Monthly Archives: May 2014

Questions to answer before you start planning your business

Are you thinking about starting a business? What does it take to get a business off the ground? Have you started writing a business plan? Do you have what it takes? Before you go any further, here are some questions you should ask yourself:

What are the main reasons you want to be in business?

Bad reasons for going into business typically include wanting to spend more time with your family or thinking that you will get rich quick. The fact is that starting a business is a lot of work, and building a successful business takes time-months and years. The fact that you cannot get along with your boss is not a good reason either. In business, you will have to work with people all the time, and even when you are the owner, the customer is still basically your boss.

The best reason to start a business is that you have a great idea; that is, you have some way to do things differently or better than the others. Another good reason is that you want to be the person in control of your income. If you expect a huge amount of hard work, and if you expect to receive the financial benefits of these efforts, then being an entrepreneur may be for you. If these are your thoughts about starting a business, then read on…

What type of business are you interested in operating?

Your business should consist of something that you are good at and something you will enjoy. You will be spending a lot of time on it; your business will become your livelihood. You might as well enjoy it, and you better be good at it.

The first businesses people often think of starting are restaurants, bars, salons, retail stores, and entertainment and recreation businesses. These businesses are risky, and they are among the most likely to fail. For this reason, they are very difficult to finance; most banks won’t touch them.

Such businesses are risky because they require significant up-front expenditure for equipment, because they are subject to people’s ever-changing tastes, because they are cash businesses subject to employee (or owner) theft, and because, contrary to popular belief, they require significant experience before you can run them properly. These types of businesses should be at the bottom of your list, unless you have experience in the industry, a really good idea, and your own money to try the idea.

Who will be your customers?

Who will pay for your products or services? How will you attract them? Depending upon your type of business, you should already be able to name exactly who some of your customers will be.

Who will be your competitors?

If you don’t think you have competition, think again. Every business has competition, both direct and indirect-from sources you may not have even considered. You must be able identify exactly who and where your competitors are before you get into business.

What will be your competitive advantage?

What exactly will you do differently or better than your competition? How does your product or service benefit your customers? This is the entire basis for your business and your business plan, and the answer to this question makes or breaks your business. The right answer represents a great opportunity, waiting for you. But, if you cannot come up with a strong competitive advantage and be able to communicate it effectively, you will probably not even get a business started at all.

Will you offer lower prices than your competition? If your answer is “yes,” then think again. This is an extremely difficult strategy for a newcomer to pull off.

What are your personal strengths?

Do you have experience in the industry? This is an absolute must. To be successful, you do not necessarily need to be an expert in business. Instead, you should be an expert in providing some special sort of product or service. You can hire professional help, but there’s no substitute for providing a great product.

What are your limitations?

Are you prepared to be responsible for attracting customers and for ensuring that the business makes money? Are you prepared to pay your bills if the business is not profitable or in the likely event that it takes months (or even years) longer than you expect to become profitable? Are you prepared to work longer hours and to work outside of the typical eight to five workday? Are you organized?

How will you overcome these limitations?

Can you afford employees and professionals to perform the duties that you cannot? Are you willing and able to delegate responsibility? How do you deal with stress? Do you have a business plan? Are you ready to get started now?

There is truly something magical about owning a business. Your business stirs a pride in ownership that is difficult to replicate by any other means. The feelings become even deeper as you create a team and satisfy customers as well as provide financial security and career advancement to employees. But, if you are going to be successful, you must first think and research and plan. It takes a special person to write a business plan and then to put it all together, to implement it, to make it happen, and to make it work. It takes responsibility and self-discipline.

At the same time, you may very well have the opportunity of a lifetime. You will ultimately be responsible for all of your successes and failures. Planning and effort are required, but your hard work will be rewarded with financial success. That is part of the magic. Business ownership takes a lot of hard work, but the rewards can make every ounce of effort worth it.