[See related story: Best Alternative Small Business Loans] Startups requiring significant funding upfront may want to consider an investor.
Investors can provide several million dollars or more to a fledgling company, with the expectation that the backers will have a hands-on role in running your business.
Some budding entrepreneurs understand the effort necessary to create a business, but they might not be familiar with the many steps required to launch a business venture. If the idea isn't something you're passionate about or if there's not a market for your creation, it might be time to brainstorm other ideas. A lot of mistakes are made by new businesses rushing into things without pondering these aspects of the business. Conducting thorough market research on your field and demographics of potential clientele is an important part of crafting a business plan.
If you're willing to put in the effort to build a business, you're going to want to know the steps needed to reach your goals. Once you have your idea in place, you need to ask yourself a few important questions: What is the purpose of your business? This involves conducting surveys, holding focus groups and researching SEO and public data.
Additionally, don't overspend when starting a business.
Understand the types of purchases that make sense for your business and avoid overspending on fancy new equipment that won't help you reach your business goals.
"A lot of startups tend to spend money on unnecessary things," said Jean Paldan, founder and CEO of Rare Form New Media.
"We worked with a startup that had two employees but spent a huge amount on office space that would fit 20 people.
If you're thinking about starting a business, you likely already have an idea of what you want to sell, or at least the market you want to enter.
"Too often, new entrepreneurs are so excited about their business and so sure everyone everywhere will be a customer that they give very little, if any, time to show the plan on leaving the business," said Josh Tolley CEO of both Tribal Holdings and Kavana.