10 Steps to Start a Business (and Why The SBA’s List is Tragically Flawed)

10 Steps to Start a Business (and Why The SBA’s List is Tragically Flawed)

Earlier this week I stumbled on an example of absolutely terrible advice from the U.S. Small Business Administration.

This advice made me angry and sad at the same time. Angry at the SBA and sad for anyone who follows the advice.

I was googling some common phrases about building a business as research for an upcoming podcast episode. One of the phrases I typed was: “How to Start a Business”

Google now includes some list content from articles directly in search results, and for this search I found this special box as the first non-advertising result:

Screenshot 2016-05-24 19.07.37

This partial list is from the U.S. Small Business Administration (a government agency) from an article titled 10 Steps to Starting a Business.

Here’s the whole list:

Step 1: Write a Business Plan
Step 2: Get Business Assistance and Training
Step 3: Choose a Business Location
Step 4: Finance Your Business
Step 5: Determine the Legal Structure of Your Business
Step 6: Register a Business Name ("Doing Business As")
Step 7: Register for State and Local Taxes
Step 8: Obtain Business Licenses and Permits
Step 9: Understand Employer Responsibilities
Step 10: Find Local Assistance

They introduced the list by saying “Starting a business involves planning, making key financial decisions and completing a series of legal activities.”

What? Are you serious? Is this a joke?

This list is tragically flawed. I wouldn’t be surprised if following these steps made you less likely to succeed than if you didn’t follow any advice at all.

Here’s the simple truth the Small Business Administration is completely missing: a business can’t succeed unless it creates something people will pay for. Registering for a business name, choosing your legal structure, registering for taxes, permits, blah, blah, blah, all do nothing to help you get closer to making something people will pay for.

Filling out paperwork doesn’t make you an entrepreneur any more than buying a fancy guitar makes you a rock star. These are the steps you’d follow if you were just “playing business.”

Filling out paperwork doesn’t make you an entrepreneur any more than buying a fancy guitar makes you a rock star.
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If you were serious about making something people will pay for (i.e., building a successful business), you’d know that the two most important aspects of starting a business are shockingly absent from the SBA’s list.

The two most important parts of starting a business are: 1) your customers, and 2) your product. Without customers and a product (or service), a business isn’t a real business, it’s just a shell of paperwork and legal filings.

Yet there is zero mention of customers or product in this supposed list of 10 steps to start a business. These 10 steps are utterly insignificant compared with knowing your customer and building your product.

Seriously, this oversight is incredible. Whoever is in charge of the SBA should be fired for perpetuating this tired and dangerous advice about starting a business.

Just so you don’t think I’m being unfair to the SBA by criticizing one article from their site, you should know that nowhere within the entire outline of curriculum on the SBA site about starting and managing a business do they mention a market, customers or building a product. Here’s a screenshot of the whole curriculum:

Screenshot 2016-05-24 21.04.48

No section on making a product or connecting with customers? WTF?

Luckily this probably doesn’t affect you. I doubt you take the SBA seriously anyway. I don’t know a single successful entrepreneur who credits the SBA for any part of his or her success, with the exception of a couple of SBA loans I’ve heard of people raising. Maybe they should stick to loans and stay out of the advice business.

Anyway, enough about the SBA.

Let me offer a better list of steps for starting a business. If you asked me how to start a business, here is what I would say.

10 Steps to Starting a Business:

  1. Follow a roadmap
  2. There are many solid training programs and incubators available to entrepreneurs these days. Find and follow a system like Fizzle’s small business roadmap to avoid wasting time on things that don’t matter. You can build a business without following a proven system, but why would you want to take on so much unnecessary risk?

  3. Choose an opportunity
  4. What opportunity will your business address? You likely have many ideas floating around, but you have to pick one. An ideal business opportunity will be a combination of something you’re interested in, something you’re good at, something the world needs and something people will pay for.

  5. Define your customer
  6. Who will your business serve? What do you know about them? What is their life like? What do they value? What problems do they face and how are they currently solving those problems? Defining your customer is an essential part of your foundation.

  7. Connect with other entrepreneurs for support
  8. Being an entrepreneur is incredibly difficult, sometimes lonely and you’ll often feel like you’re on an emotional roller coaster. The most effective way to maintain a healthy perspective while also improving your odds of success is to spend time with other entrepreneurs.

