How to Start a Small Business in 2023?

How to start a new business?

This guide has laid out in-depth guides on how to start a small business and things to consider when starting a new business before even creating the business plan for the industry you pick.

How to start a new business?


Things to consider when starting a new business

  1. Demand for your business
  2. Capital needed for your business
  3. Your passion for your business
  4. Industry of your business
  5. Business zoning restrictions

How to start a small business?

  1. Choose your business nature & industry
  2. Assess the profitability
  3. Determine the investment
  4. Raise the capital
  5. Find the right location
  6. Design your business operation plan
  7. Decide how many workers to hire
  8. Register your business
  9. Get licenses and permits
  10. Open business bank accounts
  11. Promote immediately to your contacts
  12. Operate and grow your 'business

Things to consider when starting a new business

Things to consider when starting a new business
Among so many things that you're maybe thinking to consider in starting a small business, actually, these top-5 below must be on your list.

1. Demand for your business

That's the most important thing to consider in starting a business. Let's assume that you've got a service or product that you're sure will revolutionize a person's life. The truth is, if there's no demand for that, no one will bother to check out your store. You won't make a sale. That's the fact.

Businesses that are high on demand
Small businesses that cater to the basic demands of the consumers are more likely to succeed.

Smart business-minded people know the what, where, when, and how in starting a business. The first they see are the demands. And their mind churns out fast, clearly visualizing the processes of addressing the demands.

To give you an idea, a lime, yes lime? The ordinary citrus from the farm had made a person's life changed when he looked for its demands on the market and sold 100 kilos every day. You will get to that later on this article.

Basically, that's what you need to consider, first and foremost. Is there a demand for your business?

2. Capital needed for your business

We all know that the business foundation is the capital itself. How much is your capital? Or you could ask yourself — What is my capital?

There are some small businesses that started with meager capital and, the business owners only capitalize on their skill, expertise, and dedication.

How to raise capital for business
How much or what is your capital? Do you have expertise? Or you just want to invest your money in a small business. Some do combine the two.

You can look for investors and lay-out your initial business plan which must have a back up plan once your business is already operating. In most cases, investors offer you the division of profit which is a bit more advantageous to their side. But it's up to you how to win them over to get a more favorable outcome.

3. Your passion for your business

Does the business you want to start have a connection to your personal feelings on what you enjoy doing? The most important question is, “Do you have passion for the kind of service or product that you're going to sell and offer to the buying public?”

How to make your business grow
Small business owners who are passionate about what they do and the way they conduct business succeed in the industry because they have a sense of purpose other than making money.

Are you passionate about what you do, or the product on your mind, like you want to get your hands onto them every single day?

You know the passion for a particular thing has power when you combine it with the entrepreneurship. You hold the purpose in your heart, which gives you fulfillment and being your bread and butter becomes incredibly satisfactory for you, even if at the start, you only make a little, scaling it up comes easy.

As you devote your time to your passion, it grows naturally. As Kerwin Rae says, “Chase your purpose, and the money will follow.”

4. Industry of your business

If you want to start a small business, given that you have already enough capital, narrow down the list of business industries from which you pick the best one for you.

For example, let's take guns and ammunition. Surely, there's a demand for guns and ammunition. But you have to come up with a brilliant idea of how you're going to infiltrate that demand.

In starting a small business, choosing an industry you love, and you have a certain amount of knowledge, which caters to the basic needs of the majority of the general populace, is a good way to go.

Narrow down to "basic." You can start your debate by asking what is the most basic need of the human race to live? Would they die if they don't have this basic item supplied to them every day? By asking questions, you will be able to come up with ideas. Food, oxygen, water?

So between guns & ammunition and the bottled water business, you know that the bottled water passed with flying colors as a good business. It has high demand although the competition is there, you can infiltrate the market easier and quicker than guns & ammunition.

Think of an industry that the human race consumes on a daily basis and is near to your heart, and can be learned and managed using standard measures that the government regulates.

5. Business zoning restrictions

Are you going to put up a business just outside your home? Or you are looking for an area that you think conducive to operate your chosen business industry.

Zoning regulations are more strict in the home-based business. But by no means does this means zoning ordinances don't affect any type of business even if your location is in another area.

Business location - zoning regulations
Zoning ordinances should be the main consideration in starting a small business. It's hard to operate a business while you're oblivious to the fact that you're violating some regulations.

In this consideration, you must obtain a copy of the zoning regulations in your county or city. It's easy to obtain those documents as it is the right of any resident of any city or state to have access to those public documents.

It's very crucial because if your planned business is prohibited in your chosen location, whether at your home or in different areas, you can't start the business.

Read the zoning regulations documents thoroughly and identify all the restrictions so that you know that you can't include them in the operation of your business.

Follow the step by step guide to starting a small business, next up.

How to start a business?

1. Choose your business nature & industry

Nature of business is important in starting a small business
Choosing the right industry for your business has a great impact on your success.

Starting a business will not be possible without mentioning the industry of your operation. It is the first and foremost important part of any business activity. You will not just drop a term when you're asked what is the industry of business you want to put up.

Yes, in theory, you have to start with the nature of your business. But it is the industry that really comes to mind when starting a business because it is the immediate product or service that you provide.

There are so many businesses that you see in your daily interactions. Most of the routines you do every day are determined by being a customer of companies with different industries.

For example, when you call-up a food delivery service and order some Chinese food, you interact with a company having the food as their industry of business.

When you go to a fashion retail shop and buy a pair of jeans, you know that you become a customer of a company with clothing lines as their industry and merchandising as the nature of business.

Never confuse industry with nature of business

The nature of business is the general structure of how a company operates in terms of the process in which products and services are produced and then offer them to the public to materialize the profit. There are three types of nature of business:

Three types of nature of business
  1. Service nature of business
  2. Merchandising nature of business
  3. Manufacturing nature of business
Service company
Businesses such as a restaurant, food delivery, consultancy, medical clinic are all service companies. They render different types of services to their customers to operate.

Merchandising company

A variety store, a boutique shop, a gadgets & accessories stall, and a fruit & vegetable vendor buys the product at a wholesale price and sell them with mark-up. They are all merchandising.

