Deciding to start a business isn’t an overnight decision (or at least it shouldn’t be). There are hundreds of considerations to juggle and many of them are heavy: Where do I start? What if I fail?
Of course, our economy benefits from hopeful entrepreneurs weighing these considerations and deciding to still move forward. According to the Bureau of Labor Statistics, 679,072 businesses were started in 2015 alone. These new businesses added 3 million jobs to the economy that year.
Because 20 percent of businesses fail within the first year, it’s vital that any entrepreneur thinks long and hard about his product, business or service, its marketability, its ideal (and actual) customer base, and its investment cash flow. To help eager entrepreneurs evaluate these factors, we asked established business owners what they believe every new-business hopeful should ask herself before diving into a new venture. Many of these entrepreneurs learned these questions to ask before starting a business the hard way, while others benefited by asking themselves these questions when they were first starting out.
How Long Will It Take to Break Even and Earn a Livable Wage?
Is This Something I'm Truly Passionate About?
Who Is My Ideal Customer?
How Will Your New Venture Compete in the Marketplace?
How Am I Protected Against Lawsuits and Other Legal Issues?
Is This Business or Product 10X Better Than the Traditional Product or Service?
What Can I Outsource?
What Is My Idea of Success?
Do I Need a Partner in This Business?
Will My Customer Choose This Product First?
Can My Business Be the Market Leader in This Space?
How Long Can I Float?
Do I Have Clear Goals in Mind?
Am I Ready to Dedicate Myself?
Should I Trademark My Assets?
Am I Ready to Fail?
In our market, your return on start-up capital can be much, much longer than most other businesses. When you have to not only source new clients, but then have them go through lengthy underwriting phases, it creates an immediate 90 to 120 day window before business goes active. Couple this with the insurance company paying you commissions over a 12 month period, and cash flow is a significant mountain to overcome.Jason Fisher, Co-OwnerBestLifeRates.org, LLC
If you have the kind of commitment to keep working when everyone else stops, when you hit a road bump, when you think you've plateaued, when you're tired, busy, and down on your luck, then you have what it takes to be an entrepreneur.
It doesn't matter whether you call it “drive,” "motivation," or “a thirst for success,” but it does matter that you have it. Passion for what you do will keep you motivated throughout the long and arduous road to startup success.David Scarola, Vice PresidentThe Alternative Board
A new business should be able to precisely define its target customer – not just a consumer that will casually use their product or service, but a customer who will be a raving fan and repeat, loyal customer. Next, you should ask yourself where, or how, can I find my ideal, target customer. This question forms the foundation for any marketing that you will do and allows you to think through the most effective and cost-efficient way toward profitability …
Lastly, you should ask yourself how can I retain current customers and utilize them to grow my business. This question allows you think through how you will best delight your current customers, while at the same time, using their loyalty to your business to help you find similar people to become new customers.Garrett Ball, President65Medicare.org
This question applies not only on a financial, but an emotional level as well. Pricing, product [and] service offerings may all change in the future. [What matters is] ... the core of your new venture that connects [with customers] on a deeper level, because that will stay with your venture forever.Fabian Geyrhalter, PrincipalFINIEN
When launching a new business venture, new business owners oftentimes overlook one subtle, yet incredibly important detail: protecting themselves against legal issues like lawsuits or employee compensation claims. Forming an LLC is a common way to reduce legal liability, ensuring that the personal assets remain separate from the new company.
Many business owners will tell you that setting up a legal framework is much easier to do before starting a company. Correctly setting up a company early on will allow you to focus on more vital details down the road such as growing and monetizing the business.Brett Helling, OwnerRidester.com
If not, it will be hard to have product market fit and therefore scale and grow. Also you have to give your users the ability, and a reason, to talk about your product or service. Without a viral coefficient, more times than not, your company will run out of money and certainly not be able to scale.Gene Caballero, Co-FounderGreenPal
As the leader of this business, it's important to spend your time doing what only you can do, and leave the rest up to others. If your time and energy are being drained by tasks that could be delegated, then you are no longer available to fulfill your ... role as CEO.Leo Welder, OwnerChooseWhat.com
And, going along with that, when will I know when it's time to quit? No one likes to think of failure, but it's important to have that line drawn so you can quit before you're too far behind.RaShea Drake, Communications SpecialistFrontier Business
Twelve years ago when I started my insurance agency, I was fearful to do it on my own. I quickly partnered with two other people that I did not know well and it was disaster. Every day I beat the streets drumming up business and writing new policies while one partner spent her time working on another side business she owned and the other missed day after day of work due to personal issues.
As the policies added up, I found that both partners wanted to take those commissions home every month instead of investing them back into the business so that we could buy leads and I would not have to spend as much time bootstrapping. Eventually I bought them both out … It was a hard but valuable lesson learned.Danielle Kunkle, Co-FounderBoomer Benefits
There are two concepts within this question. First, startups need to address how they will market and distribute their product or service so that it even has a chance of being chosen by your customer. Without tackling this issue, your product will never get into your customer’s hands. The second concept is that startups must differentiate their products in an attractive way at the micro-moment of customer choice. Your product must meet a need at an attractive price point that beats the competition. By choosing your product, customers must find it easy to use and [satisfactory] for the price to give it a try.Kelly Bedrich, Co-FounderElectricityPlans.com
In all industries, 80 percent of all sales within an industry [are] generated from the 20 percent of the players in it. The remaining businesses are essentially just picking up the scraps.Stan Tan, Digital Marketing ManagerSelbys.net
It's good to know how long you'll try to start get a new business going before you throw in the towel. I encourage the client to calculate how many months they have in "run flat" cash; essentially, dividing cash reserves by monthly fixed expenses to determine how long the company can stay afloat with zero income. It's also good to know how long you'll give a company to get out of the red and start turning a profit.Courtney Barbee, COOThe Bookkeeper
Without a clear idea of where you want to go and how you plan to get there, you may find yourself stumbling through the stages of starting a business and facing unwanted frustration.
One of the most important steps is setting goals that outline what you want to accomplish in the short, as well as long term. Once you have created your goals, it's time to make sure you have a plan for your business that will guide you along the way.Zondra Wilson, CreatorBlu Skin Care, LLC
Ask yourself if you're ready, willing, and able to make your new business the highest priority in your life. Becoming an entrepreneur takes total dedication. It's not something you do part time.Dee Power, Co-FounderProfit Dynamics, Inc.
Many budding entrepreneurs may think their idea — like a logo, design or tagline — is the most original one ever and nobody else has it, but they may be wrong. By filing for a trademark or copyright, they retain exclusive rights to their original works of authorship to keep anyone else from plagiarizing or copying the unique assets.Deborah Sweeney, CEOMyCorporation.com
Being a successful entrepreneur requires resiliency, tough skin and persistence. You have to be ready to fail time and time again, but to think of those failures as bumps on the road to success. You also need to be passionate about succeeding, and be willing to do whatever it takes to get there. Lastly, it’s essential that you love what you do. Thinking about a new startup idea is fun, it’s akin to thinking about the title of a new book. But to get a book written you need to be ready to sit down and write 500 words every day for years. It’s essential that you love what you do.Edward Griffith, DirectorLoveCrafts
Eager to learn more from the experts?See These Tips for Sales Growth
What questions would you add to this list? Which questions are stumping you as you decide whether to pursue your next business venture? We’d love to hear from you!