  9. Talk to customers
  10. The biggest risk you face as an entrepreneur is building something nobody wants. The best way to reduce this risk is by talking directly to the potential customers you’re trying to serve, so you can learn intimately about the problems, needs or desires you aim to address.

  11. Create a 1-page business plan
  12. Business plans are full of guesses and often give a false sense of security to entrepreneurs. A simple 1-page business plan (like Fizzle’s Business Sketch Template) will give you the benefits of a business plan without page after page of unreliable guesses. This plan will primarily describe your customers, the problem, your solution and how you’ll reach those customers.

  13. Set up your business (name, legal structure, permits, taxes, etc.)
  14. Now that you know who your customers are and what you’ll be building for them, it’s time to name your business and get your legal ducks in a row.

  15. Build a minimum viable audience
  16. If you build it they will come. If only. Smart businesses today know that you have to connect with your customers to succeed, by meeting them in the channels they already use. The best time to do this is before your product launches, to build buzz and use their feedback to make your product even better.

  17. Build a minimum viable product
  18. Your business idea is nothing more than a hypothesis. You believe there is a group of people with a problem that you can solve in a way they’ll be willing to pay you for. The first step in testing this hypothesis is by building a minimum viable product, a product with just enough features for you to learn from your customers and improve upon.

  19. Measure, learn, iterate, grow
  20. Once you find a group of customers and create a simple product or service for them to consider, it’s time to measure, learn, iterate and grow. Customer feedback is essential at this stage as you turn your minimal product into a full-fledged offering.

I suppose you could argue that the business is technically “started” by the end of step 7 in our list. Steps 8, 9 and 10 are about building the business. Including these building steps here is intentional, because describing the act of starting a business without covering the actual development of the most important things (customers and product) does you a huge disservice. The SBA’s list allows would-be entrepreneurs to feel like they’re doing important work, when they haven’t done any of the important work at all, towards growing a customer base and building a product.

Even if our list stopped at step 7, notice how much of the first 7 steps is dedicated to cultivating the customer, knowing who they are and talking to them to identify problems/needs/desires you can address. This is where real business opportunities come from, from knowing your customer intimately.

So many people still think of the entrepreneur as an inventor, someone who tinkers away in a garage somewhere for months or years on a big important product that they eventually unveil to the world, which responds with oooohs and aaaaahs.

The biggest risk you face as an entrepreneur is building something nobody wants. The “inventor” mythology is wrong because it ignores this risk and assumes the inventor knows everything.

But you don’t know everything. You’re just a humble entrepreneur with a belief. You believe there exists a group of people who have a problem, need or desire that you can solve in a way they’re willing to pay money for. Your job is to prove whether this is true or not, with as little risk as possible.

Our list of 10 steps to starting a business is carefully crafted with a central focus on customers, product and your journey (and needs) as an entrepreneur, because we want to help you build something people want. Unfortunately the Small Business Administration doesn’t seem to have a clue about what really matters when it comes to building a business.

You know better now. Use our list to your advantage. Stay focused on your customers and your product and you’ll have a much better shot at building a business that matters.


Fizzle

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Comments (29)

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  6. Jane M. Spivey^I bought this shirt because I thought it was so cute&#44 and it is. The problem is the material it is made out of. It is so thin you can see light shine through the shirt. I am not talking about holding it in front of a light source. Just hold it up and you will see light shining through two layers of cloth. This means after a couple of washings&#44 this shirt will be ready for the rag bag. I wasn’t expecting high quality&#44 but I have bought shirts from dollar stores that were be quality than this shirt.~3|Sam from Am Sam^I usually order XL shirts to wear when I want something loose&#44 and this was good for its size. However&#44 the print looked faded and the colors were not as bright as you can see on this ad. It was disappointing when I waited for 2 weeks to receive it just to wear it behind closed doors&#44 because it looks like it was ordered from a first time print shop. I could have gotten a better print at a local shop for only $2. If you are being charged to have this item shipped to you I would advise to look else where.~3|Heather Z^Cute shirt but i always wash everything before i wear it… and this one turned the pair of white socks i missed with my darks to a very dark grey. There was a warning included with it to not wash it with other clothes&#44 but who runs a washer with one item in it? It also shrunk during washing and therefore still fits&#44 but much more snug than i care for. I would not purchase again.~4|heidi r.^The shirt fit on when I got it&#44 just not as roomy as I like. But after 2 washes in cold inside out the writing is cracking and it shrunk not around just got shorter.~3|A. Blanc^This shirt is great. The 2x size fits perfectly. This is a very funny shirt for the overweight male. My husband saw another gentleman wearing a similar shirt & they both laughed as well as others. Very humorous.~5|Fascinating!^Bwahaha&#44 this shirt is perfect. Thanks so much! I plan on wearing these with my french fry leggings to my group fitness class&#44 just to be annoying. :D~5|B. Brockman^Well made. fits as expected and have had some good comments.~5|Papa Ron^Very please with this purchase. The T shirt is high quality and the printing is raised and adheres well to the fabric. This shirt was priced well below many other competitors and I believe much higher quality.~5|Amazon Customer^Bought it for my brother in law for his bday. He loved it!~5|LAM^The quality of the T-shirt is okay&#44 but the print work is horrible-it has many gaps in it that were not in the picture. I’m keeping it because I love what it says; it’s hilarious~3|

