Questions To Ask Before Starting A Business
Before you dive off the deep end, these questions can help guide you towards determining the right path to take, and help you evaluate if entrepreneurship is really for you.
Think you're ready to jump in with your new business idea? Don't go too fast! One of the most important things to do is stop and spend some time thinking about the ins and outs of your long-term plan.
1. Is this your life’s work?
If your business is something you want to do for the rest of your life, the legacy you want to create, then it's time to pull the trigger. If it's not, stop right here. Because when starting a business you will live and breathe it - it will consume your time, money, and sometimes sanity, so it had better be for a great reason.
2. What do you do?
What does your business actually do? What are the steps of your process, or the details of the product, and how do you plan to create/enact them? Before you start your business is the time to go through every detail of what you want your company to be doing - in 1 year, 5 years, and 10 years if you plan properly.
3. What do you NOT do?
As important as it is to figure out what you're doing before you start a business, it can be more important to figure out what you don't do. What products and services will you never offer, or directions would be counter to your mission. Narrowing your focus will also make it easier to figure out the next answer.
4. What makes you different?
What is your differentiation point? Is what you make or the service you provide better, cheaper, or faster than the competitors? Think about how you can stand out in your industry, and what you bring to the table as an individual or business partnership that will be your top selling point. Why should people choose to work with or buy from you? And there needs to be a good answer. Your entire marketing strategy relies on that - so take time to answer this one.
5. Do you want your business to outlive you?
What is the ultimate end goal? Do you want to support yourself until retirement, or start a company that lasts for generations (a big company, a family business - or even both)? Determine what the end of your involvement in your business would look like, and how long in the future that would take place.
6. What is your future role and can you play it?
What is your role in your growing company? Are you going to sit at the helm of a big corporate ship, or be managing a solopreneurship, and do you have the knowledge or qualifications to do that? Determine what you need to learn, or how you need to grow to fill the role you want to take in your business. And if you aren't comfortable with that role - time to reconsider.
7. Can you do it alone to start with?
Can you get going alone? Do you need help whether administrative, financial, or otherwise. What skills do you have to get your business off the ground and what might you need to pay for. Are you planning on bringing other people on board quickly or are you going to work with a partner or consultants?
8. What do you need from your business personally to consider it a success?
What is your personal goal as you start your business? Whether your goals are financial or intrinsic, it's important to know what you want to see from your business, and how your long-term goals are working to achieve this.
9. What are the needs of your customer and how might they change in the future, especially with technology?
Think about your customers and how their needs are evolving over time. Whether its technological advances, or economic trends, there are always things that will change the demands of your customer. Before you start you want to make sure that your product won't quickly become outdated. It's also important to consider where needs are moving so you might be able to beat other large companies in the industry to the punch (your idea might be the Netflix to someone's Blockbuster).
10. What type of business legal structure is most conducive to your idea?
When you're just starting out it's also important before you file any paperwork or reserve any names to consider the business type you want to grow, and what legal structure would be the best fit. Should you go the corporation route, or is a sole proprietorship the right fit to start with? This is where it comes in handy to consult with an attorney before jumping off the deep end into a business structure complete with tax ramifications or license requirements you don't know about. And to make it even easier, we wrote a whole post about it here.
11. What resources do you already have to get started?
Time to round up everything you have: knowledge and skills, money, supplies, and space. What do you have to get started or what can you make with what you have? Figure out your true starting point before you consider investing in anything new, so that you know how much money you're really investing. All the little things add up quickly. Also think about what skills you have, and what you need to outsource or ask for help with.
12. What resources do you need in the next year? 5 years? 10 years?
Now that you know what you already have, figure out what you need. What will you need to invest in? What will you WANT to invest in? Think of how your business will grow and what money, supplies, skills, and space you'll need to obtain.
13. Do you need funding or want to bootstrap?
Based on the past two answers you should have a pretty good idea of how your business will grow over time and what it will take. You'll definitely want to consider whether it's possible without funding. Bootstrapping can mean slow growth, but funding means potentially giving away a piece of your business. Weigh the pros and cons and make your decision carefully.
14. Do I have the energy/time I need for this? Am I willing to make the sacrifices?
Starting a business also can mean giving up a lot of other things, and not just money. Make sure you try to understand the kind of time and energy that will go into your business, and accept that you'll still probably spend way more than you think you will. Entrepreneurship is not an easy route, and it can be all-consuming so make sure you're able to cope.
15. Can I run this business part-time before quitting another job?
Depending on your answer to the previous question, you'll also want to consider whether you are able to put part-time energy into the business for a while. Does it make sense to grow slowly while still earning income from another part-time or full-time job?
There are plenty of other questions you'll want to answer and a lot of research you'll want to do before starting your business, but these answers are a great starting point. Entrepreneurship isn't for everyone, but it can be as rewarding as it is tough if you're ready to stick it out!