Millions of people dream of starting a business someday. The thrill of being your own boss and the prospect of practically unlimited income make entrepreneurship an especially attractive career choice. But starting a business isn’t as easy or as straightforward as it sometimes seems. If you want to be prepared for the realities of business ownership, you’ll need to ask yourself several important questions about your motivations and eventual goals.
Important Questions to Ask
Ask yourself these important questions before you begin planning your business:
- Why do you want to start a business? There are many good reasons to start a business, but different motivations should lead you to different approaches. For example, if your favorite perk of business ownership is schedule flexibility and autonomy, you’ll treat the business differently than if your favorite perk is the possibility of getting wealthy. What’s important here isn’t that you have a “good” motivation, but that you understand what your motivations are. Some are more realistic than others, and if you’re not sure what your motivations are, you’ll struggle to feel satisfied.
- Do you know what it takes to start a business? Starting a business is a massive undertaking, so you should be prepared for what it takes. You’ll need to be prepared with a checklist of all the items and structures you’ll need to build your business as well as an understanding of the mental and emotional demands of entrepreneurship. Are you ready to commit yourself to work long hours, into evenings and weekends, possibly at the cost of your social life?
- How is your business going to make a profit? This may seem like an obvious question, but it can be a difficult one. For example, if your goal is to create a kitchen appliance and sell it for a profit, are you sure you can charge a markup that people will pay that will still allow your business to make money? You may have an idea for a fantastic new app, but do you also have a plan for how to reliably monetize it?
- Who is your target demographic? If your first instinct is to say your target demographic is “everyone,” you’re doing something wrong. It’s possible to succeed with a business that has a broad, general target audience, but when you’re just getting started, it’s much more efficient and reliable to focus on one specific target demographic. If you don’t know what that demographic is, or what makes them tick, you won’t get very far.
- How will you get funding? Most businesses take a considerable amount of money to start. While it’s possible to start a business with just a few hundred dollars if you have a viable online business model, the majority of businesses will require you to get an office (or a retail location), as well as specific equipment, employees, and other expensive additions. How are you going to pay for that business? Do you have personal savings, or will you be relying on external funding options? If you’re trying to get funding from another source, will you be targeting angel investors, venture capitalists, or crowdfunding contributors?
- Can you afford to deal with inconsistent or unpredictable income? Entrepreneurship does give you the potential to make significant money, but chances are, you won’t see much of a profit—and therefore much of a salary—for the first few years of development. During dry spells, cash will be tight, possibly restricting how much money you can take for your personal needs. Do you have a plan for how to get by with a limited or unpredictable income? You can’t count on your business making tons of money from the start. You need to have a backup plan.
- What’s your endgame? This final question hearkens back to the first one you asked yourself: what’s your main goal? Eventually, you’ll need to do something with the business. That could mean selling it for a profit, passing it to a child or family member, or just sitting back as an advisor while you let someone else manage it. It pays to have an endgame in mind, so you always know what you’re working toward.
Writing Your Business Plan
These questions can help you define your goals, your directives, and your level of readiness before you start a business, but they won’t provide you with a blueprint you can use to start your business from scratch. To be successful, you’ll need to write a fully developed business plan, which will help you pinpoint your strengths, weaknesses, opportunities, and threats, and make some realistic financial projections for your first few years. The better prepared you are, the more likely it is you’ll be successful.