Starting a new business is an exciting time and the chances are you’re passionate about what you’re planning. Hang on to that; keep the passion! But don’t forget to temper that enthusiasm with some smart, business-oriented questions that will help you start a successful business as opposed to one that is simply an enjoyable but temporary endeavor. Below are some frequently asked business start-up questions.
1. Am I ready to do this?
Ask yourself honestly: are you ready for pressure? Are you willing to put in the long hours that will almost certainly be necessary? What are you willing to sacrifice? Do you have the support of your family and loved ones? Do you have the people skills and leadership qualities to succeed? Do you have the mindset that will enable you to hang on and keep plugging away when things get tough (as they almost certainly will at some point)?
2. What business structure should I have?
You might choose to be a sole proprietor, enter into partnership, register as a limited liability company (LLC), and so on. It depends on the type of business, the liability issues and, of course, there will be tax implications to whatever you opt for. The best advice is to find a good corporate attorney and seek advice.
3. Where should I incorporate?
As for where to incorporate your new business, usually the simplest and easiest option is to do it in the state where you’ll be doing business. That said, Delaware is the place of registration of more than half of all new corporations in the United States and has a reputation as an ‘onshore tax haven’ due to its favorable legislation for big business. But…, despite the hype, if you’re a small start-up, the benefits often don’t outweigh the difficulties of dealing with two state tax systems.
4. Where’s my business plan?
Often, what distinguishes a thriving new business from the a stagnant start-up is its business plan. The plan is a route map; it’s so much easier to reach your destination when you have one. In it, you lay down the vision, goals, targets and aspirations for your business and how you intend to achieve them.
5. How much money do I need to start a business?
You may have capital to hand (your life savings perhaps), equity in real estate, or other available funds to finance your new business start-up. With that, you may feel confident enough to get started in your new business venture. However, until you sit down and actually calculate your start-up costs and associated expenses you won’t know for sure that it will be enough; and that’s the certainty you need before you begin. If you run short of funds in launching and establishing your new business start-up, it may end up rapidly going down the tubes – and your investment with it! Having insufficient funding is one of the main reasons why new start-ups fail.
6. How financially savvy do I have to be?
Expertise can be hired but as a business owner, you need to at least understand the main principles of business finance: balance sheets, profit and loss statements (or statements of operations), cash flow statements, etc. You need to understand the information contained in these essential documents and also be able to analyze and understand cash flow as opposed to profit.
7. Why should I care about location?
Location is a critical success factor. Think about the potential customer/client experience from their perspective: How do they travel to you? Are you surrounded by competitors? Is that a good or a bad thing? How is the local economy performing? What is the impact on your supply chain and logistics? Will this site still suit you in five years? How about 10 years or more? Location can be the difference between business success and business failure. So take the time to evaluate your business needs and the suitability of prospective business locations.
8. Who are my competitors?
Know what and who you are up against. What other goods and services might tempt your potential customers or indirectly impact on their choice of whether to go with you? Consider the strengths and weaknesses of direct competitors and compare them to your own – take into account quality, price, process, and customer feedback. Apart from anything else, you can learn from your competitors’ mistakes.
9. How will I market my business?
Know your typical or target customer: Where are they from? What do they buy? What do they value that you can offer? Develop a focused marketing strategy that addresses product/service, price, how you will promote your business, and which channels your product/service will be accessed by. Above all, understand what makes your business unique and leverage that.
10. Where can I find help?
The successful entrepreneur knows that they cannot do it all. Knowing what you need help with and then asking for it is a savvy business strategy. As well as professional business advisors, there are also non-profit organizations – such as the longstanding SCORE – dedicated to assisting start-ups. Look also at the US Small Business Association.