Start a Small Business: The Ultimate 2021 Guide to Achieving Independence

Updated: Aug 31

You've left your job--or are thinking about it. Or you've been laid off. Maybe you were one of the millions who transitioned to working at home during the pandemic, and you loved how that worked out.

Maybe the company isn’t taking advantage of all your abilities. Endless distractions prevent you from getting things done.

You’re frustrated because your financial success is largely in the hands of others who determine raises and promotions.

You want to work on your own terms: your own focus, schedule, pace, style, location, level of income.

Maybe you want to do the same kind of work you’ve been doing. Or you want something different.

You want to start a small business.

Thousands of people have found independence, fulfillment, and satisfaction this way. So can you.

Where do you begin? Most advice says to write a business plan. That’s important, but that’s not the first thing to do. It’s not even the 20th thing to do.

This guide organizes everything involved in starting and running a small business. It’s filled with suggestions, tips, and resources to smooth your path.

Let’s look at starting a business to achieve independence.

​​A. The Pros and Cons of Starting a Business

​Can Stock Photo / kgtoh

Five Reasons People Want to Own a Small Business

  1. Income Potential. As an owner, the business you choose and your efforts, knowledge, and skills will drive your income. As an employee, your income may be limited by a salary structure and evaluations by a supervisor.

  2. A Good Idea. Enduring businesses started with an idea that met an unfulfilled need (sliced bread) or created something people didn’t know they needed (smartphones). If your idea can achieve the same impact, you can profit further by teaching others, licensing, or franchising.

  3. ​​A More Flexible Lifestyle. The 9-to-5 world was invented to meet the needs of a post-WWII industrial era. Today’s technology makes it possible to manage your work around your life, instead of your life getting whatever’s left over.

  4. Be Your Own Boss. Instead of following orders, you set your own rules, call the shots, define the direction.

  5. Choose the People You Work With. In a company, co-workers can be an inspiration or the worst part of your day. In your own business, you do the hiring and firing. You can even (gently, with respect) “fire” difficult clients or customers.


Five Reasons Someone Shouldn’t Start a Business

  1. You’re in Love with Your Idea. It’s one thing to love an idea. It’s another to launch it as a business. Do thorough market research first. Thousands of innovations have failed in the marketplace.

  2. You’re Unwilling to Learn Entrepreneurship. Starting a business takes you into a different world. You must learn how successful business owners think and operate. That’s important not just at startup but throughout the life of your company.

  3. You Just Want to Do Your Job. As an owner, you spend far less of your time doing the main work of your business than you think you will. The responsibility for marketing, sales, customer service, finance, and managing people (whether employees or sub- or independent contractors) now lies with you. Those tasks demand as much as 50% of your time, likely more during startup.

  4. You Want the Flexible Lifestyle Immediately. Long hours and lots of work are required before your business can pay you the salary you need. If you keep at it, lifestyle flexibility will come, but only well after the startup stage. Your friends and family will need to understand this too.

  5. You Can’t Afford to Fail. Starting a business without a safety net that covers your basic living expenses is treacherous ground to walk. This is especially true if others depend on you.

B. How to Start a Small Business from Scratch

If you’re still reading, good for you! The idea here is not to scare you off but to help you pull together a realistic picture of what’s ahead.

Consider these six aspects of business ownership before you take the plunge.

1. If you have a significant other, is he or she on board with this? Running your own business has as much if not more impact on your relationships and family as your job does now. Often family members pitch in as unpaid employees to handle bookkeeping, ordering supplies, and shipping products on top of their regular jobs.

2. How are you at setting goals, making plans, seeing them through? Your customers want to know when to expect your product or service. Managing your work, time, energy, and money is key to success.

3. How do you handle mistakes and failures? If you see them as opportunities for learning and even creativity, then you have what’s called a growth mindset. If you have a fixed mindset that says failure is terrible and to be avoided at all costs, it’s not a realistic way to think. It can drive you to focus on needing to be "right" instead of doing what’s needed to be successful.

4. How will you measure success as a small business owner? What do you want out of your business? Financial goals are the foundation. Consider other aspects as well. Do you want to be able to stop work at a certain time every day to be with your family? Do you want a fully mobile business that allows you to travel? What will make you feel successful, regardless of others’ definitions?

5. How will you leave your business, whether for other opportunities or retirement? In a traditional job, you get a salary, maybe bonuses. Some companies offer a matching contribution to a 401(K) for retirement needs. Going forward, your business may be the major source of the funds for your long-term goals. What will you need from the business and when? Do you want to sell it? Leave it to your children? You don’t have to make these decisions before you start. Just keep these issues in mind as you go forward.

