Starting a business involves thorough planning, critical financial decisions, and completing various legal tasks. You need to set goals, implement plans, monitor your progress, make necessary changes, and grow your business.
Here are five key questions to consider as you plan to start a business:
1. Do I have what it takes to succeed as a business owner?
Before launching a business, you need to answer some crucial questions: What product or service are you offering? What makes it unique? Who is your ideal customer? How does your offering benefit them? Defining these aspects will help you establish your business identity.
Success in business demands passion, hard work, persistence, and drive. While around 40 million businesses are started each year, only 350,000 manage to grow and become profitable, according to Elizabeth Wilson of Entrepreneur Magazine.
2. What is my niche and who is my target customer?
Understanding who your paying customer will be is crucial. A great product idea isn’t enough; you need to solve a problem people care about and are willing to pay for.
Don’t fall into the trap of believing that offering everything will attract more customers. Specializing in a niche market can be more effective. Identify your target market and focus on meeting their specific needs.
3. Who will be on my team to help with my new business?
Building a successful business requires more than individual effort—it needs a team. Even if you plan to operate as a sole proprietor, assembling an external support team can help you stay focused and on track.
You’ll also need to gather a group of professionals to help with various aspects of your business, such as a lawyer, accountant, sales representative, web developer, and marketing agency. Each team member brings different skills and insights, and their advice is essential to avoid costly mistakes.
4. How much funding do I need to start?
Starting a business might not require massive funding if you bootstrap, but you will still need some initial investment to cover startup costs. Determine how much funding you need for both startup costs and ongoing expenses before your business becomes profitable.
Explore different funding options, such as business credit cards, lines of credit, vendor credit, and business loans. A combination of these sources might work best for your situation.
5. What business structure should I choose?
The type of business entity you select will affect various aspects, from your business name to your liability and tax filings. Choosing the right business structure is crucial. Once you decide, you’ll need to obtain a tax identification number and file for the necessary licenses and permits.
For more detailed guidance, refer to the SBA’s business guide which outlines ten steps to start your business.
