Starting a business can feel like a very daunting task. It seems like there are endless things to do just to get up and running. We’ve created a list of 10 questions that you must answer before you launch your startup in an effort to help make the process easier.
1. Why are you starting the business?
This is probably the #1 question that needs to be answered by any startup. Typically if you are just looking to make a lot of money, it probably won’t work out. The business you start needs to be something you are passionate about.
2. Are your expectations realistic?
It is okay to dream but having realistic expectations up front is also important. You can look up metrics for the industry you are in to determine what financial metrics are realistic. Don’t get me wrong, it is great to set high goals. However, if you set your projections way out of reach, you are setting yourself up for failure.
3. Who are your clients and customers?
As you begin your journey, you need to understand who exactly is going to buy your product or service. After all, how can you market to them if you don’t even know who they are! The key here is to get as specific as possible. Something we struggled with for a while was trying to be everything to everyone. The more we narrowed our focus and the clients we work with, the more growth we began to experience.
4. How will you brand yourself?
There are so many steps to this one, but it starts with a company name, logo and how you want your clients to see you. I think the best way to do this is through reverse engineering the process. Make a list of adjectives that describe your business. Pick a name and logo that aligns with that list. Once you have those, everything will flow from that (website, marketing materials, content, etc.)
5. How do you differentiate from the competition?
If you can’t separate yourself from the competition, why would anyone buy from you? You need to clearly differentiate yourself in order to separate yourself from the competition. The way you differentiate yourself will also be the head of your marketing efforts. There are typically 3 areas you can choose to differentiate your product or service: quality, price or convenience. Pick one and dominate.
6. What entity structure is best for you?
There are many different options but I don’t want to get into the details in this article. A few things to consider as you are choosing your structure are tax consequences, how to take money from the business, ownership % and liability for the owners. Once you have an idea what you want, then you begin the process of choosing the right structure and getting setup. As a note, I would highly recommend working with an attorney on this one.
7. What licenses, permits and registrations do you need to handle before starting?
Again, this one will be different based on your business, but I would encourage you to talk to an attorney to make sure you cross all your T’s and dot your I’s. This is something you want to make sure is done right from day one. Some things in here would include registering to do business in a certain state, sales tax licenses, applying for an EIN and registering for payroll. There are many more, but this list will at least point you in the right direction.
8. How will you raise the capital to start the business?
You really have two options: debt vs. equity. Debt is taking out a loan to fund the business and equity is bringing on other active business partners or investors. You can also fund the business with your own funds if you would like to remain in complete control. There are advantages and disadvantages to each of these scenarios so make sure you choose what’s best for you.
9. Do you have trusted advisers in place?
At a minimum you should have a solid attorney and accountant to help you get everything setup. Trying to do too many things on your own is going to cause major problems in the long run and lead to many long, sleepless nights. Spend a few extra bucks to get some professionals on your team. You won’t regret it.
10. How will you keep track of your books, pay bills, invoice clients, etc.
It can be tempting at times to just start making money without a plan how to track things. I can tell you from working with many clients over the years that once you stop keep track of things, it is very hard to get caught up. Most accounting systems, like QuickBooks, will be able to help you keep good records, pay your bills and invoice clients. If you are just starting you can even use excel. Regardless, just make sure you keep track of things from day one.
Starting a new business can be overwhelming. There seems to be an endless list of things that need to get done. However, if you set things up right from the beginning, you will be able to spend more time turning it into the business you envisioned.