8 Questions to Ask Before You Start Your Own Business
HAVE YOU BEEN THINKING about making your endeavor into a business? Are you confused about where to start and what to do? If you answered yes, your next move is to answer the following questions for yourself. This will help you to gain the clarity needed to find direction. Also, the thinking and research you do as you answer these questions will become your steps for starting your business. Don’t be like 95 percent of wannabe entrepreneurs who think they have a great idea and jump into business without careful planning. Some people who follow this strategy are very successful; but if you look before you leap, your percentage for success will be much higher.
Questions #1
“Who am I?” Starting and running a business is a lot like running a marathon. There will be highs and lows, and the prospect is both exciting and scary. To maximize your chances, analyze your strengths and weaknesses as well as your personal characteristics. For example, to be in business, you need determination, persistence, creativity, flexibility, and a steep learning curve. Will you be able to develop and strengthen these characteristics better by working alone, being in a partnership, or being at the helm of a fast growing organization? How does your business idea fit in with your personal goals for the next three to five years? Your business idea, your expertise, and your personality all need to fit well with the type of company you’re growing.
Questions #2
“What business am I in?” Carefully define and detail what your product and/or services are. What problems do you solve? What benefits do you provide? Who are you targeting to buy your services? Consumers? Organizations? Where are they located? How will you reach them? For example, if you want to build a coaching practice, what type of coaching do you offer—executive coaching in which your clients are corporations, or personal coaching in which your clients are individuals? Learn everything you can about the business you want to start and the marketplace in which you plan to operate.
Questions #3
“Is my business idea viable?” In order to find out, market research is essential so that you can answer such questions as, “Who will buy my product?” and “Are there enough potential customers out there for me to make a profit?” Identify and analyze what your competitors are doing, and how what you offer is sufficiently different to attract customers. But you don’t need to do expensive focus groups. You can test market your idea with a group of friends and colleagues; interview competitors who are willing to talk to you; and research your industry and the market trends via the Internet or the local library. Other resources are the Small Business Administration Resource Centers, your local Chamber of Commerce, and successful entrepreneurs in a business related to yours.
Questions #4
“What is my market niche?” What is unique about you and your business? What do you want to be known for? If you fit your niche well, even in a recession, people will ask first about your product or service, and second about price. Hint: Having a niche does not mean offering the lowest price. Any competitor can charge less. A market niche is what makes your business stand out from the pack. However, any old niche won’t work. It has to be one that is focused, or narrow, but deep—that is, having enough potential customers in your targeted niche to bring you the business volume you want that will make your business profitable. For example, publishing companies are creating
more specialty magazines. There is even one called Prison Life, which has a specialized but huge captive audience—literally.
Questions #5
“How will I market my business?” The marketing strategies you choose must do two things: One, reach your target customers, and two, fit your business because you must continually market your business. Out of sight (or sound) is out of mind. For example, speaking and writing is a good marketing mix for business consultants. Back-of-the-room sales are also brisk if you have authored a book. However, if you love to give talks but you own a retail store, your store location and a well placed radio or TV/cable commercial might reach a wider audience of potential customers.
Questions #6
“How will I finance my business?” The flip side of the question, “Will I make enough money?” is “Do I have enough money to get started?” Work with an accountant or business consultant to carefully determine how much start-up funding you need and help you do a profit-and-loss projection. I recommend that you have enough personal funds to finance your living expenses for your first year of business. If you get a business loan, remember that you must put up collateral, which is often your house; if you get financing from angel investors, you must give up equity in your business, which may mean you won’t have control over what your business really is and how you run it.
Questions #7
“Why do I need a business plan?” Now that you’ve decided to go into business and you have done your research, you are ready to write a business plan. Planning ahead can mean the difference between success and failure. This is the stage when you get your ideas out of your head and onto paper. You set your goals for the year, as well as strategies and specific plans for how you’ll reach your goals. The written plan is a document that you can use to quickly explain your business to potential investors and—more importantly—to keep yourself on track.
Questions #8
“Will I go into my own business?” Are you going to run the marathon? Answering the above questions carefully will help you make a well informed decision. If you’re ready, start running now. Remember: Even though there are obstacles along the way, a marathon always has a well-planned course to follow.
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