Deciding to start your own small business is no small move. The execution of a great idea takes careful planning, research and time. Forbes provides seven key questions to ask yourself to help steer your business in the right direction and to set it up for success:
1. Why am I doing this?
This is the big first question to ask. Do you want to build a business in support of a product or invention? Do you want to organize, solidify, and expand existing freelance or consulting work you’ve been doing? Do you love what you do, but hate the company you’re been doing it for? Do you want to branch out on your own? There are a million possible answers, and likely more than one will be true for you. Not to say that any motivation is inherently better than others, but knowing what motivates your desire to start a new small business will determine a lot in terms of how you move forward.
2. Is this a good time?
Once you get a great idea in your head for a small business and finally decide you want to throw yourself in and start making real moves to realise your plan, it can be tempting to jump in without taking pause to consider if right now is the most advantageous time to starting a new venture. And hey, we love the enthusiasm! You should feel that amped up about starting a new business (trust us, you’ll need that much energy!) But there’s nothing worse than throwing energy, money, and resources into launching a business, and leveraging all of your contacts to get a team, and raise funds, only to find out that outside influences are working against you. Especially if those negative influences might have been avoided by waiting for a better time. There are a lot of areas to consider – your personal life, the availability of key team members (maybe if you start your business now, you can get someone for a particular role who is B-list, but if you wait 6 months until an A-lister’s contract is up at their current job, you could get them), and conditions in your market. It’s never fun to put a project on hold, but if waiting 6 or 9 months (or whatever it takes) to give your business the best possible chance of survival, make the smart call and pump the breaks.
3. How much money will I need?
Spend as much time as you need to get your projected budget perfect. Consult with financial experts if it’s not something that comes naturally to you, or if you simply don’t know certain things. Research the kinds of funding and budgeting practices of similar small businesses. Take meetings with people who have been where you presently are – buy them lunch in exchange for stories of what worked and didn’t work for them budget wise when they were starting out. No matter how you go about it, figuring out the best possible estimate of how much money you’ll need to get through your start-up phase and the first 2-3 years is an indispensible planning tool that you’ll use over and over.
4. Where will I get money?
Once you know how much money your small business needs to get rolling, it’s time to consider the different sources you might get those funds from. Most often, that will end up being a variety of places; the majority of small businesses gather the money they need from a combination of personal savings, family and friends, small business loans, and investors. Research and compare each of these options to see which works best for your individual circumstances.
5. What other people to I need?
In small business, no man (or woman) is an island. If you think you’re going to do everything yourself, you should probably reconsider. Even if – and this is rare – the daily operations of your business can be handled by you and only you (perhaps, for example, you’re running a consulting business and just involves you managing your clients on a one-to-one basis), you still will need other people on your team, even if just on a consulting basis. Things like taxes, legal considerations, marketing, website…the list could go on forever. And then what if you want to grow your business? What if you get more clients or customers than you can handle with the existing team you have now? Regardless of where your company is at presently, think about what it would ideally look like one or two steps down the road – what people are there? What kinds of additional support will you need? What’s the best way to get that support – should you hire full-time employees to do those jobs, or outsource to contractors?
6. How do I handle setbacks?
Anyone can handle forward momentum and reaching benchmarks and generally enjoying things going well in the early days of your small business, but unfortunately, these aren’t the only situations you’re likely to encounter in the early days (and well beyond that, to be honest.) It’s worth taking a moment to think about how you react to setbacks and disappointments: are you the kind of person who responds with a renewed sense of commitment and purpose to push forward? Do you get discouraged? There’s really not a wrong answer here, but you do need to be honest with yourself. Entrepreneurship is best suited for people who aren’t readily knocked down – even when they get knocked back.
7. What’s my endgame?
A common mistake startup business owners make is not considering an exit strategy or what they want to eventually come of their business. This is something investors in particular will want to know. The reason a lot of small business owners don’t think about this is because they automatically think, “Why would I have an endgame? Why would I leave? We’re going to make this successful and then I’ll be there to run it forever!” The truth is, however, that a huge number of businesses are started with the anticipation that they will increase in value until some bigger company wants to buy them. Or maybe they get big enough that you eventually want to make an IPO and start selling stock. And do you really plan to stay with the company forever, or are you just there to get it on its feet before moving on? Will you stay on if the company is purchased? What do you want to walk away with, if and when you do walk away? And then what comes next?
While this sets up a good starting point for your business to grow, continue to ask yourself these questions as a way of keeping focused on your goals.
What other key questions would you consider before starting your small business?