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. As a start, you can get a report from BizMiner for around $100.
3. Who is your competition?
When you start the business, you need to know who is going to be selling a similar product or service. Study these companies very carefully. Figure out what they do well and what they don’t do well. I would recommend doing a quick Google search of all related companies in the area. Their websites are a great source of information.
4. How do you differentiate from the competition?
If you can’t separate yourself from the competition, why would anyone buy from you? You need 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.
5. 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. For more information on debt vs. equity, check out this article here.
6. 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.
If you have already started a business, what is something you would include on this list?