If you want to change a career path and become your own boss, launching a small business seems like a perfectly reasonable option. It’s a great opportunity to do what you really love and create a balance between private and professional life.
The good thing is that you don’t have to worry about administrative obstacles as it only takes 6 days to start a business in the U.S. However, you do have to think about how to make your company productive and profitable in the long run.
According to research, about half of small businesses don’t make it past five years, while 20% of new companies fail within 12 months.
The business failure rate is high because a lot of entrepreneurs don’t think strategically and don’t plan their activities well in advance.
We guess you don’t want to make the same mistake, so keep reading to learn the most important questions to ask yourself before launching a small business.
1. Do I Have a Business Plan?
A business plan may sound like a fancy phrase without any practical values, but it’s actually a critical document that can make or break your entrepreneurial dreams.
Think about it this way: you probably make a schedule of daily activities, so why wouldn’t you create a business plan for your company?
It’s an all-encompassing strategy with many different elements. We will discuss some of them later, but let’s go through the basic components of the business plan here:
- Executive summary
- Business description
- Market analysis
- Organization management
- Sales strategy
- Funding requirements
- Financial projections
2. How Much Do I Need for the Start?
The funding issue is one of the most delicate and critical. The Wells Fargo Small Business Index suggests that the average amount of startup capital is $10 thousand. But we know it could go much higher depending on the nature of your business.
The best solution is to ask yourself: How much do I really need to break the ice?
Think about all the things you need for a successful launch – offices, inventory, equipment, services, etc.
In our opinion, entrepreneurs should always consider the worst case scenario and project to spend a little more than expected.
Read also: How Much Does It Cost to Build a Website?
3. What Problem Am I Solving?
People do business because customers demand solutions to specific problems.
For instance, you are reading this post because you want to learn how to solve the problem of launching a profitable small business. Therefore, our job is to provide you with useful tips and suggestions.
The same goes for your future clients, so you should answer the basic question: What problem am I solving with this company?
If you don’t know the answer to this question, you better reconsider the business plan and discover the purpose of your small business.
4. Who Are My Customers?
We’ve come to the critical point in which you have to analyze the target audience and create a buyer persona. This question is essential because you need to understand how your average clients think and behave.
For example, professional college essay writers know that their audience consists of students looking for flawless academic papers.
You should do the same and find a way to describe your own customers. In order to do that, you have to learn everything about them:
- Age and gender
- Average income
- Academic level
- Personal values
- Channels of communication
5. Who Are My Biggest Competitors?
Every niche is packed with all sorts of companies and organizations that are struggling to win over the same portion of the market share. As a clever entrepreneur, you need to identify the biggest competitors and see what they are doing.
Learn everything you can about them.
Analyze their products, marketing campaigns, communication channels, online presence, customer services, physical stores, etc.
Each information will help you to upgrade your own business and become more competitive long-term.
Read also: How to Make Nearly $50K from Your Blog in 1 Year
6. What Makes Me So Special?
This question goes hand in hand with the previous one. Now that you know both the quality and the number of competitors, you need to figure out what makes your company special and unique.
Anything can become your comparative advantage – from price and quality to product origin and corporate social responsibility.
The most important thing is to identify this special feature and make it an anchor of your sales and marketing strategy.
7. Do I Have Any Additional Resources?
A surprisingly large number of entrepreneurs neglect this very important question. When we say resources, we are not talking about money but rather about all other things you might use to boost small business.
First of all, consider your skills.
If you can handle sales and marketing single-handedly, it is already a huge benefit for the company.
Secondly, think about the network of professional acquaintances. Are there any people or organizations you could ask for help if needed?
When you understand resources, you can plan properly and get ready for the execution. At the same time, additional support is always welcome in case something goes wrong and you are forced to improvise.
8. Am I Building a Scalable Company?
Launching a small business successfully sounds like a dream come true, but it does come with a very important tweak. You have to answer the question: Am I ready to scale the company?
A study shows that nearly 40% of business owners anticipate employee growth during the next five years.
Let’s say that you’ve made a big breakthrough alone, but can you handle everything now that the work has tripled?
If not, you better make sure to find a team of skilled and reliable employees. It is by no means the last minute activity, so you must answer this question in a timely manner.
9. Do I Have an Operating Agreement?
Many companies start as partnerships because it makes it easier to delegate duties and form a productive organization. However, you absolutely have to craft the operating agreement and determine who does what, where, when, why, and how.
With a detailed operating agreement at your disposal, you and your partners can find a way out of every situation, however good or bad it might be. This includes issues like rights, profit distribution, ownership, and similar.
Launching a small business is never an easy thing to do. You have to rely on your skills, experience, and intuition, but you also need to conduct a comprehensive study and analyze the market before making your first move.
We tried to help you prepare for the new project by discussing nine questions you should ask yourself before starting a small business. These are not the only details you must keep an eye on, but they are certainly most important, so make sure to answer each one clearly and precisely.
About The Author
Jacob Dillon is a professional writer at Awriter. Being passionate about what he does, Jacob likes to discuss stirring events as well as express his opinion about technological advancements and evolution of society. Find Jacob on Twitter and Facebook.