6. How committed are you to owning a small business? It has its ups and downs. The latter can make you want to give up, quit, and go back to a day job. Is going back to work for an employer truly an option? On the other hand, many people have started more than one business before finding what works best for them. Being willing to let go and move forward might be necessary.

Can Stock Photo / sebastiangauert

What Is the Best Way to Start a Small Business?

To get a realistic view of what it’s like to work in a small business:

  • Work for someone else as an employee or temp in the same type of business that you want to start.

  • Work as an intern. Even if it’s unpaid, you’ll learn a great deal.

  • Try it as a small side-hustle outside your full-time job.

  • Interview small business owners in your area. Visit or join a chamber of commerce. Attend their seminars and networking meetings on your own time. Set up coffee or lunch dates to ask questions and advice. Even if your business will only be online, these local business relationships can be invaluable.

  • Look up, a nonprofit that offers free online courses and mentors. Take one of their courses. Local chapters may also put on workshops on how to start a business.

  • Visit your local library. Many maintain a special small business section. The librarian can help you find helpful books such as Small Business for Dummies. There are books on how to start many kinds of specific businesses. All you need is a library card. Access free e-books by installing the Libby App by Overdrive onto a phone or tablet. Or set up your Libby account on your computer via

  • Listen to podcasts for solopreneurs. Business owners need mentors and advisors who can offer wisdom from experiences that reach beyond your own. Turn a long commute, your workout, or household chores into learning time.

Can Stock Photo / elvinstar

C. Show Me the Money

You want to make as much money as possible, as soon as possible. That requires becoming highly skilled at managing money.

As an employee, your income comes from salary (cash) and benefits (if any), a pretty straightforward process. The cash part shows up in your bank account and perhaps a 401(K) account. You manage it from there.

As a business owner, money for your own personal use can come out of the business in multiple (and legal) ways. It depends on your business’ legal structure and accounting categories.

The Money Engine of Business

Can Stock Photo / h4u (Modified by M.A. Shew)

There are four kinds of money in business that you are responsible for. Think of them as four gears. Successful business owners know when and how to focus on each part of the money engine.

Sales (Revenue). What customers or clients pay you. Business owners spend a lot of time on sales.

Profit. A number calculated from Sales minus Expenses. In accounting, any profit number is only true on the date and time it’s calculated. A business can bounce back and forth between profitable and not many times, even within the same day.

Profit has little connection to how much money is in your bank accounts. Salary comes from the actual cash available in your business checking account when payday arrives. Understanding the difference between your salary and your business profit is critical to meeting your financial needs.

Expenses. Salaries (especially yours), inventory, lease/rent, equipment, computers/phones, taxes, insurance, supplies, parts, marketing, advertising, vehicles, etc.

Cash Flow. The timing of when cash comes in and goes out. Cash flow makes or breaks your company. Your accounting can show a profit, and the company can still be broke. Cash is just like the blood in your body. When it’s healthy and abundant, it carries good things to every part of your company. When it lacks strength and leaks away, the business won’t survive.

Reconciling profitability and cash flow is a crucial business skill you’ll use every day. You are doing this to some degree in your personal life with your employee’s salary. The difference is, as an employee, you know when you’ll get paid. As a business owner, that’s not the case, even when a client promised to pay by a certain date. The better you get with this skill, the sooner you’ll be on the path to make as much money as possible.

Can Stock Photo / lightwavemedia

Batman Has His Bat Cave

Even superheroes need roofs over their heads, clothes on their backs, food on their tables. Take a good, long look at your living expenses.

Review everything from mortgage/rent and health insurance down to your daily latte. Which expenses are essential and must be covered? Which are you willing to let go of to be able to support yourself (and anyone for whom you're responsible) until your business gears up?

Most experts say it will take at least two to six months and likely even a year to get it off the ground. A rule of thumb to remember: It always takes twice as long and costs twice as much as you think it will. Sources of income during that time could include:

  • A regular job.

  • Your savings or investments.

  • Financial support from a significant other or a family member. For example, your spouse’s income may cover the household bills until your business is able to.

Can Stock Photo / jannoon028

How to Start a Small Business at Home

Set Up a Home Office

A home office is necessary to hold records and manage your business. This can be a closet or a corner of a room. Your kitchen or dining room table can work. Your office doesn’t have to be fancy, just functional.

Go Professional or Don’t Go at All

Can your income during startup cover the minimum technology and office setup you’ll need? These tools will keep you organized, professional, and confident. (A website is discussed later.)

  • A drawer or file box to store important papers.

