A lot of people I speak with are on the cusp of starting a new business. They’ve got an idea and they’re about to make the leap. I’ve started a few businesses now and have developed a list of questions to ask before starting a business that help you to know whether it’s really the right thing to be doing!
It’s fine to start tinkering, but before really committing to this business ask yourself these questions…
6 questions to ask before starting a business
1) What problem will the business solve?
Is there a good enough reason for this business to exist? Really? (Just because you enjoy making baby bibs, doesn’t mean there’s demand for them!) Your business doesn’t need to be breaking new ground or the only one of it’s type, but it does need to help people or meet some demand.
2) Am I passionate about solving this problem?
I’m not talking about finding your ‘one true calling’ here, but it is important to care enough about the problem you’re solving. Even if you’re planning to eventually exit the business, you should expect to be living and breathing this business for the next 5-10 years, so make sure it’s something that interests you.
3) What is will the day-to-day operations of this business involve? Can I see myself doing that for the next 5 years?
One of my businesses was an online platform for businesses but the sales were achieved through telephone sales. Before long, I found myself running a call centre – not exactly what I had envizaged when starting a web business! Don’t make this mistake! Figure out what you’ll actually need to spend your time doing.
4) What is the business model?
Understanding exactly how the business will generate revenue is so important. Just because something adds value, doesn’t necessarily mean that customers will be prepared to pay for that thing. Understand the business model and decide whether you like it.
5) When will this business be profitable?
Now that you know how the business will make money, do some work to figure out when you’ll reach profitability and what the longer-term finances of the business look like. Be conservative! Everything will probably cost you more than you think and sales will probably take a lot longer than you think. How long will it be before you can take a salary? Can you afford this time? After that, how much money are you likely to earn? Does this fit with your financial needs and aspirations?
6) Does this business fit with my other life goals?
Starting and growing a business is like deciding to have a baby. Like it or not, it affects everything! Before you start, think about how this business might impact your family and decide whether it’s still something you want to do. It might limit where you live, your working hours, your ability to relax or disconnect after-hours, your privacy, and many other things. On the other hand, it might also give you a ton of satisfaction, flexibility to work around your family, a sense of purpose and much more.
Ignore these questions and there’s a good chance you’ll end up hating your business – not something I’d recommend! Make sure you’re going into business with open eyes. If you really go through the questions to ask before starting a business, you’ll find that you get a much greater idea of the business opportunity, and also what you personally want from a business.
If you still decide to go ahead and start your business, feel free to use our Business Plan Template to launch your business.