Most business advice tells you to monetize what you love, but it misses two other very important elements: it needs to be profitable and something you’re good at. For example, you may love music, but how viable is your business idea if you’re not a great singer or songwriter? Or, maybe you love making soap and want to open a soap shop in your small town that already has three close by—but it won’t be easy to corner the market when you’re creating the same product as other nearby stores.

If you don’t have a firm idea of what your business will entail, ask yourself the following questions:

• What do you love to do?

• What do you hate to do?

• Can you think of something that would make those things easier?

These questions can lead you to an idea for your business. If you already have an idea, they might help you expand it. Once you have your idea, measure it against whether you’re good at it and if it’s profitable.

Your business idea doesn’t have to be the next Scrub Daddy or Squatty Potty. Instead, you can take an existing product and improve upon it.

Most entrepreneurs spend more time on their products than they do getting to know the competition. If you ever apply for outside funding, the potential lender or partner wants to know: what sets you (or your business idea) apart? If market analysis indicates your product or service is saturated in your area, see if you can think of a different approach. Take housekeeping, for example—rather than general cleaning services, you might specialize in homes with pets, or focus on garage clean-ups.

Primary Research

The first stage of any competition study is primary research, which entails obtaining data directly from potential customers rather than basing your conclusions on past data. You can use questionnaires, surveys and interviews to learn what consumers want.

Secondary Research

Utilize existing sources of information, such as census data, to gather information when you do secondary research. The current data may be studied, compiled and analyzed in various ways that are appropriate for your needs, but it may not be as detailed as primary research.

Conduct a SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities and threats. Conducting a SWOT analysis allows you to look at the facts about how your product or idea might perform if taken to market, and it can also help you make decisions about the direction of your idea.

A business plan is a dynamic document that serves as a roadmap for establishing a new business. This document makes it simple for potential investors, financial institutions, and company management to understand and absorb. Even if you intend to self-finance, a business plan can help you flesh out your idea and spot potential problems. A well-rounded business plan should contain the following sections:

• Executive summary. The executive summary should be the first item in the business plan, but it should be written last. It describes the proposed new business and highlights the goals of the company and the methods to achieve them.

• Company description. The company description covers what problems your product or service solves and why your business or idea is best. For example, maybe your background is in molecular engineering, and you’ve used that background to create a new type of athletic wear—you have the proper credentials to make the best material.

• Market analysis. This section of the business plan analyzes how well a company is positioned against its competitors. The market analysis should include target market, segmentation analysis, market size, growth rate, trends and a competitive environment assessment.

• Organization and structure. Write about the type of business organization you expect, what risk management strategies you propose, and who will staff the management team. What are their qualifications? Will your business be a single-member LLC, or a corporation?

• Mission and goals. This section should contain a brief mission statement and detail what the business wishes to accomplish and the steps to get there. These goals should be SMART (specific, measurable, action-orientated, realistic and time-bound).

• Products or services. This section describes how your business will operate. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, how much your product costs, who will be responsible for creating the product, how you’ll source materials and how much they cost to make.

• Background summary. This portion of the business plan is the most time-consuming to write. Compile and summarize any data, articles and research studies on trends that could positively and negatively affect your business or industry.

• Marketing plan. The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis and analyzes competitors. It also discusses how you’ll promote your business, how much money will be spent on marketing and how long the campaign is expected to last.

• Financial plan. The financial plan is perhaps the core of the business plan because, without money, the business will not move forward. Include a proposed budget in your financial plan along with projected financial statements, such as an income statement, a balance sheet and a statement of cash flows. Usually, five years of projected financial statements are acceptable. This section is also where you should include your funding request if you’re looking for outside funding.

When structuring your business, it’s essential to consider how each structure impacts the amount of taxes you owe, daily operations and whether your personal assets are at risk.

• LLC: A limited liability company (LLC) limits your personal liability for business debts. LLCs can be owned by one or more people or companies and must include a registered agent. These owners are referred to as members.

• LLP: A limited liability partnership is similar to an LLC but is typically used for licensed business professionals like an attorney or accountant. These arrangements require a partnership agreement.