  • A work surface and chair. Good lighting.

  • Outlets for a smartphone, a computer (laptop or tablet).

  • Internet access.

Required digital tools:

  • A business email address separate from your personal email account. For a free one, create a Gmail account. Keep it as short, professional, and as easy to use as you can.

  • A digital calendar. Google Calendar works well and syncs with other calendar products like those on phones, tablets, and desktops (e.g., Outlook).

  • Online banking apps. After you set up your bank accounts (talked about later), use their apps to manage your funds and track your cash flow.

  • A bookkeeping system (preferably accessible online) to track customer invoices / sales receipts; bank deposits and credit card payments; expenses and fees.

  • A credit card payment option if your customers expect it.

  • A task list tool. You have many balls in the air as a business owner, even as a company of one. There are dozens of apps for this. Pick one and be consistent.

My “Semi-Minimalist’ Bullet Journal

A Great Analog Tool for a Digital World: Bullet Journal

Writing in a notebook is acceptable in virtually every business setting. Typing on a phone or tablet may look as if you’re checking your email.

Get a notebook in a size you can carry everywhere. Record your thoughts and ideas on paper for a refreshing change of pace. It helps you think more clearly and freely—especially in times of high-stress and anxiety. Start by using the “bullet journaling” method invented by Ryder Carroll.

Above is a sample from my own bullet journal. It has a bit of decoration, which is an optional, personal preference. I still use an electronic calendar and task tools. My bullet journal helps it all come together.

How to Start a Business Online

Let’s be clear. All businesses must have an online presence to be successful. If you want to sell online, your business still requires all the thought and planning described in this article.

Whether your website is for marketing, selling, delivering a product or service, or all three, the steps to create one are the same.

The cheapest way (lowest cost) to get a website is to build it yourself. (not an affiliate link) is a good choice. Wix is built for beginners yet has:

  • Excellent templates that are easy to fill, adjust, and change.

  • The best online help system I’ve ever seen in such a tool.

  • Easy-to-add functions such as a blog or e-commerce (and many functions are free).

  • A Wix Partner Program for access to web developers experienced in Wix if you need help.

  • Two cautions: (1) The blog function has its own format settings for fonts, font sizes, colors, and related settings. It's confusing to deal with. (2) You have to really dig to find a way to talk with a Wix human for support. They make you fill out forms and expect a callback. Wix strongly encourages contacting their Wix partners for help.

Approach using WordPress with caution because it has a complex mix of parts, each of which requires maintenance to stay current. For beginners, might be a better choice as it narrows the technical complexity. Expect to use one of the paid options; the free version is not a good choice for a business site.

Building your own website will require at least 40-50 hours of your time to learn the online tool, write content, fill in the internal SEO settings, connect the site to your domain name, connect the site to Google’s Search Console and Analytics, and launch the site. Ongoing blogging will also require time.

Now that you’ve considered your living expenses, office setup, business tools, and business website, let’s look at your startup capital.

Can Stock Photo / dolgachov

How to Start a Small Business Without Money (or Very Little)

Starting a business is a risk. How big that risk is depends on how much there is to lose and whether you can afford it. Make sure your finances handle living expenses in any case.

The Internet abounds with stories of people with low start-up costs like $50 or $100. Read between the lines. What did it really take to get from startup to their version of success? The initial cash investment is never the whole story.

Some businesses require that, from the very start, you have a place of work, like a garage where you can do auto repair and/or tools such as a good lawn mower for landscaping work. Keep this in mind during your research.

Study the articles above to figure out:

  • What skills did the owners have when they first started? Were their skills relevant to the type of business they chose? What skills did they have to learn along the way? What did training cost?

  • What licenses are needed, if any, to run that kind of business?

  • Was the business solely online, solely in real life (IRL), or both?

  • How long did that $100 last? In other words, what other expenses came up? How soon was more money needed to keep moving forward?

If you need more than $50 or $100 to start, or you know more startup expenses will happen soon after, you might need a loan.

Be aware that if the business fails and you are unable to repay a loan, you could lose your home, be forced into bankruptcy, have to pay extra taxes or penalties, or not be able to support yourself later in life.

Cough Up the Cash to Start Your Business

Money sources you control are your first option for funding your company. Each of these options has its pros, cons, and risks.

A personal loan for a startup may be an option when other forms of business financing don’t work. It’s money borrowed from a bank, credit union, or online lender.

Use OPM to Start Your Business

You may be thinking of using other people’s money (OPM) instead of your own to start your business. Loans, grants (rare but possible), and investors would be the fifth gear of your money engine to manage. They can be both a blessing and a curse. Possible sources are:

Now that you have an idea of where the money will come from, it’s time to look at what kind of business will work for you.

