Start a Small Business:

The Ultimate 2020 Guide to Achieving Independence

You’ve left your job—or are thinking about it. Or you've been laid off.


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

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 start and running a small business. It’s filled with suggestions, tips, and resources to smooth your path.

Let’s dig in!

Planning Guide for How to Start a Small Business







A. The Pros and Cons of Starting a Business

Five Reasons People Want To Own A Small Business

  1. Income Potential. The opportunity for unlimited income is based on the business you choose and your efforts and skills. As an employee, your income may be limited by a salary structure and evaluations by a supervisor. Achieving financial and lifestyle independence has motivated millions of business owners.


  1. A Good Idea. Most 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, and franchising.

  1. 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.

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

  1. 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. Unwilling to Learn Entrepreneurship. Starting a business can look easy, but it takes you into a different world. Learning how successful business owners think and operate is important not just at startup but throughout the life of your company.

  2. You’re in Love with Your Idea. It’s one thing to love the idea you want to build your business around. It’s another to launch it as a business. Doing thorough market research first to figure out who is most likely to buy it is essential. Thousands of innovations have failed in the marketplace.

  3. 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.

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

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


B. Decide Whether to Start a Small Business

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 will have 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 will want to know when to expect your product or service. There’s a balance between planning as much as possible and taking advantage of unplanned opportunities.

  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 the fixed mindset that 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 being 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 had to start more than one business to finally find one that works best for them. Being willing to let go and move forward might be necessary.


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.

  • 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 to make it easy to locate what you need. The librarian can help you find helpful books such as Small Business for Dummies. Books on how to start specific businesses such as carpentry, masonry, HVAC, painting, and more are available. 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. Sometimes we need to turn to proven mentors and leaders who can offer wisdom from experiences that reach beyond our own. Turn a long commute, your workout, or household chores into learning time.


C. Show Me the Money

It’s normal to want your small business 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), and you manage it from there.

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


The Money Engine Of Business

There are four kinds of money in business that you are responsible for. Think of them as four gears in your money engine:

  • Sales (Revenue). What customers or clients pay you. Business owners spend a lot of time on sales. Successful business owners know when to focus on each part of the money engine.

  • Profit. A number calculated from Sales minus Expenses. In accounting, any profit number only represents a particular moment in time. A business can bounce back and forth between profitable and not many times over a period of time. Profit has little bearing on how much 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 will be crucial to your financial success.

  • Expenses. Includes salaries (especially yours), inventory, lease/rent, equipment, taxes, insurance, supplies, parts, marketing, advertising, vehicles, etc.

  • Cash Flow. The timing of when cash comes in and goes out will make or break your company. 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 likely are already doing this to some degree in your personal life with your employee’s salary. The difference is, as an employee, you always know when you’ll get paid. As a business owner, that’s not always the case, even when a client promised to pay by a certain date. The sooner you improve this skill, the sooner you’ll know how to make as much money as possible.


A Roof Over Your Head, Clothes On Your Back, Food On The Table

Batman has his Bat Cave. Even superheroes need a place to operate from. Whether you start your company with little or no money or startup funds you’ve set aside, take a good 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 whomever you are responsible for) 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 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 covers the bills.


The Minimum Business Tools That Show You’re Serious About This

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 smartphone, a computer (laptop or tablet), and Internet access.

  • A business email address separate from your personal email account. For a free one, create a free Gmail account.

  • A home office to hold paperwork and manage your business. This can be your dining room table, a closet, a corner of your bedroom. It doesn’t have to be fancy, just functional.

Now that you’ve considered your living expenses and minimum business tools, let’s look at your startup capital, in other words, the other money you’ll need to start your new venture.

Starting a business is a risk. It’s possible you will lose what you spend for initial business needs. Whatever that amount is, you still need to be able to go on if the business fails and those funds are lost.


Start A Business With Little Or No Money

The Internet abounds with stories of people who had very 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.

Keeping startup capital low often requires you have certain skills, a solid level of knowledge, a place from which to do business, or all three before you start. Study the low-fee startup articles 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 did skills did they have to learn along the way?

  • 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?

Some businesses require that you already have a place of work, like a garage where you can do auto repair, or tools such as a good lawnmower for landscaping work.

If you need more than $50 or $100 to start, or you know more startup expenses will happen soon after, there are different types of loans to consider. Just be aware that if the business fails and you are unable to repay these, 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.


Using Personal Loans To Start Your Business

A personal loan 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 that can be used for any number of purposes, including funding a business. Understand the pros and cons of loans and review your options:


Using Other People’s Money To Start Your Business

You may be thinking of using other people’s money instead of investing 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 a blessing or a curse. Possible sources are:

  • Family or friends. These loans can have an impact on the relationships involved.

  • A bank’s small business loan. These are usually guaranteed by the Small Business Administration.