• Sole Proprietorship: If you start a solo business, you might consider a sole proprietorship. The company and the owner, for legal and tax purposes, are considered the same. The business owner assumes liability for the business. So, if the business fails, the owner is personally and financially responsible for all business debts.

• Corporation: A corporation limits your personal liability for business debts just like an LLC does. A corporation can be taxed as a C corporation or an S corporation. S corporation status offers pass-through taxation to small corporations that meet certain IRS requirements. Larger companies and start-ups hoping to attract venture capital are usually taxed as C corporations.

Before you decide on a business structure, discuss your situation with a small business accountant, as each business type has different tax treatments that could affect your bottom line.

There are several legal issues to address when starting a business after choosing the business structure. The following is a good checklist of items to consider when establishing your business:

• Choose your business name. Make it memorable but not too difficult. Choose the same domain name, if available, to establish your internet presence. A business name cannot be the same as another registered company in your state, nor can it infringe on another trademark or service mark that is already registered with the U.S. Patent and Trademark Office (USPTO).

• File business formation paperwork with your state. You’ll officially create a corporation, LLC or other business entity by filing forms with your state’s business agency–usually the secretary of state. As part of this process, you’ll need to choose a registered agent to accept legal documents on behalf of your business. You’ll also pay a filing fee. The state will send you a certificate that you can use to apply for licenses, a tax ID number and business bank accounts.

• Apply for an Employer Identification Number. All businesses other than sole proprietorships with no employees must have a federal employer identification number. Make your application to the Internal Revenue Service. You’ll typically receive your number in just minutes.

• Apply for the licenses and permits you need. Legal requirements are determined by your industry and jurisdiction. Most businesses need a mixture of local, state and federal licenses to operate. Check with your local government office for licensing information tailored to your area.

• Open a business bank account. Keep your business and personal finances separate. Here’s how to choose a business checking account—and why separate business accounts are essential.

• Apply for business insurance. You should consider general liability insurance for your business in case of property damage, lawsuits or other problems. Product liability insurance and commercial property insurance may be beneficial, too. In most states, workers’ compensation insurance is required by law if you have employees.

• Choose a bookkeeper or get accounting software. If you sell a product, you need an inventory function in your accounting software to manage and track inventory. The software should have ledger and journal entries and the ability to generate financial statements.

There are many different ways to fund your business—some require considerable effort, while others are easier to obtain. Two categories of funding exist: internal and external.

Internal funding includes:

• Personal savings

• Credit cards

• Funds from friends and family

If you finance the business with your own funds or with credit cards, you have to pay the debt on the credit cards and you’ve lost a chunk of your wealth if the business fails. By allowing your family members or friends to invest in your business, you are risking hard feelings and strained relationships if the company goes under. Business owners who want to minimize these risks may consider external funding.

External funding includes:

• Small business loans

• Small business grants

• Angel investors

• Venture capital

• Crowdfunding

Small businesses may have to use a combination of several sources of capital. Consider how much money is needed, how long it will take before the company can repay it and how risk-tolerant you are. No matter which source you use, plan for profit. It’s far better to take home six figures than make seven figures and only keep $80,000 of it.

Many business owners spend so much money creating their products that there isn’t a marketing budget by the time they’ve launched. Or, they’ve spent so much time developing the product that marketing is an afterthought.

Even if you’re a brick-and-mortar business, a web presence is essential. You can make a standard informational website or an e-commerce site where you sell products online.

After getting a website or e-commerce store, focus on optimizing it for search engines (SEO). This way, when a potential customer searches for specific keywords for your products, the search engine can point them to your site. SEO is a long-term strategy, so don’t expect a ton of traffic from search engines initially—even if you’re using all the right keywords.

Provide quality digital content on your site that makes it easy for customers to find the correct answers to their questions. Content marketing ideas include videos, customer testimonials, blog posts and demos. Consider content marketing one of the most critical tasks on your daily to-do list. This is used in conjunction with posting on social media.

You don’t necessarily need to be on every social media platform available. However, you should have a presence on Facebook and Instagram because they offer e-commerce features that allow you to sell directly from your social media accounts. Both of these platforms have free ad training to help you market your business.