Take note that wholesalers also fall under merchandising as they get their goods from manufacturers and sell to other wholesalers and retailers.

Manufacturing company

Manufacturing companies create their own products by acquiring bits of parts at a low-cost rate to make a profit. Companies like vinegar production, soy-sauce, soap are all manufacturing companies.

Choosing the nature of business

The first question here is, “How much is your capital?”

Not the initial capital, but the figure of the entire amount of investment that you have or if not, the amount you can raise to start-out a business and keep it going until it takes off.

Most manufacturing companies start small, but in reality the amount is quite high for some budding entrepreneurs. There are logistics involved most of the time, and it necessitates extra funding.

Merchandising is an attractive business for both people with a small and significant amount of capital. But as it generally involved buying and selling, it is more practical for some starting-out.

Services can be very cheap to start if you have a profession or you have some degree of experience in some industry under this. At the very least, you can just get a license and turn an area in your home as your base.

Choosing your industry of business

The success of a business is not determined solely by the industry. It's best to examine yourself and ask why you are putting up this business? What are the things you want to achieve aside from making money?

There must be fulfillment in your day to day operation. Is your chosen industry near to your heart? If you only see the profitability and there's no passion, it's more likely that your business won't succeed.

Examples of industries according to their nature of business

In the table below is the list of different industries broken down according to their nature of business. By looking at this table, you can arrive in a business idea which might be the right fit for you. The list is not complete. There are so many industries out there that you can think of, like education, finance, etc.

Food delivery Variety store Face mask
Car wash Boutique Condiment
Printing Fruit&Vegetables Soap
House mover Thrift shop Detergent
Consultancy Drug store Fabric conditioner
Medical Cellphone store Toiletries for hotels
Restaurant Gadget & accessories Bakery
Painting Car tires Shoe-making
Web design Bookstore Bag-making
SEO Grocery Picture frames
Funeral Clothing lines Wine
Car repairs Branded bags Candle
Electrical Cosmetics Towel
Laundry Appliance store Jewelry
Water refilling Meat stall Rain coat
Shipping Gifts & souvenirs Delicasy
Barber shop Religious items Rag-making
Hair salon Kitchen wares Pottery
Internet shop Bargain store Fruit jam
House cleaning All imported store Preserved food

Bottom line

The industry, as well as the nature of business one picks to start a business, should align his/her passion and interest. It's a business, but if you don't enjoy running your business, it won't succeed anyhow.

2. Assess the profitability

Profitability of a business
The level of profitability of a business must be studied well before making a decision to start the planning.

The profitability of a business doesn't account only for the immediate profit that you get from items sold or services rendered. There are so many factors that affect the profitability of a particular industry.

It is a common mistake for inexperienced candidates of entrepreneurship to simply compute a product cost subtracted to its selling price to arrive at the profitability. And most of them fall into the trap of miscalculation and bad assessment of profitability, which always results in earlier failure and bankruptcy.

In simple terms, the assessment of profitability is determined by how you accurately calculate your overhead once your business is on its operational state.

The overhead doesn't include the cost of your products or services. Overhead is essentially the total monthly cost of your operation, which is dependent on your industry and the nature of business.

Usual expenses that comprise business overhead

1. Rent

The important thing to remember here is how much is the going rate for the rent of the industry you're in and the scale of your operation, which is determined by your business location. For example, if you plan to sell clothes in a stall on a popular and crowded city center, expect that the rent is quite high compare to a community marketplace.

2. Utilities

As early as you made up your mind on what industry you pick to enter as your business, you have the full idea of what utilities you will have to spend much of your overhead budget. It's very important how you approach determining your utilities because if your nature of business is manufacturing then you know you're in for a huge monthly cost in electricity.

3. Transport

If you're thinking about buying and selling goods, which falls under merchandising, number 1 in the list of your overhead expenses is the transport cost. Where are you gong to get your merchandise? How often are you going to get there and back? Without putting so much weight towards the cost of fuel you will incur, you might arrive at inaccurate profitability.

4. Taxes

In this area, there's one line that you should remember in starting a business — “Start right and you will not fail.” Tax often skips our mind in determining overhead expenses. You have to know the classification of the nature of your business when it comes to income tax. Different countries have different tax laws. Invest time in getting the right information on how much tax would you be paying monthly for your business. Seek assistance from the Internal Revenue Service (IRS) in your state, or your country's counterpart of Bureau of Internal Revenue of some countries.

5. Salary

How much is the manpower salary for your chosen industry? Keep in mind here that you're still in the planning stage. So it is very crucial that you have researched this figure by knowing the going-rates.

Determining your industry's overhead expenses

Write down all applicable overhead expenses for your business. You will not spend on transport if your business is consultancy and clients just drop by your office. But you'll have at least one telephone line. Car wash business operation runs mainly on the huge supply of water. And if you're a web developer, you churn out mainly on the use of your computer, so you will have just a few items on your overhead expenses list, you might even don't hire an employee in your first year. That's how you're going to determine your overhead expenses.

How to assess the profitability of an industry?

We have to calculate how many sales we're going to generate for the industry that we've chosen to be our business. We have to do some digging and learn from exiting businesses in our immediate vicinity.

  1. Do some research and identify areas where products and services similar to your chosen industry are sold.
  2. Be a customer of that company and make friends with the seller and ask questions that will give you answers to how many units they sell in a day.
  3. Make some calculations on the number of units you can sell. Get the figure.
  4. Subtract the cost of products to arrive at your calculated gross revenue.
  5. Subtract the calculated overhead expenses and you will arrive at a profitability range of your chosen industry.

Bottom line

Be conservative on getting gross revenue and overestimate your overhead expenses. That way, you will always have room for improvement in increasing your sales.

3. Determine the investment

Investment for your chosen startup includes the money capital and all the equipment and objects that make the operation of the business to happen.

In this area, we're talking about a different definition of investment. Here, investment means the total amount you will need to start your business and keep it running.

So, investment here is both money and tangible objects, although the later is actually acquired by getting parts of your money, which is by the way, you can call your capital.

