Six Questions Every Entrepreneur Should Ask Before Starting a New Business
Expert Reveals How To Know You’re Ready to Launch
As the US job market continues to lag behind, inspiring terms in the media like “jobless recovery,” many disenfranchised professionals are thinking of starting their own businesses. While the rewards could be greater than their old salary, so are the risks, begging the question “Am I ready for this?”
“One of the greatest concerns that most entrepreneurs face is whether their business will be sufficiently lucrative to replace the income that they are giving up by taking themselves off the job market,” he said. “This concern is referred to as opportunity cost. By answering a few questions, most entrepreneurs can evaluate their business idea and determine whether this opportunity is better than working for someone else. These questions should be answered before spending the time necessary to develop a business plan.”
* What is your product or service, and how it is different than your competition? -- This sets the stage for the risk assessment. If your product or service isn’t very different or it’s not delivered in a unique fashion, you may already have the odds stacked against you.
* What is your management background and expertise that allows you to provide your product or service? -- Your resume should be comparable to that of other senior managers in your field. Credibility is important to customers and clients, and if you haven’t walked the walk, people won’t believe you when you talk the talk.
* Who will be your customers? -- If your customer base is rich with mass consumer possibilities, or deep pocketed clients, you’re off to a good start. If you can sell to a wide range of customers, you’ll have a better shot at meeting your business goals.
* How will you market to your customer? -- Knowing your customer is important, but knowing them is meaningless if you don’t know how you’ll reach them to educate them on your company and sell to them. Marketing is a major expense, so understanding this strategy will also help you figure out how much capital you’ll need to make it work.
* Who are your major competitors? -- There is a difference between entering a field that is new, with few competitors, and going against big companies with deep pockets. You may need to raise more capital if you are going up against some heavy hitters.
* What are your start-up expenses, the one time expenses that need to be considered prior to beginning business operations? -- Setting up an office, creating business cards, buying software and other costs need to be considered in order to determine how much funding you’ll need to take your best shot.
“Regardless of your answers to the questions, the primary thing you need is passion for your venture,” Oman added. “You can have the best financial model, a receptive audience and compelling marketing, but if you’re not absolutely passionate about your new venture, you won’t have the drive it takes to bring it all to fruition. All you’re doing is going from one miserable existence working for someone else to another miserable existence working for yourself. Choose a venture that makes you jump out of bed in the morning with anticipation for the day, and you’ll be equipped with 90 percent of what you need to succeed.”
Andrew Oman is founder of the Olive Tree Network, has successfully owned and run his own online business since 2001. He majored in Organizational Communication at the University of Utah and values education and research as key elements of establishing a business.