  7. Allie^The shirt is NOT cotton as advertised. It’s some other material&#44 like polyester. It’s also a very bright white&#44 not “natural white” as advertised. Everyone else seems to have received a different t shirt than me. The only thing true about this was the size.~3|Jacklyne^the fits a bit weird&#44 I’m 5’3 and I’m a lady so I’m sure it would fit better on a man. The shoulders are a bit broad and theres really no shape to the shirt so its not super flattering but i love wearing it with a jacket and jeans. Its an awesome rock shirt to own.~4|Jeff Heiner^Very disappointed with the shirt&#44 so much so I donated the shirt to goodwill.~3|Shannon^Nice quality&#44 way too big. I usually order an XL t shirt so it’s a bit roomy & has a relaxed fit to it. This was like a dress/night shirt. So&#44 my man gets this shirt & I’m ordering a large.~3|PVail^Great quality T-Shirt. I attended this concert in Pontiac (A long&#44 long time ago:) so it’s also a nice souvenir of a great show.~5|Beverly Waite^Shirt arrived promptly and as described. Would order again.~5|Alison stander^Gift for my dad and he really liked it.~5|Patrick^Awesome cotton. I hate thin shirts. Fits nice. Love it.~5|Amazon Customer^Found the material to be very thin. I can see right throughit.~3|JennMann^Bought this as a birthday gift for a friends young son and he loved it….he loves classic rock so I really scored with this gift.~5|

  8. Isaac^Great fit mg friend loved it&#44 originally got him a medium but it got him way too big (he’s about 5’8&#44 average build) so I returned it and got the small. Super rad shirt still like an inch too long and the sleeves were kinda big. Other than that like I said cool shirt. (By the way I have no idea if it shrinks or not)~4|josh lordigyan^This is not an LRG brand shirt. It’s a cheap rip off and a terrible one at that.~3|Lindsey B^I ordered this as a birthday gift for my boyfriend&#44 he loved it! He loved the lion design&#44 and LRG is one of our favorite brands. We were both very satisfied with this item!!~5|Joseph^Love the quality of the shirt and the design is very bold!~5|Amazon Customer^Too small i can wear other 2x lrg this ones tight so i go to ltg big and tall~3|Amazon Customer^Was very happy with shirt.~4|Jonathan Thomas Jackson^Nice…~5|thatguy;)^Awesome print! One of my new favorites.~5|Daddy Black^This shirt was one of my best clothes purchases. Not only does it fit good&#44 I get compliments every time i wear it.~5|Amazon Customer^I love the shirt~4|

  9. Anonymous^A strange fitting hat and weird looking hat as well. The mechanism used for sizing it doesn’t work&#44 and it doesn’t fit on top of your head right&#44 meaning it’s either over your eyes when it’s forward or falling off the back of your head when backwards.~4|Sandy Rogers^Fabric and workmanship great~5|James Edwards^Just as described&#44 good purchase.~5|

