Questions to Ask Before You Start a Business
PRACTICAL WISDOM
By Susan Urquhart-Brown
Have you been thinking about starting 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 in two ways: (1) you will gain clarity that will help you find direction, and (2) the thinking and research you do as you answer these questions will also become your steps for starting your business. Don’t be like 95% 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.
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 quick 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 3-5 years? Your business idea, your expertise, and your personality all need to fit well with the type of company you’re growing.
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 so that you know it inside and out.
3. “Is my business idea viable?” In order to find out, market research is essential so that you can answer the questions: “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.
4. “What is my market niche?” What is unique about you and your business? What do you want to be known for? If you are well niched, even in a recession, people will ask about your product or service first, and price second. 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.
5. “How will I market my business?” The marketing strategies you choose must do two things: (1) reach your target customers, and (2) fit you and 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 your potential customers.
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 means you won’t have control over what your business really is and how you run it.
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.
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: a marathon always has a well-planned course to follow.
TAKE THE ENTREPRENEUR QUIZ!
Have you been downsized? Are you thinking about a career change? Are you taking early retirement? Have you said to yourself many times that you would start your own business if you only had a marketable idea? In the current economy, this may just be the time to develop a product or service and take the plunge into self-employment.
Even if you have never thought of yourself as an entrepreneur, you may already have the characteristics needed to become one. And even if you don’t, you can develop them—if you are willing to take on the risks involved in being a entrepreneur as well as being motivated by the rewards.
The following questions will help you determine whether you are ready to take the plunge into business ownership.
1. Are you comfortable with NOT receiving a regular paycheck?
YES [ ] NO [ ]
2. Do you like work that offers challenge, change and variety, even if it involves some risk?
YES [ ] NO [ ]
3. Are you flexible enough to meet changing market demands?
YES [ ] NO [ ]
4. Are you willing to invest your own money as well as ask others to invest in your business venture?
YES [ ] NO [ ]
5. Are you committed to spending as much time and effort as it takes to make your business successful?
YES [ ] NO [ ]
6. Is it important to you to do the strategic planning as well as take care of the day-to-day details of running a business?
YES [ ] NO [ ]
7. Is your business idea based on your expertise, interests, and solid market research?
YES [ ] NO [ ]
8. Are you able to bounce back and learn from failures or temporary setbacks?
YES [ ] NO [ ]
9. Are you optimistic, persistent and passionate about your work?
YES [ ] NO [ ]
10.Are you confident that you are capable of succeeding as an entrepreneur?
YES [ ] NO [ ]
Scoring the Quiz
8-10 Yeses: Ready to Move Ahead. If you answered Yes to 8-10 questions, you’re ready to move into starting your own business. You are willing and able to take calculated risks supported by solid information and based on experience. You are probably energized by the work you do because it’s stimulating and innovative and offers you opportunities to master challenges. You are an independent thinker who is willing to listen to the advice of others but you prefer to make your own decisions. However, don’t launch too fast. Be sure to write your business plan, including a marketing plan and best-case/worst-case financials. Poor planning is still one of the most common reasons for business failure.
5-7 Yeses: Move Ahead Slowly. If you answered Yes to 5-7 questions, you have some of the key entrepreneurial characteristics, but you need to move ahead slowly. Assess your strengths and weaknesses, and determine what you need to develop before you start a business. You might consider buying a franchise or an existing business instead of starting a business from scratch. You might also test your mettle by starting your business part-time while working for someone else full- or part-time. Grow your business slowly, and only give up your employment when it grows large enough to be a viable business.
4-0 Yeses: Consider Working for Someone Else. If you answered Yes to 4 or fewer of the questions, it’s likely that you would be more comfortable working for someone else. You’re not sure of your ability to be your own boss and do what it takes to run a business. Perhaps you are interested in starting a business because you love delivering the service or making the product. If so, you might consider working for a company that values and fosters the entrepreneurial spirit, or join a start-up team within a larger company. However, if you really want to start your own business, your determination can compensate for not having all of the entrepreneurial characteristics. And of course, if you have a solid business idea, have evaluated the financial prospects carefully, business partners you trust, and lots of capital, you might want to go for it.
Three Fear-Busters
No matter how you scored on this business “readiness” checklist, here are three things to keep in mind to help you get beyond the fear of taking the plunge into starting your own business.
1. You don’t have to start immediately. It takes time to plan, and once you start your business it takes time to build it up. On average it takes between 3 and 5 years to build a solid, successful, profitable business. Make a plan, set your goals, and take one step at a time.
2. Marketing and selling your product or service is much easier if you believe in yourself. Base your business on your interests, strongest skills, and expertise.
3. You don’t need to do it all alone. Get support from friends and family, advice from business professionals, business coaches, colleagues and take advantage of community resources. Don’t fall into the trap of being the “lone wolf.” This is a common mistake new entrepreneurs make. Ask for help when you need it—because, in the long run, you will save time and money!
Excerpted from The Accidental Entrepreneur by Susan Urquhart-Brown. Copyright © 2004 by Susan Urquhart-Brown. All rights reserved. Reprinted with permission of Susan Urquhart-Brown. $17.95. To order click here.
|
10 second 
