Do You Have What It Takes to Start Your Own Business?
Many people dream of owning their own business and being their own boss, but dreams are one thing and actually starting and running a thriving business is another. Today, it is more of a challenge than ever to build a successful startup, but if you’re determined to be your own boss, here are the top 10 questions most frequently asked by those looking to start their own business.
Question #1 – Can I Run a Business?
The knee-jerk answer to this question is almost always “yes,” but if you want to minimize your losses and increase the chances for your startup to succeed, you will want to dig deep and honestly answer these questions to help you find an answer to this one:
- Do I make good judgments in my everyday life?
- Do I have the energy, focus and passion to put in the long hours a startup demands?
- Do I have experience in business, finances or management?
- Do I have the ability to persevere through hard times?
- Am I willing to sacrifice personal time to help my business grow?
- Do I have the ability to interact well with others?
Question #2 – Do I Need a Business Plan?
Yes. Every business, large or small, needs a road map for where it is going and that’s what a business plan is. Besides that, you will be expected to present a well-written business plan every time you want to apply for financing or attract potential investors to your company. While you may be tempted to hire a writer to write your business plan, as the owner, you should handle this task personally. After all, nobody has the passion for or the understanding of your business quite like you and that needs to be conveyed through the business plan.
Question #3 – How Do I Determine Startup Costs?
Before you start a new business, you should know how much money you are going to need to get it operational. Finding the answer to this question will require some research. Estimated costs for businesses in your particular industry can be obtained through trade associations, utility companies or through networking with other professionals. You can also look online for information related to startup costs for your type of business.
Question #4 – How Can I Obtain Cash to Help My Business Grow?
It can be difficult for startups to secure funding, but it is not impossible. That said, most banks and lenders want business owners to have a lot of their own money (no less than 25% of the startup costs) invested in the company before they will feel comfortable about granting credit. One of the ways you can increase your chances of being approved for financing is to get to know your bank’s loan officer. Seek their advice even when not applying for a loan and you’ll start to build a relationship that will be beneficial down the line.
Question #5 – Is Location Important?
Yes. The location of your business can be the difference between success and failure. You want your business to be located in an area that has excellent police and fire services present plus convenient parking, good traffic flow and the potential for operating at the site for a long period of time. Other questions you can ask yourself about your location include:
- What is the area’s tax burden?
- Is the cost of running a business in this area too high?
- Is this building or property suitable for my type of business?
- Is there too much competition nearby?
Question #6 – Who Are My Competitors and How Am I Better?
Understanding your competition (yes, every business has competition) will help you maximize your sales and thus, your profits. Research the direct and non-direct competitors in your chosen area and identify their strengths and weaknesses. Call them and inquire about their products and services or visit the stores personally.
If you notice admirable traits or valuable ideas among your competitors, do not hesitate to make them yours. On the other hand, if you notice mistakes they are making, then you will be better able to avoid making the same ones. If you have a particular competitor who has been in business for a long period of time, research them very carefully to learn how they have stood up to the test of time.
Question #7 – How Can I Market My Business Effectively?
The most effective way of marketing your business is dictated by who your target audience is. Who do you see as your primary customer? Where do they come from? What income class do they belong to? What and why are they buying from you?
You can also research trade publications or your local chamber of commerce for the best ways to market and advertise your particular type of business. Of course, you can always see what is working for your competitors to help you narrow down your options.
Question #8 – How Can I Create a Successful Marketing Strategy?
A successful marketing strategy is based on four things – price, product, promotion and sales channel. The first two are interrelated. You want to offer the best product for the best price. Price is self-evident, but in order for your customers to know your product is better than your competition, you are going to have to convince them that it is and that means – better promotion.
In order for your product to get the exposure it needs, you need to create a unique promotion that positions it perfectly within your market. Advertising and packaging play a large role in this. Lastly, how you intend to get the product to the masses is your final piece of the strategy puzzle. Which sales channel will your product thrive in – via telephone order, catalog, online, or retail?
Question #9 – How Can I Provide Excellent Customer Service?
In successful businesses, the customer always comes first and this is where customer service can make a huge difference in your customer retention rate. You need to ensure that your customer service employees are well-trained and capable of handling customer complaints. You should have customer service policies in place, but they should not be so constraining that your employees are not empowered to make their own judgment calls without requiring supervisor approval every time. Communication is the key to effective customer service and often the difference between a customer returning to or leaving a store or service provider.
Question #10 – What Do I Need to Know About Financial Statements?
Financial statements are filled with information, but the most important things you need to focus on are the balance sheets, the cash flow statements and the statements of operations. These three documents will give you the clues you need to determine if something within your business requires your immediate attention.
The balance sheet tells you the current financial state of your business. The cash flow statement tells you what happened to your financial position during a specific time period. The statement of operations tells you whether or not your company made a profit during a specific time period.
While your accountant will more than likely be the one creating these reports, it is up to you as the owner to be personally responsible for being aware of the state of these three financial statements at all times.