You are a small business owner when you start a business. So, here, your investments to your small business are the pieces of equipment that you will need to operate, and the funding to buy products and services to sell.

It's important to have the full concept of your investment in your business because you will raise the capital.

The nature of your business and its industry determine the aggregate of your investments. Are you aiming for a manufacturing business? Or you're launching an SEO company?

See the investment needed for a manufacturing business weighs much towards the big pieces of equipment without which you can not operate. While an SEO office, most of your investment, aside from your capital, is the knowledge and expertise, which means you don't have to invest in the primary source of your operation.

Bottom line

The total investment for your business is the sum of the capital and the total cost of all touchable objects which you acquired, big or small, contained within your business premises and its annex of operation.

4. Raise the capital

How to raise capital for business?
Business capital is the foundation of the business and, so it must be managed well.

It's now clear how much capital you need, because you have already determined the cost of the entire investment by identifying the necessary articles and apparatus for your business operational system to work and, the funding as well.

How would you raise the capital? Normally, people who plan to put up a business of their own had saved a certain amount intended for business. And usually, it is small or even if it's big, not enough.

Possible sources of capital for business

In this early stage where you don't have proven data points for your business as you haven't launched it yet, finding investors is out of the question. You might just cast yourself in a contract that might not helpful to you.

Relatives and friends

The first line of financial assistance is the people who know you. Ask them to loan you some money. Share them on your business plan. That way it becomes easy to offer them interests for the capital that they're going to loan to you. It's much easier and gets a favorable response from these people as they know they are supporting a person close to them on a life-changing project.

Business loans from banks

You can get a business loan from your bank. But as a startup, you will need your personal assets to secure a loan from a bank. What are these? Your home or car will do as collateral. Now, if your business will involve machinery and equipment, they can back your loan even if you can only buy them once the loan is released.

Save more money

You can put on hold the business for a while and embark on saving money from your current sources of income, in addition to the money you had saved prior to planning. Wait until you raise enough capital putting aside large chunks of your income to a bank account that you may want to call fund or capital for your business. It's a good decision if you don't want to risk your personal assets in case of default.

Bottom line

In starting out a business and raising capital, prioritize the shield from the danger of your personal assets and business. Repossessions and defaults bound to happen to a business not planned and managed well. It's always smart to go first to capital sources that don't require securing the loan. Getting a secure loan as extra or small funding would be advisable in this case.

5. Find the right location

How to find the right location for your business?
Location determines a lot of things for your startup. The surrounding businesses ultimately supplement your growth in the future.

How to start a small business requires that you must give weight to the location. Finding the right location for your business is critical to your success. Once you start the operation in a bad location, it is almost irreversible. Yes, you can rectify it but expect financial loses coming if you decide to move to another area.

How to find the right location for your business?

Look at the nature of your business and the industry it is found. There are businesses that don't need crowded areas while some business prospers on it. Many factors affect a good site for a business.

1. Find an area with the right amount of pedestrian traffic

A good amount of pedestrian traffic constitutes having the hardest work done for the business on a daily basis.

Getting sales every day is so much easier in places where hundreds of people come and go.

While a crowded area is a boon to a retail business, a consultancy firm should be in a location where crowd don't block the view of their facade and signage.

2. Welcome your business in a site where competitions are

The good thing about having your business surrounded by competitors is that the place is popular for the buying public.

People go there with specific intent and, that is to buy a particular item. Whether it's an article of clothing or a technology-gadget, they look for it in the place where they know they have a lot of options and product availability.

3. Choose if applicable location with no competition

While there are businesses that favor areas with the same industry, like the clothes' retail shops and the technology lanes in a mall, a handful of businesses thrive in sites where there is no competition at all.

Businesses like law firms, consulting agencies, bakeshops would be more successful along the roadside where both pedestrians and motorists have a clear view.

It easy for a prospective client to decide once they see your signage and, the action to get inside your office is almost immediate.

4. Surround your business with different industries

Having other types of businesses in the proximity of your business is not only advantageous to your company when it comes to sales.

Your operation in general is affected by what establishments are located on your site. Surely dine-in customers of a restaurant are always inclined to peruse retail shops and bookstore as well as cellphone stores.

But the thing is, having eateries near to you makes it easy for your employees to grab their lunch fast. Is there a branch of your bank near to you? Or a grocery and convenient store?

5. Think in terms of your customers' convenience

It's a matter of being smart than being nice when you think about the convenience of customers when it comes to managing your business.

A customer who finds it convenient to shop or do business with you won't even think of looking for other providers, that's for sure.

Is your business site near to a parking lot? Are parking slots for persons with disabilities conveniently located near to your establishment? Do you have a toilet for customers?

6. Make sure that heavy rains don't flood your site

Most of the places that experience flooding yearly are those in the low-lying areas. You can't ignore the bad effect of flooded streets in business.

Your company keeps incurring the bills, but the sales stopped when people don't want to go to your place. Not only that, once buyers know that your site is notorious for getting flooded easily if there's a storm, they never try to check out your place.

They go somewhere else, you lose sales, the competition from another area gets it. It's best to get the right information from your city authority that oversees city streets.

In New York, a site called Localize helps determine if a certain area gets flooded on heavy rains.

7. Know the local ordinances and zoning regulations

If you're putting up a home business or before you begin constructing one in a different area of a city, it's very important that you know the zoning regulations and local ordinances that pertain to businesses being built inside a residential neighborhood.

Different cities, different countries, regions, and different states here in the U.S. have different business laws. An important element of the business is promotion and advertising, and a great number of communities and cities prohibit these.

Parking is a major part of business both for customers and your company mobility. But many cities and local governments impose restrictions on parking in certain areas under their jurisdictions.

8. Find a location with an existing target market

A business start-up that planned well on where to operate has paid pretty much attention to the availability of “ready customers.”

In other words, a smart business plan is to put up your business in a site where you have the target market available for you.

Laundry and dry cleaning service is an example of the business idea that falls into this. Find an area that is not yet saturated by this industry.

You can also create a brand for your service by offering pick-up and home delivery to make a name for your company right off the bat.

