Starting a business can be a lot of fun. But you also need to ask yourself some probing questions to ensure you’re on the right track. Making a mistake could be financially costly.
Question 1: Who Am I Selling To?
Before you even begin, you’ll want to ask yourself who you’re selling to. For most companies, the answer to this question is natural and easy. You’ll know who your target audience is intimately.
But for others, you might not actually know. For instance, if you want to start up a used tire business, you won’t automatically know your target demographic. If you’re at all unsure about who you’re selling to, do some market research and find out who existing competitors target.
Question 2: What Makes You Different?
The next question is to ask what makes you different. It doesn’t have to be anything particularly grand or special, just something that separates you from the rest of the field. There has to be a reason why somebody would come to you, and not one of your competitors.
Question 3: Do You Have The Money To Set It Up?
You might have a great idea for a business, but if you don’t have enough money, you could wind up in financial difficulties.
Many people start companies believing their savings will carry them through. But eventually, they realize that they don’t have the funds to make it work.
If you’re not sure how much money you need, always set aside 50 percent more than your best guess. This way, you can bring your company to profitability before your capital dries up. That way, your business can become an asset to replace lost savings instead of going bankrupt.
Question 4: How Many Employees Do You Need?
Starting a business solo is a lot of work. There’s just so much to do. In many cases, basic legal admin can take up the majority of your day.
Therefore, many startups need to hire people from the outset. You’ll want to think about how many employees you’ll need and the equipment you’ll have to buy to support them.
The trick here is to think ahead of time. For instance, you might need laptops, printers, scanners and office equipment to keep things running. Ordering in bulk allows you to save money and means you’re ready to go, the moment a new colleague arrives for their first day.
Question 5: Do You Need A Partner?
This question is critical for people who worry about their energy, motivation and passion. You might feel ready to start a business right now. But two years down the line, will you have the same level of motivation? Probably not.
Having a partner can help you see your plans through to fruition. You don’t want to complete 90 percent of the process, only to give up when there’s 10 percent to go.
Question 6: How Much Tax Do You Need To Pay?
Finally, you’ll need to have a conversation with your accountant about your tax liability.