  10. Noni^Bought for family member since grandchild will be attending VaTech in fall. Quality of tshirt is great for price~5|Stephen DeWolfe^It was a bit larger than I expected. Once washed in cold and dried on delicate&#44 it shrunk up nicely.The arm holes are huge so I guess I will need to work on my biceps.??~3|Bob@Kaylahaus^T-Shirt was a gift&#44 and was well liked. Color and fit were good. This was a good value.~4|Amazon Customer^I’m transferring colleges in the fall and wanted a shirt that represented it. It fit exactly as expected&#44 and is a comfortable shirt to just wear around. Very pleased with this product&#44 especially for the great price. Particularly pleased with the customer service; I recieved an email checking in to make sure I was happy with the product&#44 and if not to return it. Will buy from store again.~5|The Fair Critic^I am happy with this purchase. Great&#44 basic t-shirt that will wear well. about as basic as basic gets. 100% cotton so it will shrink a little bit if you really dry it.~5|Aunt Heidi^I orders several of this shirt (at different times) to wear as a group to surprise my Niece. Everyone likes them so far.~4|ChezKern^Nice shirt. Good quality. Large size fits like a medium-large; just a little short in length. Recommend ordering a size up.~4|V. Brewer^Great quality shirt. Looks great. Was shipped very quickly. The young man I gave it to was very happy with it.~5|Amazon Customer^It’s a basic cotton t-shirt. I like my shirts kind of large because they shrink and are generally more comfy. I normally order a small or medium as I am a petite girl. I went with a small because they are sized in men’s and it’s perfect. The printing is nice and I think it will wear well. You can’t beat $12 for a basic college t-shirt.~5|Stephany^A bit small for the size but overall good quality.~4|

  11. Tropic flower^This purple one is quite a bit larger than the turquoise one from the same source.I prefer the smaller size.~4|Amazon Customer^I like the extra width for sun protection ( not too wide); great color – a perfect light weight visor!~5|Fantasy writer and Ph.D. Scholar^The best ever sun visor in a lovely shade of purple…. Highly recommended!~5|G. A. Kleine^Love it. I like these sun visors and can’t find them where I live. It’s perfect.~5|Patrice L. Ash^I have multiples of these in various colors&#44 only thing I can stand to wear as they don’t give me a \”clamp\” headache. These are bigger than average & not kid sized. They hold up well & are easy to clean.~5|Wendy Reitmeyer^works just fine!~5|Ju^The items I ordered were what I expected. The order was processed and arrived within the 2 week period as noted on the comment section of the companies add.~4|

  12. Dev^Daughter loves it came early perfect and no damage to packaging or items at all~5|LBos^It’s very cute but not true to size at all.~4|C. Reinke^Cute shirt. Bought two different printed shirts both mediums&#44 this one ran slightly smaller. Still wearable&#44 no complaints.~5|Atlanta Reviewer^Love Love Love it~5|Amazon Customer^Nice shirt&#44 larger than I expected…~4|MRV^Nice shirt but fits a liitle big amd even with following instructions pic design fades.~3|Amazon Customer^Love it~5|Adriana Santander^Gift for my daughter and she loves it!~5|Amanda^Generally a size 16 and the XXL fit&#44 as is the usual with “Junior” sizes. It has a vintage look to it and behind catwoman’s head is a very faded comic book page&#44 like a back drop – really neat effect.~5|tsea21^I am a missy size xL when I purchased this tee I figured it was a junior size. It is but I took a chance it was a boxy cut and would fit in the XL. It fits me closer to the body like i wanted in that boyfriend style. Plus this is a cotton/poly blend so when it is washed & dried it still fits.~5|

  13. Wudwaen^I like the idea of this shirt. Color is fine. Statement is fine. However&#44 I cannot wear it. I bought a size larger than I normally buy just in case&#44 and it was still not large enough for me to even get an arm into a sleeve. Maybe it is 3XL in some other country. It is not a 3XL in the US.~4|Forestrial^Seems to be a good quality shirt – it’s comfortable&#44 and I don’t think the graphics will fade or peel off any time soon.They also gave me a good coupon with my package&#44 which is an appreciated touch.~5|OKAT^The shirt was worn just a couple of times and washed equally and the graphic is already falling apart.~4|Mom^Gave as a gift & they were thrilled with it.~5|Amazon Customer^Feels nice&#44 looks like it should.~5|Auntie Val^The graphic looks like the artist scaled up a jpeg of the original image&#44 making the edges very blurry and rather ugly. But it came earlier than expected and the material feels comfortable~3|Amazon Customer^Little large on my guy but he’s 5’7″ and relatively slim. It’s a good fit though. Very soft cotton. Great coupon. Decal looks great&#44 might wanna wash it inside it though.~5|Roni^good quality shirt&#44 time to get the good rolls with it.~5|Nick Elder^Great quality material and didn’t shrink after washing it either. My D&D fellow players loved it!~5|Aaron Strickland^The shirt says it all rolled a new 5e charater got 4 18 on try gm said bs even though he watch me roll made me do it again with his dice 2 18 3 17 and a 16 rain down max rolls shirt~5|

