7 Things to ask yourself before starting a biz

Sure, you just might have a concept for the next multi-million dollar (or more!) business or it could just be a big time flop. I’m all for chasing your dreams and having an entrepreneurial spirit but being naive and ignorant can quickly make that dream become a nightmare.
 

According to the U.S. Small Business Administration, in the first quarter of 2014, 382,000 small businesses were launched and another 364,000 closed during the same time. About half of all new establishments close shop within five years and about one-third survive 10 years or more.


Before pouring your life-savings or borrowing lots of Benjamin’s on the idea, it’s best to put it up against some rigorous testing. Here are a few questions to help you figure out if that business idea has a green light or break lights:
 

  • Know Your Customer- Who’s your audience? Who do you want to sell to? “When I hear a business pitch that says ‘our target customer is every adult in America,’ or the like, I know trouble is ahead. Your customer will never be everyone. Recognizing exactly who you want to target is hard work, so go beyond just knowing your customer; understand what makes them tic and how your service can best serve that need,” says Blake Irving, CEO of GoDaddy.

  • What Are You Replacing? “Whatever your idea is, someone out there is buying something else in its place. Ask yourself what makes your product compelling enough to replace what’s already in the marketplace. This doesn’t necessarily have to be limited to products that have a similar purpose as yours,” says Jim Pulcrano, Executive Director of IMD.

  • Convince People- To join your startup that is. To have a successful biz you must be good at convincing others why they should quit their job and join in your endeavor. “Working for a startup is like entering a marriage. Employees will spend a lot of time with each other as they work together to bring a specific product to market, so the decision to come on board has to be about more than money. However, financial considerations matter when you’re asking an accomplished expert to leave an established company for a startup. For that reason, demonstrating the potential for future success is critical,” says Nir Polak, CEO and Co-founder of Exabeam.

  • Know Yourself- Why do you really want to start this business? Can you work with little or no pay for a while? Are you resilient? Is this your true passion? “If you are looking for a fast way to get rich or a way to look impressive to your peers, it’s unlikely you’ll find success at the end of your journey,” said Irving.

  • Are you an inventor or entrepreneur? A great product or idea doesn’t necessarily mean a great business. “Too many times, an ‘inventor’ type stays focused on the product, the prototype, the patent, etc., ignoring the other aspects of developing a business. Just because you develop a great product doesn’t mean that customers will instantly flock to your door. Entrepreneurs get that,” says Nellie Akalp of Mashable.

  • Will It Turn a Profit & Be Sustainable? I would say this is the most important question. Sure there are a zillion other factors that play into a successful business, but at the end of the day it’s about the bottom line. “The No. 1 killer of startups is a lack of cash flow. If your business doesn’t turn a profit, you will be unable to make the positive impact you’re striving for. It’s rare for a startup to make money immediately, so you need to make sure that you have enough saved, or that you have another income stream that can support you. If your favorite idea will take longer to turn a profit, it might be better to focus on one of your smaller ideas first. Afterward, you can use the smaller business’s success — and profit — as a springboard to launch a bigger project,” says Richard Branson, Founder of Virgin Group.

  • Is there a plan B?  If things do not go according to plan is there a fall-back strategy for me personally and for the business?  Does my family support me in this endeavor?
     

Dream big and don’t be afraid to go after it. But also use caution and intense planning before taking the plunge. The old saying, “Fail to plan, plan to fail” still rings true.



 

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