With this plan, you are building a reliable customer base through walk-in customers and the pre-existing target market in the community where your business is located.

Bottom line

The process of finding the right location, for business, is by itself the non-material investment of starting out a business. Whatever amount of effort you invest in finding the right place is nothing compares to the payoff of running a profitable business for many years.

6. Design your business operational plan

Business operational plan
Starting up a business with the operational plan gives way to a more solid business operational plan, which you employ once your business operates, and all determinants in the business location are at work.

How to start a small business demands major planning on different stages. Among them is creating the business operational plan. Your operation as a business must have a clear plan. It's crucial on the first day of business operation.

There must be a first-day business operation activity that serves as the template of your day-to-day operation. Start with what, where, when, and how?

Below are some ideas that generally ask details of a business operation of a retail industry.

Although some operational tasks that some ideas asked are not applicable on the first day of operation, it is recommended that the business owner has listed them already and the details that answer these questions are known right on the very first day of regular operations.

  • What is your main activity during business hours?
  • Who's in charge of the main tasks of the business?
  • When do you get your supplies, i.e., day in a week, days in a month, etc.?
  • When do you make payments to your suppliers?
  • When do you make "follow-ups" for payments if you sale on credit?
  • When do you receive deliveries of other products to be sold in your store?
  • What is the time for your employees to be on their posts?
  • How do you handle lunch time if your business is retail?
  • How do you pay and file your taxes?

How to create a small business operational plan?

You can create an operational plan using any spreadsheet format. Here are the two tables of an operational plan. The first table shows the daily activities and, the second lists down the non-periodic ones.

Daily Operations
9:00 - 9:40 Stocking shelves
Replenish supplies
Pricing labels on items
Tidying up the shop
9:40 - 10:00 Brief meeting
10:00 Store opens
10:00 - Closing Main activity
Sell goods
10:00 - 11:00 Handing out promo fliers
Taking orders by phone
Emailing offers
Order packing
11:00 - 12:00
11:30 - 12:30 One employee takes lunch
12:30 - 1:30 Other crew takes lunch
1:30 - 2:00 Delivery of orders
2:00 - 3:00
3:00 Mid-afternoon snack
3:00 - 4:00 mail marketing
Adding products to online stores
Calling collection departments for sales on credit
Online advertising etc
4:00 - 5:00
5:00 Employees second shift ends
Second shift replaces them
5:00 - 6:00 Checking if stock is low
Replenish if needed
Put every inventory in order
6:00 - 7:00 Leveraging social media
Promote products for free
7:00 - 8:00 Employees take dinner in rotation
8:00 - 9:00 A manager can use this schedule
to see what to improve based on
how the store performs the
whole time and including
all sales from all areas.
9:00 - 9:40
9:40 Inform clients how many minutes
they have before you close
9:40 - 10:00 Tidying up the store
Throwing away garbage
Security check
10:00 Store closes

Non-daily Tasks
Day Time Particular
Tuesday &
9 AM Getting
Thursday &
9 AM Receiving other
product delivery
& Thursday
10 AM
- 4 PM
Calling customers
on credit for their
check payment
Friday 4 PM Check payment
to suppliers
Last day of
the month
Discretionary Periodic
Any day of
last week of
a month
Discretionary Remittance of

Whether your industry is big such as manufacturing or start-up retail, you should have a clear operational plan.

It's not only for you getting the bird's eye view but to send the message to all involved including employees that your company has a clear direction and charting the right path for success.

Without the operational plan, everybody might sit around waiting for sales to come in.

Bottom line

Running a business without the operational plan, even if small, is like sailing without a rudder. The operational plan falls everything into the right places and accelerates the take-off of your business.

7. Decide how many workers to hire

How to hire employees?
If you know how to hire employees who are dedicated to their jobs, you've done half of the battle in starting a small business.

Human resources for literally all kinds of business have been an incredibly important part of driving starting out entrepreneurs to success.

Even if you decide not to hire an employee in the initial stage of your operation, you still have a human resource in the person of no other than yourself.

In getting employees, it's best to maximize the concept of relegation. You just hire people to relegate and distribute the jobs that stick to the whole spectrum of works and responsibilities of your small business.

Pointers in hiring to get the right number of employees

  • Look at your business operation plan. By studying it, you will be able to determine how many employees to hire.
  • Be prepared that you still have to do things that already relegated to an employee. Time management will help you out.
  • Always go towards hiring too few than too many. When you found yourself doing too many things, that means you're doing fine.
  • Embrace sacrifices. That's what starting small means. Think of so many big companies now that started small with no employee.

Things to consider in hiring employees

1. Employer identification number (EIN)

You will be needing this unique 9-digit number and use it in TAX ID purposes. The registration process for EID differs from state to stat. For more information, visit the website of your state's Department of Labor.

2. Employees withholding taxes

You need to get through the legwork of accomplishing tax forms that you use to pay employees taxes: Federal Income tax withholding, Federal Wage and tax statement, and State taxes.

3. State employment agency

You must report all data pertaining to your newly hired employees. Go to your States labor agency and furnish them with the necessary documents of your new employees.

4. Workers' compensation insurance

You must obtain insurance policies for your workers to cover injuries and illnesses due to work-related circumstances. It varies from state to state. Get the right information from your state department that oversees this.

5. Department of labor posters

Get your free workplace posters from your state's labor department. You are required by the law to display these posters conspicuously in the employees working areas to inform them of their rights and your responsibilities as the employer.

Bottom line

Getting employees means increased overhead for a startup. The key is to hire less than hire more in the initial stage. It's better for you to work as hard as to cover many tasks in a day than having too many, which translates to burning too much cash. Remember that you're just starting out.

8. Register your business

How to register your business?
There is a lot of reasons that you can smile when you register your business. One of them is you are ridding your business of the limitations an unregistered business does have.

As a small business owner, starting out, there are two options for you under the Small Business Administration (SBA):

  1. Register your business
  2. Do not register your business

If you run a business under your legal name, you are not required to register whatever business you have.

But there are limitations to the scope of your operation. Without business registration, you can not hire employees.

The main requirement for hiring people is that you must register your business to both state and federal authorities.

