12 Steps on How to Start a Business in California

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Starting a business can be challenging since you’ve likely never done it before. Thankfully, I have, and I’m going to tell you exactly what you need to do to start a successful business in the most populous state in the country — California. 

Step 1: Come Up With Potential Business Ideas

In order to start a great business, you first need a great business idea. This can often be the hardest step in the entire process since there are so many different options to choose from. But instead of just looking up “top business ideas” and going from there, it’s always better to take a more personalized approach to find a business idea that you’re really excited about. 

Start by considering your strengths and experience in addition to your passions and motivations. 

Finally, consider your frustrations and challenges by coming up with ways to address them either through a product or a service. 

Step 2: Conduct Market Research on Your Ideas

Once you have a shortlist of potential business ideas, you then need to research these ideas. Start by researching your potential competition, keeping in mind that just because someone else is already doing something, that doesn’t mean you can’t do it too. 

Then you need to research the actual market to make sure that starting a business in this area is economically viable. 

Be sure to look at future projections instead of just current numbers since starting a business is a long-term investment. Lastly, find out more about what consumers want and how you can meet their needs with your business idea. 

Step 3: Choose the Best Business Idea

Based on your gathered information, it’s now time to choose the best business idea. In most cases, it won’t be entirely easy to measure which idea is the “best” since there are so many different factors involved. 

However, you should feel confident starting a business that you care about within an industry projected to grow in the future. 

Step 4: Create a Business Plan

Now that you have a better idea of your business, it’s time to nail down the details in a formal business plan. This business plan will help guide you going forward, so it’s important to be thorough — keeping in mind that you will get what you put into it out of your business plan. 

In your business plan, include the following sections: an executive summary, company description, market analysis, organization and management, service or product line, marketing and sales, funding request, and financial projections.

Step 5: Obtain Funding

If you don’t plan to fund the business with your own money, you need to obtain the funding necessary to launch your business. There are several different ways to fund your business, including small business loans, crowdfunding, and venture capital funding. 

Many financial institutions offer small business loans, and some are backed by the U.S. Small Business Administration (SBA). Crowdfunding has become increasingly popular in recent years wherein individuals give money to your company in exchange for a gift like a free product. 

Finally, venture capital funding involves finding an investor to give you money in exchange for an equity stake in the company. 

Step 6: Choose Your Business Structure

Next, you need to choose your business structure before moving forward with registering it. In the United States, there are four main types of business structures to choose from a sole proprietorship, partnership, limited liability, and corporation. 

If you’re looking for a simple business structure and plan on running the business yourself, then a sole proprietorship might be the best structure for you. If you’re starting the business with other people, then a partnership might be the best structure for you. 

If you’re looking to protect yourself from liability as much as possible, then a limited liability company (LLC) might be the best structure for you. 

Finally, if you’re looking to launch a large company and aren’t intimidated by the complexities of the structure and taxation, then a corporation might be the best structure for you. 

Step 7: Register Your Business With the State

If you have decided on a partnership, limited liability company, or corporation, you will need to register your business with the California Secretary of State (SOS). Sole proprietorships are not required to register. 

To register your company with the California Secretary of State, you will need to select your business structure, choose your business name, register the business according to the proper structure, and obtain your Federal Employer ID Number (EIN). 

Step 8: Obtain Any Necessary Licenses, Permits, and Insurance

Depending on your industry, you may also need additional licenses, permits, and insurance. For example, you must obtain a seller’s permit if you’re selling tangible products. 

If you’re running the business from your home, you may need a home occupation permit. If your business is in the food or health industry, you may need a health permit. 

Finally, you need to obtain a liquor license to sell alcohol. 

Step 9: Find a Location

If you’re not planning on running your business out of your home, then you will need to find a location for it. Try to find a convenient location for both you and your customers. 

However, try to find a location that won’t break the bank since you’re just starting and need to be smart about your money. 

Step 10: Hire Employees

Unless you plan on running the entire business on your own, you will need to hire employees to help make your business dreams a reality. And while it may be tempting to hire the cheapest possible workers out there, you should instead focus on finding the right fit. 

A good employee is worth their weight in gold, and it’s worth it to pay a bit more for someone who is more proactive, productive, and professional. 

Step 11: Build Your Business Website

You need to build your business website now that you’re just about ready to launch your business. Be sure to include all relevant information about your business, including products and services offered, physical location, and pricing structure. 

Also, include your business story and information about you and your employees. 

Step 12: Promote Your Business

No matter how much time and thought you put into a good business idea, it can be hard to succeed without the proper marketing and promotion. Digital marketing is all the rage these days and can be a cost-effective option for new companies. 

So consider advertising on social media platforms like Facebook, Instagram, and YouTube. Also, consider advertising on search engines like Google and Bing. Finally, consider advertising on online marketplaces like Amazon and eBay. 

Final Thoughts on Starting a Business in California

With this information, you can launch a successful business in California in no time. However, if you need more personalized assistance or have any additional questions, feel free to reach out to me.


Write Your Business Plan | Small Business Administration (SBA)

Choose a Business Structure and Register Your Business | California Office of the Small Business Advocate (CalOSBA)

7 Creative — and Free — Ways to Promote Your Business | U.S. Chamber of Commerce

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