Starting a business can be an excellent way to achieve your dreams. For starters, you’ll have more freedom working for yourself than working for someone else. You can also create your own schedule and working hours, build anything you want, and most importantly, make a profit.
But, this comes with many challenges and drawbacks. So, it's essential to ask yourself some critical questions.
If you rush in without identifying your passion, understanding your interests, or doing proper research, your business will most likely fail. According to a report from the U.S. Bureau of Labor Statistics, around 20% of small businesses fail within the first year.
Therefore, before starting a business, you should ask yourself some important questions that will help you decide if it's is right for you.
Questions to Ask Yourself Before Starting a Business
1. Why do I want to start a business?
Before starting a business, start asking yourself a straightforward question: Why do I want to start a business in the first place?
Is it because you are tired of doing a 9-5 job? Is it because someone else is doing it and getting rich quicker? Or is there something that you are passionate about?
Start asking yourself these questions. This will help you to come up with your own personal reasons for starting a business.
Write your answers down on a piece of paper and think again. Ultimately, you need to have a deep love, passion, and enough knowledge about your potential business.
Once you have a clear and long-term vision of why you want to start a business, you can move to the next question, which is identifying your competitors.
2. Who are my competitors in the industry?
The business you are planning to start could already exist somewhere out there. It's even possible that a potential competitor company has been in the market for quite a while and is popular.
So what should you do? How can you compete with businesses that are already successful and running? Well, to answer that, you need to perform competitive research.
Competitive research is a strategy that identifies your competitors, research the products they offer, pricing, marketing strategies, and their weak points. By conducting competitive research, you can better understand your competitors and the market itself.
If you’re not sure of what services to offer, you can always look at your competitors for some inspiration. Then, you can put on your own unique twist to differentiate your offering from the rest.
3. How will I fund my business?
Money is significant when starting a business. Without money, you may not even be able to build your business’s website. So, the first thing you need to do is to make a list of things that you need to buy.
Some of the essentials may include:
- Building a website
- Registering your business
- Creating products
- Paying employee salaries
- Performing market research
- Purchasing equipment
- Advertising and promotion
These are just a few things, but the list may go up or down based on your specific business needs.
After making a list, you can think about funding. There are many options for raising funds for your business. First, you can self-fund your business where all the expenses will go out of your pocket. Alternatively, you can obtain loans from investors who believe in your business’s potential success.
Both funding options have pros and cons. If the money is coming out of your pocket, the risk of personal debt and bankruptcy increases. And, for investor-funded businesses, you may have to pay interest rates for years.
So, ultimately, you have to figure out which funding options suit you the best.
4. Who is my target audience?
You know that old saying, "know your audience?" Well, you should be asking yourself who your target audience is. In the business world, it is all about targeted marketing and getting to know what people want as a whole, not just individuals with similar interests or demographics.
By identifying your ideal target audience, it will be easier for you to advertise and market your business. In addition, this will help you understand their pain points and improve products based on their feedback.
Just look at Apple as an example. It may seem like Apple manufactures its products for people with higher incomes who are ready to pay extra for their technology. But, according to research, college students, executives, and professionals are the primary target market of Apple.
5. How will I market my business?
Marketing your business is not an easy task. You have to be creative and innovative with a plan to market your startup wisely. In addition, the world must know what products or services they can find from your company. It may seem like one daunting undertaking, but don't stress!
Once you have nailed down your target audience, you can efficiently market your business. For example, marketing on social media platforms such as Facebook, Instagram, Snapchat will attract younger audiences, while B2B and B2C marketers frequent places like on Twitter and LinkedIn.
However, if you don't want to spend money on paid ads, you can focus on content marketing and SEO. This will improve your organic traffic as well as boost leads.
6. How will I price my products?
Product pricing is probably the most challenging decision to make in a business. You don't want to be overpriced or underpriced.
Correctly pricing your products can significantly improve your sales, and incorrect pricing can lead your business to failure, which is hard to overcome. There are different pricing strategies out there, and you need to figure out which one suits you the best.
One of the best ways to get an overview of pricing is to look at your competitors. Observe what kinds of pricing options your competitors are currently offering - is it a one-time purchase or is it a recurring payment, or do they charge extra for additional services as well?
You’ll also want to take costs and profits into account. It’s important that you price your products high enough to cover your business costs, like production and marketing, while leaving room for profit.
7. Can I do this alone?
This is one question that many entrepreneurs face at some point when launching a new business. While it may seem to be an easy decision, there are several things you need to be responsible for, such as build and develop the products, managing sales, marketing, and many more.
Managing all of these tasks by yourself can next to impossible, no matter how knowledgeable or skillful you are. For example, if you are good at marketing, you may not know sales or business developing well. To cover all of their bases, companies of all sizes have dedicated teams for each department.
Even if you are a jack of all trades, the growth of your business may be too much for you to keep up with on your own. Consider planning out a path for growth and what that may look like for your business and its personnel.
8. What is my USP?
A Unique Selling Proposition, also known as a USP, is a selling point that sets your products or services apart from the competition. It's what makes your business stand out, attracting new customers and retaining old ones.
You need a USP if you want to be successful in today's competitive market. Your USP boils down what makes your business different from the rest. Rather than blend in with the crowd, you need to clearly showcase why customers should choose you.
Differentiation is the key to success in today's competitive marketplace. Customers are bombarded with choices, and they want products that offer something different. So you need to do more than provide a good product at a fair price; also, you need to give customers what they want. That means understanding their needs better than anyone else does and delivering an experience that exceeds their expectations every time.
9. What type of taxes do I have to pay?
Taxes are an essential part of running any business. You need to know what taxes your company must pay and how much other companies typically pay in taxes. Taxes owed by a business can differ depending on the state and country you’re based in. The sales taxes you charge customers for your products will also depend on local tax law.
Taxes may also depend on how your business is structured. It's best to decide in advance if you want to start an LLC, partnership, or be an individual proprietor.
As a legal requirement on wages in most countries, employers must also state what their employees earn and report this information for taxation purposes. Knowing these regulations can help keep your finances organized while building up a successful company.
10. Am I prepared for possible failure?
When starting a business, it's often difficult to anticipate how everything will go. Of course, you have the best of intentions and hope for success when you launch your company, but there will always be periods where things don't work out as well as they should. So how can one prepare themselves in advance?
Preparing yourself mentally is vital – think about what failure might look like (will I lose my job if this venture doesn't succeed?). Then, plan financially by setting aside some savings that'll help tide over rough patches during these times. Also, make sure you're not putting all your eggs into just one basket, which may mean spreading your risk across different ventures or industries. So even if something goes wrong with only one investment, you may have other avenues available.
If you've never started a business before, it can feel overwhelming to get everything right from the start. However, when you take time to think about your personal and professional goals, define what success means for you, and identify potential risks ahead of time, starting a business will be much easier.
This list of 10 questions should help you determine if your idea for a business is viable and worth pursuing. Remember, it's never too early to start thinking about what might go wrong before starting one. However, if you don't have answers to some of these questions now, that may be a sign that you need to put more thought and planning into your new business.