You are also not covered by legal benefits, tax benefits, and personal liability insurance.

Would you avoid the hassles of registering your business? Or would you enjoy the benefits and convenience of conducting a business registered accordingly?

How to register your business?

Get your federal tax ID number

If you plan to hire employees, you need the federal tax ID number. Use the IRS online assistant. It's pretty much answering a few usual questions after which you get verified and, you immediately get your 9-digit federal tax ID.

Get your state tax ID number

Learn your state's tax laws on income. Your purpose is to know if your business is required to pay state tax. State and local authorities differ on tax obligations. And most states require small businesses to get state tax ID if they're going to hire employees.

File your state documents and fees

You need to visit your local government website to know what to do. Mostly, the information you need to provide includes these: business name, business address, and type of ownership. There are some additional requirements that you must check with your local tax office if apply to you. These include providing documentation soon after your registration.

Bottom line

Registering your business sealed your devotion to take your business to the upward direction. It's making your business a legal entity, so it has a positive and auspicious influence on how you approach the overall daily management of your start-up.

9. Get licenses and permits

This one shouldn't be passed up. You need to get licenses and permits to operate a small business in the U.S. and literally anywhere in the world.

You need to get licenses and permits before you can operate any business. There are certain industries that are regulated by the federal agency and, there is another set of industries that the state regulates.

However, there are small businesses that are regulated by both state and federal agencies. As such, you need to apply for permits and licenses from the two regulating authorities.

Check the table below to see if your business industry is regulated by which authority. If your business is not found on either column, you need to check it with your state. Visit your state's official website.

actions agriculture
constructions alcoholic
dry cleaning aviation
farming fish and
plumbing commercial
restaurant maritime
retail mining and
and logistics
How to apply for licenses and permits?

Locate your state's business permit. It is advisable to go to their website first to get the assistance you need before you visit their office in person.

It's common now that business permit offices have either online forms that you can fill out and submit them online or printable forms that once filled out you submit to their office in person.

Keep in mind that requirements, fees, processing, as well as the licenses and the permits themselves vary based on your industry activity, the issuing authority, and the business location of your trade.

Bottom line

Applying for licenses and permits is easy when you research the regulations of your state and local county pertaining to processing, fees, and requirements.

10. Open business bank accounts

Business bank accounts
Business bank accounts are necessary for the smooth operations of your business. They expedite transactions and add more layers of channels that funnel more sales.

Business bank accounts are necessary if you're going to ask experts the question “how to start your own business.” By opening a business bank account, you reap the benefits of running a business that is legally compliant.

As you know personal bank account has a lot of limitations that are not conducive to business.

Besides, it is not only doing good for your convenience but having business accounts make it more convenient for your customer to transact business with you.

What are the business bank accounts for small business and how do they help?

One great advantage of business bank accounts for a small business is the flexibility in revolving your capital. You can maximize the billing period of a credit card account by using it on purchasing your product and pay on the due date without accruing interest.

Checking account has 3-banking days of clearing, and so you can issue a check as payment and maximize the 3-day period. What's more? Talk to your supplier and request that you issue a post-dated check. A lot of entrepreneurs do that. And it gives them enough window to make money on items that payment terms are stretched out to the max.

Merchant services accounts increase your selling power. Because with these accounts, you put another set of lines in the water. People prefer to buy using credit cards. With the merchant services account, you cover those customers. And now you double the number of customers getting items or services from you.

Most of the business bank accounts are bundled with limited personal liability insurance protection. For one, merchant service accounts cover the protection of purchases by the merchant customers along with the guarantee that these merchant service accounts secure their personal information.

Bottom line

By getting the complete set of business bank accounts, you tap and open a lot of opportunities for your business to grow. They add an extra layer of flexibility on your revolving fund, they attract more customers to your business, and they give protection for your business.

11. Promote immediately to your contacts

Business contacts
Businesswise, promoting your small company to all your contacts even through online, will give you a substantial amount of sales and get you the momentum you need at the early stage, which is important.

Before your opening day, you must create the momentum and spearhead some campaigns and promotions for your small business.

But before you think of setting out on a spending spree for ad campaigns and paid promotions, your best bet to help you on the initial sales are the people within the network of people that knows you in different degrees.

Who are these people?

  1. your relatives
  2. your friends
  3. your associates
  4. your insurance agent
  5. your former co-workers
  6. etc

These people have built-in connections with you in all sorts. Chances are they buy and avail products and services that you sell only from other stores or companies. Might as well introduce them to your own line of items. They would be eager to see your store and get some stuff from you.

By promoting your small business to your contacts, whether relatives or friends, you are doing a passive business networking.

Remember, each of your contacts has his/her own set of contacts. And it is spontaneous when your contacts refer your store to their own set of social circles and relatives.

What happens is you tap the power of word of mouth. It only happens because of the kind of connections you have with your contacts. And your business will have an immediate group of customers that is growing.

On the side note, unless your “friends” in social media are actual friends or close to you, avoid investing time in them. The probability of most of them not showing up on your opening day is so high.

Bottom line

Between spending on ad campaigns as well as promotions, and promoting your start-up business to your contacts and social circles, the later does the excellent job of creating the momentum and excitement for your opening day. Above all, the offshoots are the reliable big networks of potential customers.

12. Operate and grow your 'business

how to grow a business
Scaling up your business depends on the whole team of your company, who maybe they are, as long as they are committed to the company values, well-compensated and treated professionally, you're company will grow and curve its name in the industry.

It's a huge responsibility every day. You need to wake up early and go to bed late. You're running a business now, and like those big corporations and companies, you need to look out after it, manage it fastidiously and assiduously.

Now that you operate, your ultimate goal is to “not fail.”

Scaling-up your business is your business. Because nowadays, a lot of small businesses fail.

Before we tackle that, here are some tips on day to day operations that can help you avoid struggling for business to come in.