  14. Aimakins^Just received this today and it is NOT 100% cotton. It is that silky clingy material which my son does not like. I expected to get a 100% cotton t-shirt&#44 not this. Plus the design is totally blurred on the shirt and takes up the entire shirt…nothing like the picture. Very disappointed.~3|Anne^Nice shirt&#44 12 year old likes it. It washes up real good&#44 didn’t seem to shrink up to much in the wash happy with it.~5|Cella987^It was a bit large for a medium. Definitely get a the size below what you’re looking for. The print had a bit of a worn look to it&#44 but my boyfriend loved the style it added to the shirt! It came with a bit of a smell&#44 but goes away after a wash or two.~4|Abdlrahman I Al sulaiman^Goods worth buying&#44 and received on the same time of specify shipping time.~5|Phillip Edwards^I was looking for a Green Arrow t-shirt that looked stylish and had some artwork. The only t-shirts that I could locate in town were those that just read the words of the superhero with minimal artwork. I am happy to have found this t-shirt online and it fits great.~4|Eric Schmidt^Love it&#44 for the longest time I had a hard time finding anything Green Arrow related (comic book green arrow)&#44 but I finally found a couple shirts from these guys. Great price&#44 great quality&#44 can’t complain.~5|KAB^We bought this as a gift for my daughter’s friend. It was a huge hit. Great product. Would highly recommend.~5|Raoul Ritz^I bought this shirt for my son (a huge Green Arrow fan) and he absolutely loves it. It fit perfectly and he couldn’t be happier with it.~5|Michaela Gibbons^This is a good quality shirt. I bought it for my boyfriend. It would say that it does run a little small&#44 but the color is vibrant and the shirt looks nice.~4|Jacob^This shirt didn’t fit one single bit. I ordered a men’s 2XL and it seems more like a childrens 2XL~3|

  15. Lilgal23^I am sure some of the people who give a good review to this product got the shirt as the advertising picture. It is a nice print.What i got its a very small print in the middle of the front of the shirt. We were very excite to get the t-shirt. It took a very long time to get to us&#44 it was ship from china. When we look at the shirt we were speechless&#44 and we felt cheated of our money. be aware this is a false advertising. The picture does not look nothing to what you get. This people answer to my return. “I am sorry i will return $4.00 and you can keep the t-shirt”. why will i want to keep this shirt its ridiculous you will be a joke if you ware it.~3|Amazon Customer^It took almost a full month to receive it.The T-shirt material seems to be ok quality&#44 but the print is “NOTHING AS EXPECTED”. It looks like they ran out of ink&#44 and then had the shirt washed a 1&#44000 times.It is completely faded!!!Very unhappy with it&#44 since it was meant to be a gift&#44 and I would feel ashamed to give it as a gift!!!I got 3 shirts different sizes ( 3XL&#44 2XL&#44 and XL)The XL is like an LThe 2XL and 3XL are like an XL and they are “both exactly” the same size!!!~3|Charles Dunitz^Well the art work is on the front&#44 it shown on the back and it is not centered. I will not wear this~3|hi^This is not a cotton T-shirt. Not sure what the material is&#44 but don’t expect it to fit or feel like a T-shirt. Also be prepared to wait weeks while it ships from China. Disappointment.~3|Apopkaladd^I get compliments on this shirt.I even ordered one for my buddy so he could have one. True to size.~5|Amazon Customer^Nothing like the page shows&#44print was on front not the back&#44print was very small.(Disappointed)~3|Joanne^Love the wording and design on the back. Did not like the material it was made of–seemed very lightweight and silky. Definitely not a heavyweight cotton. Also&#44 ordered a large but certainly was not a large!~4|Nancy S.^Print was suppose to be on back of shirt but print came on front. graphics were much lighter than add shows. Not impressed at all.~4|Janice Upton^Not a true 2XL~3|Danielle Weidow^Junk. Looks cheap and doesn’t fit. Do not buy!!!~3|

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