D. The World Is Your Oyster: Pick Your Pearl

What Is the Best Business to Start from Home

Many businesses can be started from your home. They require varying degrees of investment and experience. Market research is a must.

A few pros and cons of running a business from home:


  • Fewer / lower overhead costs.

  • Flexible hours and schedule; little commuting.

  • Possible help from other family members with business tasks.


  • The space needed to run your business may mean reorganizing or repurposing one or more rooms.

  • You still must comply with all local zoning and licensing regulations.

  • If you have frequent deliveries from large trucks or employees who come to your house to work, neighbors might object.

Some ideas to get you thinking:

Can Stock Photo / haywiremedia

What Is the Best Business for Beginners?

If you have no experience running a business, look at what others have done. Find types that support the interests, skills, and resources you already have.

Though the ideas in the sites below are appealing, be aware that startup costs can be substantial for required expenses such as franchise fees, food trucks, etc.

What Are the Most Successful Small Businesses?

According to this list (updated 1/31/2021), the most profitable small business industries are:

  • Home Improvement Services

  • Cleaning Services

  • Tutoring Services

  • Personal Training and Fitness Instructors

  • Delivery Services

  • Digital Marketing Services

  • App Development

  • Accounting Services

  • Law Firms

  • Real Estate Agencies

  • Dental Offices

  • Warehouse and Storage

  • Doctor Offices

Other sources to explore for profitable businesses:

E. Start the Money Engine: Choose Your Business

There are two common paths people use to choose the business they want to start.

The traditional path starts with selecting the industry you’re interested in. Then research the businesses within that industry, looking for who’s been successful, who’s gone out of business, and why. Find an unmet need, whether it’s because of geography or price or product/service. Review the competition. Assess the realistic market potential: number of customers, price range, costs involved, etc.

The “passion” path attracts people who love doing something and would like to make money at it. The hard part is, contrary to what you might have heard, if you do what you love, the money might not follow.

The passion path can be workable if you do all of the “reality checks” of the traditional path. You still need to learn whether anyone wants to buy what you want to make, who your competition would be, and how much time, work, and money it will take to make your passion a going concern.

How to Start a Business Plan

Regardless of which path you choose, pull the pieces together with a business plan. Simple, one-page templates for both product and service businesses are plentiful and free.

If you pursue outside funding, you’ll need to upgrade to a more formal business plan that will provide the information your investors seek.

As you design your business, learn how to focus on profit. Minimum Viable Profit (“MVpr”) is the point at which your business is operating in the black as soon as possible. MVPr comes from the book, Company of One, listed below in Books. The lower your initial profit goal, the sooner you’ll reach it, which will tell you what to do to reach the next and higher profit goal.

The secret here is to design your business around profit, not expenses.

A business plan answers:

  • What will you sell?

  • How much do you need to sell, when, and how often to make this a viable business? How long will it take to get to that point?

  • Who are your competitors? What makes your offering better and more attractive than theirs?

  • Who will buy what you offer, why, at what price, and how often?

  • Where are they located?

  • How will they find out about what you offer? (Low-cost marketing)

  • Where will you set up your office and storefront (online, offline)?

  • How will you produce what you promised?

  • How will you deliver on what you sold?

  • What customer service might be needed afterwards?

  • What outside help do you need with any of the above?

  • What costs are involved in all of the above?

Legal Requirements for Starting a Small Business

Once you have your plan, you’re ready to make your business real.

A Huge Achievement: Your Business’ Opening Day

The day you open your business for customers is a huge milestone. How you go about it depends on your circumstances and desires.

You don’t have to host a grand opening complete with news coverage and ribbon cutting. For many people, it’s simpler than that.

Go to your first business networking event and hand out a few cards. Send out a notice via email and social media to family, friends, neighbors, former co-workers and other friendly connections letting them know you are open for business. Or maybe it’s when you make your first sale that you feel official.

Can Stock Photo / olegkalina

Books on How to Start a Business

Books are one of the best--and cheapest--ways to learn about business. They cost very little compared to other startup costs. Borrow them for free at your local library.

The advantage of books over endless Internet searching is the information is all in one place and organized.

How to find a great book on how to start a business:

  • Go to your local library, and find the small business section. Or ask the librarian for help.

  • Pull 3-4 “how to” titles from the shelf and take them to a chair.

  • Read the first chapter or so of each one.

  • Pick the book that makes the most sense to you. If you need more to choose from, again, find your favorite librarian for help.