Below are pointers to remember on how to operate a starting out business with regards to the importance you provide to each part of your business:

  • Your employees. They are one of your assets. Give them the knowledge by training them properly and let them feel that you appreciate their works.
  • Next up is your customers. Treat each of them nicely and let them feel they're important and special with sincerity. They give you business, so it makes sense.
  • Your suppliers. These wholesalers have large accounts on their belts. And they give priorities to retailers that truthful to the promise of payments.
  • Your tax obligations. We owe it to the government that we run a business and have a bread and butter. It's our duty to give them what is due to them.
  • You are the number 1 asset of your company. Work hard to attain your dream for your business. But at the end of the day, have you done something to take care of your being?

How to grow your business

1. Have a clear sight of revenue per day

You need to have a clear record of how much revenue your small business has generated each day and computed that by the end of the day.

Every brass in business agrees that not every day is a good day. There are days that you make good sales or income. And there are days that you have no revenues or just break even, or worst you have no sales at all.

In most cases, it's the overheads that most small business owners have a knowledge of like the back of their hand.

By knowing how much revenue you have generated today, you know more or less, that your funding may be affected either down or up in a particular period in a month or a quarter.

You can make a plan to adjust your pricing, which, maybe, lowered way too low to beat the competition.

You are in control when you know the revenue your business is getting at the end of each business day.

2. Manage your business effectively

Mismanagement is the primary reason why most small businesses fail in the first 3-years of operation.

Basically, when the sale is dropping, you need to do something right away.

A retail store that has consistently made upward progress in sales in the previous month and a sudden negative spike in the current month has to be taken seriously.

A good business owner who has no management team should learn how to identify the factors that make the abnormal behavior in sales and revenue. It's true that small businesses must avoid additional expenses.

In that case, a business owner as the manager should look both inside and outside of his store for reasons that the sudden big drop in sales happens.

Could it be the employees? Or just a matter of taking a rack of clothes or two outside the store entrance that is needed because a big clothing line has open alongside your store.

There's a psychology in sales. Once a bunch of shoppers is perusing your racks of the inexpensive but attractive collection of clothes, more shoppers will follow suit.

3. Apply the chosen business plan

In the planning stage, you designed the daily operation of your business. Most of the time first-time small business owners are either overwhelmed by the scale of their businesses or forget the importance of the effort and time they have invested in designing their day to day operations.

The importance of sticking to the daily operations that you have designed in the planning stage of your business is necessary so that you can adapt to the condition of the business landscape that you get to find for your business now that it's operational.

You're running smoothly now. But different challenges will show up along the way. Your business will experience hurdles that are natural in any small business.

But the day to day operation plan that is in place will make it easy for any transition or introduction of a new business plan.

A perfect business plan is hardly made in the planning stage of any business. It is the evolution of your pre-designed day to day operation plan. That is because the actual business experience determines how you design a major business plan for your small business.

A perfect business plan is hardly made in the planning stage of any business. It is the evolution of your pre-opening daily operations plan. That is because the actual business experience determines how you design a major business plan for your small business.

4. Implement a new business plan

With the current daily operations plan in place, you have the flexibility of designing a new business plan that is based on the business landscape condition that you got to learn on your location and the scope of your business.

You get to factor in many things that came up now that your business already operates.

For example, in the daily operations plan that you had designed days before your opening, you hadn't thought about the possibility of putting up vendors outside your shops.

It manifested days and weeks into your store operation as you notice that shoppers are attracted to racks displaying different designs of clothes outside the actual store.

Now it's become a part of your business model to have 3 to 4 racks outside your shops.

You adapt to the need of the target market in the location. They don't adapt to you.

That is why you cannot just design a business plan without getting the pulse of the buying public.

5. Have realistic projections and act on them

By projecting a sales figure that is realistic and attainable based on the business conditions that you found in your location and the scope of your new business, you can project a good and well-thought-out spending. You always put the revenue into the focus of your projections.

Before I fell in love with online marketing and blogging, I once had a trading company. I supplied citrus and limes to scores of hotels and restaurants.

I made projections of executive chefs' orders of limes, which were so many about twice a month.

I had to get supplies ready when each chef ordered for 30 kilos, or they'd get it from other suppliers. I bought the lime on a cash basis while I gave terms to the executive chefs. And my source only delivered twice a week - Tuesdays and Fridays. So, I made sure that the limes weren't withered when it got to a chef. Back then, they wanted neither crisper nor refrigeration. My projection must be the lime should be delivered within 3-days from the date it had arrived at my stock area or, they'd be rejected.

If I made a wrong projection on the volume of the stock on my supply area, I would lose a lot of money since the items were perishables.

So I made sure that my projections of the total orders of a number of chefs and the total volume of lime that arrived were accurate so that all limes were sold with the very minimal amount of unsold ones like a couple of kilos. Less supply meant income lost. Oversupply meant income lost as well.

Chefs were the most generous clients when it comes to selling limes and, I must admit that the margin of profit was substantial.

I must say I made accurate projections back then that I really made money that helped me in my decision of career-change.

Bottom line

It's far better off to have a low revenue with accurate projections on spending and sales, than bumping up the projections and, ending up with a big financial loss.

I have laid out to you the guides and pointers that answer your question “how to start a small business.” Below is our conclusion.


Starting out any business begins in the demands. If you can't see demands or it is highly saturated, the probability of financial loss is so high. When you have the demands, you can start the business plan.

There is no perfect business plan created in the planning stage of the business. The business plan evolves based on many factors that you get to see when your business is already open to the public.

The importance of daily operations plan determines the business slow transition in adapting the perfect business plan that works around the following:

  • actual target market
  • business conditions in the business locations
  • competitions you have with other businesses
  • influences of other business industries in the area

Finally, with the perfect business plan at work and your skillful management, you are headed in the right direction in your business. That's how to start a small business and ensure its success.


Saving Money through Investment Better than Banking

To save money thru investment is better than banking.

As we strive to improve our lives, there is only one direction we go — either up or down. We always look for ways to save money.

Financial management takes priority. Ultimately, progress is the only place that we see ourselves to be, 3-years or 5-years or 10-years from now.

Investment better than banking in saving money

We feel we're on the right path on how to save money when:

  • We knuckle down daily to prepare for the future.
  • We set aside money daily for our savings.
  • We work hard on making extra money.
  • We do tight in budgeting, etc.

