10 Questions to Ask Before Starting a Small Business
Starting a small business sounds like a great idea, especially if you are creative and hardworking. You get to manage operations and make your own decisions for the most part. And you’re not alone in thinking this—there are currently 31.7 million small businesses in the United States today.
However, not every venture withstands the test of time. Around 64.7 percent of businesses survive at least two years in their industry. This figure drops to 48.8 percent at the five-year mark, then 33.6 percent at the ten-year mark, and then 25.7 percent at the 15th-year fault. Many factors contribute to a business’s success and longevity. Before starting your business plan, here are some questions to ask yourself.
What kind of business do I want to establish?
If you don’t have at least a vague idea of what business you want to start, take some time to think. What can you offer to the world? What industry would you like to enter? Most times, you don’t need to be completely original to start a business. You can even operate based on someone else’s business model in a system called franchising.
It’s best to do prior research, especially if you’re caught between considering a franchise vs. corporate aspirations for your business. A franchise might be a better fit if you don’t want to handle the effort and risk of figuring out a business model that works. If you want to expand your business and explore more original ideas, you can go for a corporate setup.
Do I know enough about the industry?
It’s easy to want to set up a business, but do you know enough about the industry you’re about to enter? The ideal venture is usually something you already know and are passionate about. Prior experience and expertise will set you apart from your competitors and allow you to make well-informed business decisions that will drive you to success.
This advantage doesn’t mean you can’t enter a new industry. However, you will need to educate yourself or consult with experts and experienced professionals in your target industry. Their knowledge will be valuable to help you craft a business plan that works for your industry and target market.
Can I do this alone?
Businesses can come in different shapes and sizes. Most small businesses (81 percent) are sole proprietorships or have no employees. However, this structure won’t benefit every business. Suppose you want to run a business selling pastries, clothing, or personal artwork. If that’s the case, you could probably do it yourself.
However, if you dream of doing something more significant, like a restaurant or a mid-sized physical store, you must hire employees. Your answer to this question isn’t the end-all-be-all for your business, but it will be your starting point. Many companies find it easier to start as a sole proprietorship and then scale up as their business grows.
How much of my time and energy can I invest?
Starting and growing your business requires time, energy, and commitment. You must look into your current situation to see if you’re in an excellent position to start your business. Establishing your own business while working a full-time job isn’t impossible. Still, it can be more complicated than working on your business full-time. Each business owner’s situation is different, so assess your priorities and take calculated risks if possible.
Who are my competitors?
It is rare to find anything utterly original in any industry. Your business idea might already have dozens of variations already in the market. It’s best to analyze your competitors to help you identify best practices and areas for improvement. You can observe every aspect of their business. How does your competition market its services? How do they interact with customers? You also need to check what customers like about their business.
What makes my business special?
Identifying your competitors helps you find your business’s unique selling point. What do you have, or what can you do to set your business apart from the competition? Finding your unique selling point early on helps establish a unique brand identity. This would set you apart, even in your business’s early stages.
Who is my ideal customer?
Aside from your competition, you should also know your customers. Who is your business trying to attract? Market research is essential to any business plan. Getting and keeping new customers is the main factor in your business’s success and longevity.
Conducting market research helps you get to know your target market and how you could attract their attention. You can get professional researchers to do the work if you have the budget. If not, you can also do it yourself, though you may need to consult some resources to help you do it well.
How do I fund my business?
To start making money, you must spend some first to set it up. You need space to run your business, necessary materials, equipment, employee salaries, etc. The amount you need will vary, depending on the nature and scale of your business. Below are some common ways to fund your business.
- Personal savings;
- Crowdfunding;
- Business loans;
- Investors.
If you fund your business with other people’s money through crowdfunding, loans, or venture capital, you should get a business plan ready. Laying out your goals will help you convince banks and investors of the merits and profitability of your business.
How will customers know about my business?
How will your business gain customers if they don’t know about it? Therefore, you must dedicate part of your business plan to your marketing strategy. Marketing can take many forms, and some are more expensive than others.
If you’re a small business just starting out, likely, you don’t have that big of a marketing budget yet. Don’t worry—you still have some excellent options. One of the most affordable yet efficient marketing tools is social media. Creating an account is free, as is creating content that attracts your audience. You can also run targeted ads for a small fee.
How would I define success?
It’s never too early to start thinking about the future of your business. Setting monthly or annual goals is a great way to track your progress and ensure your growth. Success can mean different things to different people. How much growth would you like to achieve? Are you aiming for a mid-sized enterprise or a corporation? Or do you prefer to stay small and involved in your daily operations?
Having goals helps you maintain focus, especially when making business decisions. Starting a small business is admirable, as it involves many risks and challenges. Hopefully, answering these questions will help you understand the company you want to build and share your ideas more effectively.