  • Grants. Check with your local Small Business Development Center; they often know what might be available. This is money you don’t have to pay back. Understandably, they are rare and hard to get. If you served in the US military you can access small-business grants for veterans. There are also small-business grants for women.

  • Angel Investors and Venture Capital. These are people who invest in businesses with specific (and significant) expectations of return and ownership. Before contacting anyone, do Google searches to familiarize yourself with both kinds. If you are interested in investigating these options, a source that may be able to help is the local economic development office or chamber of commerce of your town or city.


D. Decide on the Kind of Small Business to Start


Best Businesses To Start From Home

Many can be started from your home, albeit with varying degrees of investment and experience. Serious market research and possibly complex licensing and legal work may still be involved. 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:


The Best Businesses For Beginners

If you have no experience running a business, it makes sense to look at what others have done to find a working model, especially one focusing on 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 feesfood trucks, etc.


What Are The Most Profitable Small Businesses

A focus on profit is a solid financial strategy. Mike Michalowicz in his book, Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine, makes the point that “Taking profit first will help you figure out which of the many things you do makes money, and which don’t.” This book should be required reading for everyone starting a business.

This excellent list of startup statistics (published March 2019) provides excellent data, including “Industries with the Best Startup Statistics” and “Industries with the Worst Startup Statistics.” Each of those two lists uses net profit margin to rank the industries.


Confirm The Business You Want To Start

There are two common paths people use to make the choice for what business to start.

The traditional path starts with choosing 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. Then complete a business plan to work through the numbers.

The “passion” path attracts people who love doing something and would like to make money at it. This can be a workable process if you also do the “reality checks” of the traditional path, such as market research. You still need to learn whether anyone wants to buy it, who your competition would be, and how much time, work, and money it will take to make your passion a going concern.

This excellent page provides one-page business templates for both product and service businesses.

If you’ll need to pursue outside funding, you can upgrade to a more formal business plan that will provide the answers you’re investors will want to have.

In summary, Jeff Baden of Inc. offers these wise words about the best—and hardest—way: start your business AND keep your job:

  • Live like a college student. Cut all personal expenses to the bone. Don’t assume personal savings will see you through.

  • Work incredibly hard at your current job to not lose your income.

  • Set a daunting schedule. When your day job ends, your start-up work day begins.

  • Don’t whine. Don’t complain.

  • Don’t think of profits as income. Think of profits as a tool to further establish your business.

  • Keep your full-time job longer than you want. Always focus on numbers, not emotions. Your personal and business financials will tell you when it’s finally time to quit your job.


Ready For Takeoff: The Baker’s Dozen

Are you ready to move forward? The answers to these questions will tell you:

  1. How much salary and how often will you need to run your business full-time? How long will it take to get to that point?

  2. Where will you set up your office and storefront?

  3. What will you sell? Who are your competitors?

  4. What makes your offering better and more attractive than that of your competitors?

  5. Who will buy it, why, and how often?

  6. Where are they located?

  7. How will they find out about what you offer?

  8. How will you produce what you promised?

  9. What will you charge for it?

  10. How will you deliver on the sale?

  11. What customer service might be needed afterwards?

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

  13. What costs are involved in all of the above?


E. Time to Open Your Small Business

Like packing for a trip, take care of these last details before you open up or at least concurrent with handling your first customer. These make a business run more smoothly and help you get back on track if you run into trouble.

  • Find an accountant, small business attorney, and small business insurance agent to contact when needed.

  • Register a name for your business, decide on its address (and mailing address if separate) and phone number, and set up a legal structure that makes sense for your situation.

  • Take care of required state or local licensing fees, permits, and zoning issues.

  • Get the appropriate IRS tax ID number (don’t use your Social Security number) and open business checking and savings accounts.

  • Accept credit card payments if your customers expect it.

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

  • Learn how to focus on profit. Minimum Viable Profit (“MVpr”) is the point at which your business is operating in the black. “MVPr” comes from the book, Company of One, listed below in Books. The lower the 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.

  • Set up your business office where you plan, organize, and think, that is, you work ON your business.

  • Establish the setting for client work, whether they come to you or you go to them (work IN your business). A home office can work for this, or you might need commercial space.

  • Develop an initial marketing plan with online and offline low-cost strategies for getting the word out. Include business cards as they are still a relevant and useful marketing tool. Online services like Vistaprint have great-looking cards at low prices.


A Huge Achievement: Your Business’ Opening Day

The day you open your business for customers is a huge life 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 an email 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.


Now Start a Small Business

We’ve walked through what it takes to launch and run the kind of business you want to work in, how to plan, where to go for advice, how to handle the money. You don’t have to go it alone, even if you’re the only one in the business. Find a mentor, talk with smart people along the way and get feedback. Don’t let mistakes set you back; you can learn and move forward. Achieve the independence that will change your life.


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