No one said that going into business was going to be easy. But, why not give yourself the best of starts.
If you are thinking about starting your very own business, here are twelve questions you must ask yourself before you start:
1. Is there a market for my business idea/concept?
No Market, No Money, simple as that. It doesn’t matter how great you think your product or service might be. The market can be extremely harsh. The real question you should be asking yourself, is: is it really something people want or need? or is it just something you think they want and need?
Most start-ups fail to take off because they are not solving a market problem. And in some cases, startups fail because the market simply isn’t yet ready for their product or service. For example, many virtual reality (VR) start-ups have found this to be the case – with a lack of infrastructure to support the technology.
As an entrepreneur, you must tackle problems that serve a market need, rather than just tackling problems that are interesting to solve.
2. Do I have sufficient financial resources?
Most start-ups fail before they have even begun due to the inability to raise additional funding, and as a result, often end up running out of cash.
It is entirely possible to start a business with little to no capital, for example, setting up a consultancy, or starting an internet business. In such cases, you leverage your time for money. Time and money are finite and need to be allocated accordingly, so if you don’t have any money, time becomes your greatest resource.
3. Do I have the right team?
“The first five employees will make or break your start-up” – Oliver Holle, CEO Managing Partner Speedinvest.
Having the right team dynamic is essential to the success of any business. Do not make the mistake of nepotism – hiring friends and family for the sake of it, just because you like them and want to help out. Ask yourself, do they have the right skills for the job? If not, you should set personal feelings aside and find someone more suitable – if funds allow of course.
A diverse team with different skill sets is essential to any success that the startup is to achieve.
So, although you might have the right business idea, with the right market conditions, and necessary financial resources, if the team can’t leverage, deliver and execute, on such opportunities, the business is already one foot in the grave.
4. Who are my competitors?
All businesses face competition. Whether you are a start-up or an established business, knowing your industry is a critical step if you are ever to succeed in business. It is vital to stay aware of how the current competitors in your industry are doing. But it is also equally important to be on the lookout for possible new competition, i.e., new start-ups.
5. Have I priced my product/services right?
How much you should charge for your product can be the difference between, undervaluing your business, or, pricing yourself out of the market. It is essential that the product/service is priced high enough to eventually cover costs, ideally also make a profit, but at the same time, the price has to be low enough to attract customers.
Pricing is indeed a fine balancing act, setting the right price is a dark art that requires you as an entrepreneur to do your research on how the competition is pricing the same or similar products/services.
In cases where the product or service is relatively niche and/or novel, it can be difficult to determine the right price. It is often cases where the product or service is novel that entrepreneurs find pricing hardest.
6. Is my product/service user-friendly?
The customer experience is king. As an entrepreneur, you cannot ignore what the user wants and need. User-friendliness should be at the forefront of any product you develop or service you provide. This might seem like an obvious point to state, but it would surprise you to know just how many businesses get it wrong – even established billion-dollar companies also get it wrong from time to time.
Do not build a product for yourself, build it for your prospective customers, talk to them, get their objective feedback, and make the necessary adjustments.
7. Who is my target audience?
This is basically marketing 101 – promoting the product.
Knowing who your product and/or service is targeting and how to get their attention, convert them to leads, and eventually established customers, is undoubtedly one of the most important skills if you are ever to have a successful business.
Figuring the promotion side of the business out will set you up for great success. There is a reason why big corporations pay so much for marketing. No matter how good your product or service is, if the right people don’t hear about it or know where to find it, they can’t buy it, and in turn, you can’t profit from it.
8. Do I have the Passion and Discipline?
Do you have what it takes to see it through? For many entrepreneurs starting a business is nothing new. You might be familiar with starting something yourself, only to give up on the first idea, jump to another idea, only to give that idea up and move unto the next, and so on it goes. Constantly side-tracked by distracting projects, losing focus, lacking passion, or giving up when it gets a little tough. It’s important not to lose focus or discipline, no one said it would be easy. You cannot keep jumping from one idea to the next. Sit yourself down and find something you really believe in, stick to it until you have success, or it ultimately dies out – but let the reasons not be due to lack of focus or discipline
9. Do I have the right investors?
It is important to do thorough research on investors before you approach or accept any. I know it might seem like a luxurious problem to have, that you can be at a stage where you can simply just reject investors. But it is critical to understand that not every investor is the right fit. For starters, watch Shark Tank (U.S) or Dragons Den (U.K) and see just how different investors can be and behave.
Among the decisions you might have to make, is whether you want a hands-on investor or one that takes a back seat, each choice has both its advantages and disadvantages.
10. Do I have the right location?
Unless your business is online, deciding where to locate your business is very important. The importance of location in determining business success cannot be understated. Location plays a significant role in attracting and retaining your customers.
11. What are the legal challenges?
You do not want to fall victim to legal challenges, some industries are more complex than others, and it is your job as an entrepreneur to educate yourself on all the potential legal challenges your business could face in its given industry.
For example, the legal challenges of starting an eCommerce or blog, are different from starting your own driving school, or private health practice.
In the early days of most start-ups, small companies tend to sneak under the radar with a few things, however, as the business’s presence grows, small legal issues that were missed or neglected can quickly turn into legal complexities that can ultimately shut the business down. So, do thorough research, and if possible, get legal advice.
12. Am I using my network/advisors?
Stop trying to do everything yourself – a tendency many entrepreneurs have. You need all the help you can get, so don’t be afraid to reach out for help, it can save you time, sweat, tears, and money. You ideally want your investors involved from the start.
Don’t forget that the majority of these investors have a lot of experience under their belts, you might be sitting with an issue that your investor can solve for you, but perhaps out of insecurity or fear of being seen as incompetent you fail to ask. But do remember, the investors see your success as their success, so of course, they want you to succeed, more money for you equals more money for them – Win, Win – at least in most cases.
Which question do you think is the most challenging for an entrepreneur to answer, and would you add on any other questions?