Thinking of Starting a Business in 2018? Ask Yourself These Questions

By on October 15, 2018

If you are considering leaving your job and starting a business in the coming year, you are not alone. What could be more fulfilling than setting your own hours, generating your own income and being in control of your own destiny? Going off to start your own business is no easy feat, and many would-be entrepreneurs quickly become unsettled by the hard work and uncertainty of the lifestyle.

If you are thinking of running your own business, here are some key questions to ask yourself before coming up with your detailed business plans, seeking financiers and launching yourself into the great unknown.

8 Questions to Ask Yourself Before Starting a Business

1. Do You Have a Business Plan?

Many people think that being their own boss is going to make life easier, but that is not always the case as there are many facets of business to manage. It can be difficult to get started when there is no clear indication of what you should be doing or where to begin. You need a business plan to organize and direct your efforts in concrete ways.

2. Are You an Inventor or Entrepreneur?

A lot of successful business start with an amazing idea or super successful product. Unfortunately, a great product, idea or invention is not be enough to establish a stable business. All too often, Inventors are overly focused on the idea or product and lack the skills for properly managing the other aspects of a business.

Entrepreneurs understand that a great product or idea does not immediately translate into a business; there are supply chains, marketing, insurance, bookkeeping and other tasks requiring knowledge and coordination. Sometimes these two personalities need to partner up and use their complementary skills to build a strong business around a good product/idea.

3. Does Your Business Offer Customers What They Want or Need?

Maybe you’ve heard the saying “If you build it, they will come”. While this might work in the movies, but it may not always work that way in business. The customers or clients are only going to come is you offer something they want or need.

Passion and determination are key factors in success, but in order to build a profitable business, you need to offer a good product. If there is no customer need, the business will fail.

4. How is Your Business Unique?

If you do offer a desired or necessary product, how is your business idea different from other businesses already out there? How do you plan to compete in your industry or marketplace?

You don’t always have to come up with a brand new idea, rather, it depends on how you define your company and its place in the market. Give customers a compelling reason to choose you over the competition.

5. Are You Willing or Able to Perform Multiple-Roles Within the Business?

Large companies can afford to hire someone to file invoices or answer phones, another to manage projects, a team of accountants, even personnel to track the time-sheets and pay of other employees. This is not usually the case when starting a small business.

Without a large amount of start up capital for a football sized team of employees, new business owners will typically wear many hats — owner, human resources manager, accountant, sales person, tech support, maintenance contractor, etc.. Make sure you will be comfortable performing a variety of functions, even the grunt tasks like taking out the trash and fixing faucets.

6. Is Your Business Financially Viable?

Working for yourself can be extremely stressful. Freelancers, contractors and many other small businesses have inconsistent cash flows (income). For those interested in launching a product-based business, it can be three to five years before you business turns a profit.

When making your business plan, it is important to be realistic about how much money you can make in the early years. You may need other means of support from another job or spouse to cover debts or emergencies.

7. Are You Prepared to Handle Risk and Failures?

It is hard to not take rejection personally when you are deeply invested in what your business or product offers. However, you need to be prepared for the word no. You may hear ‘no’ from investors, bank lenders, landlords and other. Don’t spend time dwelling on the rejection or feeling bitter, you’re not only wasting your time. Starting a business can be difficult and you may fail the first few times, but stay determined and hone your business model.

Additionally, a business is a risky venture which may make subject you to accidents, lawsuits, and other risks beyond your financial means. Start thinking about commercial insurance coverage now to get an idea of what you need to protect and how much it is going to cost you (some insurance protects are required before you can open a business to customers).

8. Do You Have an Exit Strategy

A common mistake new business owners make is not having an idea for how they want their company to grow or having an exit strategy. It may seem strange to think of closing a business before you have even started a business, but investors will want to know if you are interested in selling your idea/product off and moving on or if plan to stick with the company forever until retirement.

Many businesses start out with the anticipation that they will sustain market share for several generations or increase in value until some larger business wants to buy them. Ask yourself what your long-term plan is for your business. And make a plan for your company if you had to quit or sell.

Tough Questions Lead to Solid and Successful Business Plans

Asking yourself the tough questions ahead of time could mean the difference between success and failure in a new business. Speak with a trusted business consultant or financial advisor to ensure you are on the right track before drawing up a business plan and establishing your entity.

Take the next step - Let's talk!

Remember to speak with your financial, legal or tax professional for more information about the topics which interest you. Here are a few ways for you to share your ideas, learn more and interact with FinancialSafetyNet members, authors and expert advisors.
Have a question, but don't want to share it with everyone? Contact a financial advisor.
Want to contribute to the conversation publicly? Submit a comment.

Submit A Comment

About Chuck Piecukonis

You must be logged in to post a comment Login

Leave a Reply