The way we work is changing — many people are choosing to work from home or even start their own small business rather than continuing to work in more traditional careers. While starting a business can be a great way to become self-sufficient and be your own boss, it’s not for everyone. It can be expensive, and lead to failure if you’re not properly prepared before you open your doors for the first time. So what questions should you ask yourself before you start your business?
1. Is there anything preventing me from starting a business?
This should be the first question you ask yourself before you even consider starting a business. What is preventing you from jumping feet-first into the world of the small business owner? List all of the excuses that come to mind on a piece of paper, read over them again, deeply consider them, and then… throw them away! Business ownership is all about risk and reward. If the risk is your excuse, then owning a small business might not be for you, or at least not that moment.
Don’t focus on excuses. Find solutions instead!
2. How much money am I willing to risk?
Depending on the type of business you’re starting, you may need a lot of capitol to get it off the ground. The important question here is how much money you’re willing to risk to get your business started. Do you have savings that you can use or will you be looking into obtaining a small business loan to give you the startup power that you’re going to need?
Keep in mind that while there are loans available, you’ll still be responsible for paying the loan back if your business plan fails. Be aware of this when choosing the amount of your loan. A good idea for this question is to determine how much your business will cost overall — and how much you’re willing to risk — as part of your overall business plan.
3. Do I know how to run a business?
You don’t necessarily need a degree in business management to run a small business — though it can help. What you need is the willingness to learn from anyone and everyone willing to teach you the ins and outs of running a small business.
Read books. Attend seminars both online and in person. Go to business management conventions — yes, they do have those — when you can afford it. Absorb everything that you can about running a business from those who have done so successfully. They’ll be the ones who can teach you the tips and tricks that they’ve learned over the years.
4. Can I afford to start this as a full-time job?
Running a business is a full-time job in and of itself, but if you don’t start making money immediately, you may find yourself scrambling to pay the bills while you wait for your business to start building momentum. Ask yourself if you’ve got the resources to handle a few lean months — or more — if your business doesn’t start making a profit immediately.
If the answer is “no,” your best option may be to start your preparations and build your businesses foundation while you’re still working another job.
5. Am I going to need a physical storefront?
What type of service or product are you planning to offer? Is it something that will be done exclusively online, in client-based locations, or in your own personal storefront? Small businesses may find the idea of a 12-month lease daunting, especially if you’re not sure if your business will turn a profit.
However, having a place to work, even if it’s a relatively small workspace, is actually very popular amongst small business owners — roughly 85% of commercial real estate transactions are completed for small businesses, or properties that are worth less than $2 million. Even if you’re working on your own at first, having a place to call “work” can be beneficial to establishing a work-life balance and getting in the right mindset every morning.
Make sure you can handle it financially, though, and look at your own businesses’ needs. If you’re going to require the use of a storefront, do plenty of research on both the location and the lease requirements before you consider signing. If possible, seek out the aid of a commercial real estate association to help educate you on your rights and needs.
6. How much time do I have to dedicate to running this business?
Are you planning on starting an on-call consulting business or will you have set business hours where you will be available to run your business? This becomes an important question once you’ve opened your doors. The more time you’re able to dedicate to your business, the more potential income you can make, but it can be stressful for you as well, especially if you’re a sole proprietor and have no employees or partners to share the load.
7. Will I run this business alone or do I need employees or partners?
A sole proprietorship can have its benefits — you don’t have to worry about things like healthcare and employee taxes if you’re the only employee of the company. On the other side of that coin, though, working alone means that you don’t have any time for sick days or vacations — if you need to take a break, you close your doors for the day and lose out on that day’s potential profits.
Having a partner or hiring an employee can help you share the load. Look into the benefits of running the business by yourself and compare it to the potential pros and cons of working with a partner or hiring someone. If you choose to enter into a partnership, make sure that it’s with someone you trust and are willing to work closely with — otherwise, you put yourself at risk.
8. What are my plans for advertising and marketing?
You’ll probably need to invest in advertising at some point. This could be as simple as relying on good public relations with your customers, or as extensive as investing into magazine and newspaper advertisements, billboards, and even television and radio commercials.
When you’re planning your budget and looking for startup capitol, make sure you include a budget for advertising and marketing. It doesn’t have to be expensive if you’re willing to spend time networking, but it is necessary.
Make sure you include social media. An online or social media presence is almost essential to running a successful business in today’s modern world, so make sure you’re well-versed in social media advertising techniques.
9. What are my chances of success?
This question is pretty straightforward, but may require some research. You need to look into the following things:
1) The demand for your business in your target area.
2) The potential profit margins for your type of business.
3) The overall cost of starting and maintaining your business.
If the first two items are high and the third item is low or at least reasonable, your business likely has a high chance for success. If your business has a lower profit margin or low demand in your area, it might be time to look for another business plan. Small businesses need to be profitable to survive.
10. Do I have a backup plan in case of failure?
Finally, before making that leap into small business ownership, ask yourself this: Do I have a backup plan in case my new business goes belly up? Don’t leave yourself without some sort of safety net — even if you’re not going back to your old 9-5 job, it’s still a good idea to have some savings or some credit that you can use to keep yourself afloat. Don’t plan for failure, but make sure you’re covered if it does occur.
Running a small business is a massively rewarding endeavor, but it requires work and copious amounts of preparation. Don’t jump into the deep end before you learn how to swim! Take the time to prepare and learn how to best run your small business before you turn the key and open your doors.