We’ve all heard that starting a business is challenging, and it’s not always easy to make it work. In this blog post, I will help you with a step-by-step guide to starting a profitable business that will bring you great satisfaction. Owning a small business is one of the most rewarding experiences, but it takes a lot of work and effort to get there. It is necessary to go far beyond the choice of legal forms and the registration of the new company. Above all, you must avoid making glaring mistakes that can damage your path. This blog post will guide you through the steps you need to take to get your business off the ground, from evaluating the business idea to choosing the legal form of your business.
Find A Business Idea
The first thing to do, of course, is to come up with a good idea (or pull that innovative idea out of the drawer that you have imagined for a lifetime) that has the potential to sell. For example, if you plan to start a sweet shop, make sure it is not already a well-established business in your area. You don’t want to compete with a successful business that has already invested much money and time in its development.
Instead, it would help if you were looking for something that hasn’t been done before that you can use to make a profit. This could be a new product or an old product that needs to be refurbished. For example, you could create a website that sells products to other businesses or the general public. The idea doesn’t have to be complicated to get started, but it does have to be something you are passionate about. It won’t go anywhere if the picture doesn’t appeal to you. Remember that you must cultivate whatever you choose for years to succeed.
Do A Market Research
Market research is essential if you want to run a profitable business. This includes researching your competitors, identifying your target audience, and learning what works and doesn’t in your industry. The most important thing, however, is to find out what your potential customers need and if there is a market for your product. This is too often an underestimated step. Many aspiring entrepreneurs make the tragic mistake of falling in love with their idea. In doing so, they can no longer evaluate it objectively and think that “it is so brilliant that it will surely be a great success.”
Unfortunately, the statistics say the opposite: 90% of startups are destined to fail, and in the vast majority of cases, this happens precisely because the market does not need their product. Doing thorough market research will not give you the guarantee that your idea will work (for that, you can do appropriate tests, which I will tell you about shortly), but it will allow you to understand:
- how your reference sector works
- how large is it
- how does it work
- what are the rules that govern it
- who are the competitors, and what strategies do they use
In short, it will give you a clear vision of what the playing field will be and your potential. If you want to learn more, I have written a complete guide to market analysis.
Get Feedback On Your New Business
This step is crucial if you are unsure of your idea. It is also highly underrated by new entrepreneurs. It’s always good to get feedback from someone else because if you’ve been thinking about something for a long time, you may start to believe it’s right. But if you don’t share it with anyone, you may end up disappointed when it doesn’t turn out to be what you thought it would be. Therefore, please discuss your idea with family and friends, but ask them to be as objective as possible and try to find your vision’s criticalities and weaknesses.
If you cannot answer their objections, you will certainly not be able to counter those of the market. Then take the idea of validating your business idea very seriously. Before spending even the first euro on product development or starting the bureaucratic process, you must understand its potential. The best thing you can do is run smoke tests: low-cost experiments (in a few hundred euros) that will allow you to get valuable feedback from potential customers and understand what eventually needs to be revised in your business idea.
Create A Business Plan
I have written extensively on business plans elsewhere on this blog (particularly in this comprehensive business plan guide ). So I suggest you look at what I registered in the other articles and start writing your business plan quickly. The business plan is an essential document that will guide your entire business and help you evaluate whether your idea will be feasible or not. It should include the following:
- Briefly describe your business (your name, target market, product, etc.)
- The type of business model chosen
- An analysis of the legal implications of your business (for example, if it is a limited liability company)
- A list of your goals and objectives
- The market analysis already described above
- A hypothesis of a financial plan
- And many other significant details
A business plan should always be up to date to ensure it is up to date and avoid future problems.
Develop A Marketing Plan
Marketing is the key to your success. You need to know how to reach your target market and get them to buy from you. You will need to understand the rules that govern your market and then test them. By doing so, you will be able to find out if your idea has any chance of success or not. So, before investing time and money, you should create a marketing plan. Without a doubt, your plan should include the following:
- A clear understanding of the competition and their strategies
- The needs of your potential customers
- A clear view of the product or service you want to offer
- A list of your key benefits
- A list of your strengths and weaknesses
- A unique and inimitable value proposition
- The marketing activities you will put in place to capture customers
- The commercial activities necessary to finalize the negotiations
- And many other significant details
As with many other topics related to the world of startups, you can learn more in my guide to the business marketing plan, where you will find an in-depth and step-by-step path.
