It has now become easier than ever to start a business. But while the world of business has been democratized, it is as easy as ever to fail. Not everyone is fit to run a business, and not all ideas are fit to be businesses either. This is why it’s important that you have a realistic view of what it is to actually run a business before you start one.
Having a clear idea of what running a business entails and proper preparation will not guarantee success, but could allow you to avoid a catastrophe. Here are some of the questions you should answer before you start a business.
Will My Business Actually Address a Need?
The first thing is making sure that your business is actually meeting a need. Maybe you identified a gap in your market, or your local market is underserved. You have to make sure that your target market and the population at large will actually care about your business. Without an audience, you have no business, so make sure that this question is answered before moving to the next step.
Is it Actually Feasible?
Even if your idea is great, you may not be able to actually start it yourself. Some businesses are just too capital intensive for a single person to start, unless they already have the funds. Others might not even be ready to be entrepreneurs in the first place, so this is another thing you’ll have to assess. Are you ready to move from salaried employee with a guaranteed paycheck to being the captain of your own ship? Will your family be able to handle the shift? These are all questions that will need to be answered as well.
Am I Adding Value in Any Way?
Successful businesses aren’t successful simply because of good marketing or out of luck. They are successful because they actually add value. They make people’s lives better. If your business is not contributing to people’s lives in a positive way, then you might have to reconsider it.
Is This Something I Can Do Full Time for the Rest of My Life?
A business is not a 9 to 5, and there is no way to take a break from owning a business. You might shift responsibilities to someone else, but you always have to be able to handle the duties of being a business owner. You might have to deal with business issues at all times of the day and night, hold impromptu meetings with investors or clients, or have to put out fires. So, unless you are ready to commit 100% to your business, you shouldn’t start one.
You have to see how it will fit with your life, and what you want your life to look like for the next coming years. You might have less time to dedicate to your family and friends, and even have to abandon some of them. The same goes with hobbies and activities you may enjoy. And you also have to deal with the ups and downs of running a business, with all the pressure that comes with it.
Can My Business Actually be Monetized?
This might seem like an obvious question, but there are many business ideas that can be hard or impossible to monetize. Your idea could be great, and even solve a big problem in the world, but if it isn’t profitable, it simply won’t work.
This could be because the target market is simply too narrow, or that the idea, while being beneficial, cannot provide any tangible return on investment. So that is something you’ll have to consider as well.
Can I Get My Partner to Buy In?
Sometimes, your partner could be the best judge of whether an idea is good or not. Try pitching your business to your significant other and see how they react. If they seem excited by the idea, then it’s often a sign that you’re on the right track. However, if they have reservations or think you are out of your mind, then you should consider their advice. That doesn’t mean that you shouldn’t get a second opinion from a professional however, but that can be a great first test.
What’s the Best Structure for My Business?
This is also a very important thing you’ll have to consider. Choosing the wrong structure for your business could be disastrous, and open you up to a variety of legal and tax issues.
If you were thinking of starting a small to medium business, the most common option is either going as a sole proprietor, or as an LLC. Sole proprietorships are easy to start and don’t require that you register. However, you will be held liable for any debts or lawsuit against your business.
The next option is to go for an LLC. An LLC allows you to create a separation between you and your business.
As well as learning what it is, you will learn exactly how to establish one, and a bit more about the legal side of it. They also give you a few tips on how to choose the best state to form your LLC.
Do I Understand the Legal Aspect?
Too many people jump into business without understanding the legal side of things. But the best thing you could do before starting a business is consult with a business attorney. They’ll be able to give you a clear rundown of what you can expect as far as tax requirements go, permits, obligations, and risks. This could be the difference between running a smooth operation and getting hit by a lawsuit out of the blue.
Starting a business is easy. Running a successful business is a whole other thing. So, before you start one, make sure that you do your homework, that your idea is feasible, and that you’re up for the challenge.