04 November 2015
Six Questions You Need To Be Able To Answer Before Starting Your Business
What Kind of business will you start?
A lot of business begin very small, with the owner of the business also being the only employee. You’ll need to know what you aim to do; can you run the business alone? Will you work from home? Will family member be involved?
You might also be an independent contractor or you might decide to start a franchise. The kind of business you start matters for a number of reasons.
If you’re a franchisee, you’ll have a larger company there to guide you through the process of beginning your own business, and will also have access to a network that will be able to support you.
If you’re an independent contractor, you’ll be much more agile and will have to put in a much smaller start up investment than a larger, more traditional kind of business.
Remember: Starting as a sole trader or a home-based business allows you to get a sense of the environment you’re operating in. A lot of current businesses began as small home operations (IBM started in a garage!)
What is your product or service?
This seems like a simple question, but you need to be able to answer it very, very well and very clearly. What value do you offer that people will be willing to exchange money for?
You need to have a lot of detail in your head, but you need to be able to communicate it very simply.
Consider these questions:
- What is your competitive edge? What can you do that others can’t or don’t?
- Will your idea work? You need to be comfortable that it’s practical. Get opinions from friends and family before you jump into something.
- Who are your competitors? These are the people that will try to make you fail, do you need to understand them and their ability to make things difficult for you.
How Much Will It cost to Reach Profitability?
It takes a lot of investment to reach a point of profitability. Throughout this time, you’ll need to be feeding, housing and clothing yourself. To get to a point of profit, you will need money to cover these costs, either by saving or taking out a bank loan.
Do You Have A Plan?
Another obvious-sounding question, but an important one. You need to know where you business is going and how it will get there. You need to be certain that, even when you reach profitability, you still have goals to strive for that will make you even more profitable. Goals are important, and assessment of performance should happen all the time.
Do you have enough people/time?
One of the most taxing things that a business requires is time. You will need to sink a lot of effort and a lot of late nights into your business and it will be exhausting. If you can get extra personnel to help you out, that’s great, but one way or another, you need to have enough time to do the work ahead of you.
What will you do if you fail?
We don’t want to think about this, but you need to build in a contingency plan if your business doesn’t work out. The question here is; can you afford to fail? Will you be emotionally and financial stable if you do fail? Will you be able to pay off your debts? If you can work out a way to very comfortable say ‘yes,’ then you have a solid grounding and you can move your business forward confidently.
Business, much like captaining a ship, is about knowing that you control. Do everything you can to ensure that your choices are intelligent and are backed up by hard work. If you have these down, you’ll have a successful business.