Create A Prototype (MVP)
The Minimum Viable Product is one of the most critical steps in the entire process of creating a startup. You must have a prototype of your idea. It will allow you to understand what your picture looks like, how it works, and how it will be used. You can make a mockup using your computer or a 3D printer. If, on the other hand, it is a service, you should have a clear idea of which components it will have and how you will deliver it, without necessarily having all the tools, software, tools, and staff who will then have to provide the service. When you have it ready, it is essential to test your MPV. This is the first step towards launching your product or service. The most common mistake people make when starting a business is thinking they can launch their idea without testing it. This is why it is good that you read this in-depth guide to MVPs for startuppers.
Choose A Legal Form And Tax Regime
If all the previous parts go well, you can finally consider opening your business. Instead, it should be the last. This is because you should never invest time and money in the bureaucratic process necessary to start a company if you have not first made sure that it is overwhelming. Anyway, at this point, you will find yourself in front of two different paths
- do everything yourself and open an individual VAT number
- Or work as a team and create a company
Let’s see what the bureaucratic process necessary to open a company is.
The VAT Number
The first step in starting any business is registering the company name and the type of VAT number. The VAT number is the key to writing the invoice and having legal receipts for your business. You can open a VAT number online by simply filling out a form from the Revenue Agency website. You will have your VAT number within one business day, and you will not have to pay anything. Be careful, though: you will have to make some critical decisions, including the ATECO code and the tax regime to which you will be subject. For individual VAT numbers, the best solution is the flat-rate scheme which entitles you to various benefits in addition to a net reduction in taxes.
The ATECO Code
The ATECO code is a unique code that identifies the business sector you are managing. It is fundamental because tax aspects depend on it that will influence the development and management of the company. Here are some examples of ATECO codes taken from the FiscoZen site:
- 69.10.10 is the ATECO Code of law firms.
- 86.21.00 is the ATECO Code of general medicine studies.
- 71.12.10 is the ATECO Code of Engineers.
- 86.90.30 is the ATECO Code for psychologists/psychotherapists
- 56.10.11 is the ATECO Code for catering activities (pizzerias, restaurants, fast-food restaurants, etc.).
- 96.02.02 is the ATECO Code for beauticians, make-up artists, and massage centers.
The Tax Regime
To open a VAT number, you must also select the tax regime of reference. Currently, the most convenient option for new businesses is the so-called flat-rate scheme, which allows them to be exempt from any tax payment for the entire duration of the company. However, only natural persons are eligible for this scheme, so it is worth checking if you qualify for the flat rate scheme. Furthermore, the annual turnover threshold in this scheme is 65,000 euros. Beyond this turnover, it is necessary to opt for an ordinary VAT number.
The Legal Form
If, on the other hand, you decide to open an honest company, you will have to choose different legal forms, distinguishing first of all between partnerships and corporations. The main ones for a small-medium business are:
- Snc (general partnership), if you make use of one or more partners;
- Sas (limited cooperation), if some partners have limited liability;
- Srl (limited liability company), where the responsibilities of the shareholders depend on the invested capital.
- Spa (joint stock company), where the share capital is divided among many people (the shareholders)
It should be noted that the process required to start the company is more or less complex, depending on the legal form chosen. For example, you may need to:
- register with the Business Register
- notarize the constitution of the company
- indicate the company headquarters
- define managing and general partners, etc.
- Establish a minimum capital to be paid into the company’s homes
Social Security Contributions
The last point of the bureaucratic process involves opening a social security position at the INPS or a specific Fund. Also, from Fiscozen, we read that:
- Professionals who belong to a Professional Order ( doctors, architects, psychologists, nurses, to name a few) must register with the Social Security Fund dedicated to the category (e.g., Enpam, Inarcassa, Snap).
- On the other hand, there is the INPS Separate Management for freelancers without cash. Finally, the individual firms converge in the Artisans and Traders Management, always belonging to INPS.
In conclusion, if you decide to open a business, you will have to complete a series of steps: the first is to understand if your business idea has the potential to be successful (or at least to receive the interest and money of the market). Then you will have to start registering your company name and VAT number. This is the most accessible and most immediate because you must fill out some online forms. Finally, you can complete the bureaucratic process and start selling your products on the market. I wish you to succeed, and I hope you can create the successful company you deserve!