Questions to Consider Before Starting a Business
/We have had the privilege of seeing a fair number of savvy entrepreneurs create companies that defy the odds and sustain success well past the critical one-year and five-year milestones.
On the other hand, we have witnessed an even greater number of businessmen and businesswomen fail in their attempt to launch a successful enterprise from the ground up.
What factors separate the successes from the failures? While there are far too many variables and intangibles at play to formulate a definitive answer that works for every situation, our most successful clients do have something in common: meticulously constructed business plans that answer important questions about the viability of their proposed venture. Some frequently asked questions these entrepreneurs considered before moving forward with their start-ups include the following:
Do I have the skills, knowledge, financial backing, and aversion to risk required to make my business work?
What is the current state of the market for the products or services my business will provide and how will I go about capturing a large enough share of the market to turn a profit?
What unique qualities or characteristics—such as lower price, better customer service, or a more convenient location—will help my business remain competitive?
How will I advertise and promote my new business to my desired customer base? Do I have the time, talent, and know-how to manage this on my own or will I need to hire a marketing team or PR firm to help get the word out?
What kind of infrastructure, office space, storage capacity, employees, production facilities, and supply chain do I need to have in place before bringing my product or service to market?
Are my startup costs, operating estimates, break-even analysis, and other financial projections accurate and do they fall within an acceptable range for the industry?
What is the long-term sustainability of my business and do I have a solid exit strategy in place for the worst case scenario?
Should I register my business as a sole proprietorship, partnership, LLC, or corporation? What are the advantages and disadvantages of each business structure in terms of legal liabilities and taxes?
Do I have access to professional counsel in the form of bankers, lawyers, and tax and accounting specialists to help guide my decisions in critical areas outside my expertise?
While having satisfactory answers to the above questions prior to launching your business won’t automatically guarantee success, you’ll likely get a lot farther with your efforts than someone who skips the process altogether. So before proceeding with your plans, take the time necessary to make an honest assessment of your ideas in light of the considerations listed here and modify your vision as needed.