Those would add up, or so we thought. Well, if you have a financial goal that you hope you can achieve in 5-years, the best strategy in saving money must be planned.

We have to see beyond piggy-bank, and regular savings account mentalities. We've got to have a clear concept of how the money that we saved so far can help us in reaching our financial goals.

Once you have already accumulated a decent amount of money in your savings, it's time to think on the next level of making your financial dream a reality. It's the right time to consider yourself as an investment personality.

As an investment personality, you think in a more broader avenue of saving money, which gives you more possibilities when it comes to facing the level of risks. There are four investment personalities.

Investment personalities

Investment personality

  1. Conservative
  2. Moderately conservative
  3. Moderately aggressive
  4. Aggressive

Investment personalities definitions

1. Conservative

You don't want to face risks in investing your money. You want to be assured that your money will earn at any market condition. Low-returns — is acceptable to you so long as your principal is secured and guaranteed.

2. Moderately conservative

Low volatility is acceptable to you. You know that you'll lose money. But you also know that it is only temporary. You're looking at the rate of return, which is a bit higher than the bank's rate.

3. Moderately aggressive

Your time frame in investment is long term. And you know that your capital will yield a high return in the end. Even if the risk is a bit high than those portfolios belong to moderately conservative investment.

4. Aggressive

You want to get the maximum returns for your investment. You are willing to take high risks for that. The most optimistic of all investment personalities, you are a fervent believer that the market will climb up in the long term.

Your investment personality

Before you can start in becoming an investment personality, you must determine first what type of personality you have when in comes to investment.

  • Which among the four investment personalities above fits you?
  • In other words, what is your risk-profile?

To answer these questions, you must learn about different kinds of investments available for you. But before that, you must be clear about your understanding of the term savings.

What is — savings?

Can we define savings? Only a few people know the definition of savings.

In the concept of setting aside from our paycheck a small amount and putting it into the piggy bank, savings can be defined as — income not spent.

The money you have saved in your piggy bank can get a long way in the right investment vehicle.

What we do is getting hold of part of our salary regularly and save it. It's income and, it's not spent. Instead, it goes to our savings. For what? So that in the future you can collect the sum of all the small amounts that you have saved. And that's all about it. It's good because it promotes discipline on how you handle your income.

Are there other options to obtain or realize a financial goal by not spending part of our income?

Financial planning - Saving Money through Investment
With knowledge of your investment personality, you can grow part of your income and attain financial success.

Yes, there are options.. And we call them investments.

Technically, you will also resort to not spending part of your income.

But it is invested in a financial vehicle not structured in a passion that the money is only kept for the future.

Here, the money doesn't just sit there. Rather, it works for you.

When we invest, we level ourselves to entrepreneurs in the sense that we set our eyes on profit. There's always material gain in investment. If you invest your money, your money is like your employee. It will be working to deliver you the profit. That's the difference between saving your money and investing it.

At this point in this article, you should have already determined your investment personality.

You can refer back to the list above and identify yourself to any of the listed investment personalities.

And now, we're on to the next topic — types of investment.

So, what are the types of investments and what type of investment is available for your investment personality?

Types of investment

Types of Investment - Choose the right one for your investment personality

1. Money Market

The money market invests in securities that are less than one year. The money market in financial terms is a debt instrument.

So the company borrows money short term, less than one year. So this fund actually invests in securities or commercial papers that are less than one year. Because it is less than 1-year money market is conservative.

2. Bonds

Bonds are also debt instruments. Instead of borrowing from banks, a corporate or governmental entity issues bonds.

They offer bonds to the public that in turn loan money to them. Let's say you invest 250,000 pesos for a defined period of 5-years and with the interest rate of 4%. Every year your earning is 10,000 pesos less tax.

It's like I will borrow 10 billion at the rate of 8% and, on the 8th year I will give you back what I owed. And this is traded in the market illustrated in Philippine Stock Exchange Index.

3. Equity Market

It's what called stocks — corporate stocks. When you invest in a stock, you turn yourself into a part owner of a corporation.

For example, if you buy a share of stocks of PLDT, you can proudly say you're a part owner of PLDT technically. As part owner, you know that the income of any institution is not fixed. That's why the price of the stock is fluctuating.

Here, funds are invested in blue chip (large corporations) stocks, e.g., Ayala, PLDT, etc. This is a high risk investment. And it's highly recommended you invest your money in stocks for at least 5-years.

Investment product vs bank deposit

As you have already learned what is savings in a simple definition, you might wonder how would you make a decision to shift from deposit account to investment account.

I will give you a simple illustration here to differentiate a bank deposit account and an investment plan.

What is the basic difference between the time deposit and money market?

  • The time deposit is actually a time deposit instrument. As it is a deposit, it is PDIC insured.
  • Money market fund has a higher income potential, not PDIC insured because it is not a deposit product.
  • And money market has only a 7-day holding period compare to time deposit which you can not withdraw for at least 30-days.

Time deposit vs money market simple illustration

So let's say you put your money on a time deposit, you expect to get a net interest of .8 percent, you can't withdraw t for 30-days.

But if you invested it in money market last year, the potential return is 1.17 %. The good thing is you have a holding period of only 7-days.

Another thing — there are banks in the Philippines which tag your investment with your savings account. So, there will be no physical cash transfer.

Everything is electronic when you invest from your savings account to your investment.

There is no volatility because of the volume. These banks can bargain from other banks' higher time deposits.

Money market — investment type for a conservative investor

In the illustration above, we cited the most conservative type of investments — money market.

As the money market is for a conservative personality of the investor, it has the lowest interest rate among all types of investment, e.g., bonds and equity.

Money market commands higher rate compared to regular savings account

Nevertheless, as you've seen already, money market commands the higher rate compared to the regular savings account and even the time deposit account.

As for interest rates of other investment types, the potential return for the bond is 3.60% to 4% per annum, and the stock has an annualized return of 11.65%.

Tips in investing

  1. Get investment advice from right persons. Major banks in the Philippines where you bank can direct you to their investment department where trusted financial advisers are utterly reliable and credible.
  2. Think twice before you make your initial investment. It is not like you're opening a bank account. Here money should not be touched for the long haul to make pretty decent earnings for the principal.
  3. Make sure you have an emergency fund. Make sure you have extra savings equivalent to six times of your monthly expenses. If something happens like emergencies and for the immediate source of funding for any expenditure, i.e., hospitalization, car broke down, etc.
  4. Expect for what investment insiders termed “unrealized loses” to happen. It will only happen if you stick to your investment plan when the market value goes down. If your plan is for 5-years, you just need to wait, because the only way to recover your loses is to continue.
  5. In finding our your risk profile, look at factors that determine where you fall to identify your investment personality accurately. Do not look at the interest rate of investment plans for each personality. If you do, you'll end up not continuing the plan you get and, you'll lose money.

Final thoughts

You have learned here why investment is better than bank deposit in saving money and preparing for your financial future. The ball is in your hands now to decide what route to take.

Months and years quickly pass when we equate them with accomplishing our goals. Making the right decision in realizing our dream is ultimately vital in getting to where we want to be.

What is your opinion about investing? Which do you prefer - investment or banking? Share your thoughts in the comments' below.


Investing: What Is It & How Does It Help in Saving Money in 2021?

Investing: What is it & how it helps save money?

You will learn here now

  • What is investing?
  • Facts about investing
  • Investing with a small amount of money

The term "invest" always pops-up in any setting that alludes to the business environment.

We hear it in banking, trading, marketing, even networking, etc.

It's a very common word that we always assume it is so simple an undertaking for those who have resources from which they get the fund.

In the context of finance, invest — correlates with money. You can't complete your project of investing if you have no money to invest.

What is investing?

Nevertheless, this is not to mean that people in the low-income bracket will never be able to invest. There are investment programs fit for low-income individuals like you.

What is investing?

What is investment?

Investing is a financial vehicle of allocating available cash and use it as a capital for a particular nature of managing one's money so that it grows and returns to you with profit. In a manner of speaking, investing is making your money works for you, which makes you a smart person.

Facts about investing

1. Higher interest rate

Unlike any type of bank account, investment platforms offer you higher returns of investment, which is why investing your money and doing it properly, is the fastest way to prepare for the future.

2. Investing involves risks

These are financial losses that investors may experience, which are brought by inherent uncertainties in the financial and business environments such as inflation, volatility, fluctuating interest rate, etc.

3. High-risk and low-risk

These are the only two certain options you face from which you choose in investing your money. It's so simple to decide once you made up your mind. The rule is: High-risk investment gives the potential of high returns. Low-risk investments yield low returns.

4. No guarantees

As there are the risks in investing, it follows that interest rates, returns, and profits are not guaranteed. The figures in a particular investment plan are there for the purpose of presentation. That said, if all the factors are in upward trends, then the estimates in yields and earnings are achieved.

5. Knowledge first

It is included here because, as a matter of fact, you won't invest a large sum if you don't have any idea what is it you are entering into. You must equip yourself with knowledge. To overcome a lot of jargon in investing say yes to investment seminar invitations coming your way./p>

Investing with a small amount of money

Investing with small amount of money

We always relate investing with stocks which even if they say that you only need 6,000 or 10,000 to open an account in stock trading, well, that would only be it — an open trading account. You really need to invest more in the stock market. Below are three of the low-cost investment plans, which also considered as low-risk:

1. Mutual fund

Here, your small amount of investment is added to the collection of other small amounts of investments from other small investors.

Then the gathered money is pooled together to get the aggregate amount that in turn will be invested in high-yielding assets and instruments like money market, stocks, bonds, etc.

Mutual Fund is a good starting point for a newbie investor as you get to monitor the performance of your investment fund. However, an option is always available for you to have a Professional Fund Manager who would take care of that.

You can start a mutual fund investment plan for as low as 5,000 to 10,000 pesos. Mutual funds, considered as low to high-risk an investment vehicle, are sold by registered investment companies through SEC-licensed Certified Investment Solicitors.

2. Unit investment trust fund

Similarly, in UITF, money from different investors are pooled together to come up with large aggregate to invest.

The similarity ends there because the fund collected in UITF is used to buy you investment units, not shares which you buy in Mutual Fund.

UITFs are offered by banks, but they are not considered as deposit product, and so your money invested in UITF is still not covered by PDIC or Philippine Deposit Insurance Commission.

If you maintain a savings or a deposit account, you can approach the staff or the manager of your bank and inquire about the UITF. They are more than happy to help and guide you every step of the way.

In fact, some banks conduct free seminars about their investment products.

If you have 15,000 to 20,000 just parked in the S/A, you can use that and let that money work for you to achieve maximum earning potential not achievable in any savings account or time deposit for that matter.

3. Retail treasury bond

Retail Treasury Bond is the most low-risk investment that you can find as per my knowledge. This is because this kind of bond is offered and sold by the Philippine Government to retail investors.

Bonds offered by private corporations can be considered high-risk as anything detrimental to the existence of a certain company is always present.

With the government's treasury bond, you can rest assured that your principal goes back to you on the maturity date.

You make money in treasury bond by being loaner of the government with interest rate coming to you higher than any deposit's prevailing rate in commercial banks. You receive your interest which constitutes your earnings in any of these pre-determined schedules — annually, semi-annually or quarterly.

Meanwhile, you can only get your principal back on the maturity date. Minimum investment ranges from 5,000 to 10,000.

If you think RTB is for you, it would be perfect if you talk to an officer of the institutions to which selling of RTBs are entrusted by the government — commercial banks. You don't need to get far as you can talk about RTB to your bank's manager or assigned officer.

Final thoughts

In investing, you have to begin somewhere. Starting right deters regrets in the future. There is quite a lot of investment information on the internet. Using them as a guide is a good start.

Scratching the surface through attending seminars by financial and investment institutions is the perfect next action plan. It helps you identify your risk profile, short and long term goals, etc. Ultimately it gets you to the right path on deciding which is the right investment plan for you.

Have you invested any amount in an investment? Can you share so that we might study it? If not, what are your primary reasons you haven't got to investment yet? Kindly use comments' box below.