Nevertheless, much of the US economy is fuelled by entrepreneurs willing to take risks. By most reports, the recession has “officially” ended. This may very well be an excellent time to start a new business. Carefully thinking through these ten questions can help mitigate the likelihood of you wishing you hadn’t.
Is there really a need, demand or desire for your service or product? Market research is critical to answering this question. Surveys, community forums, focus groups, etc. should be conducted to gauge whether this is something that is likely to be supported or just a neat idea you have bouncing around in your head.
2. Who is your market, target audience, or desired clientele?
It is critical that you have a thorough understanding of your customer base. No “niche” supports every business. Truly understanding the needs, interests, trends, expectations, level of discretionary income, etc. of your unique customer base is key.
3. Who is your competition?
Competition doesn’t just come from a business offering the same or similar product. With limited discretionary income, many businesses are competing for customers. The putt-putt place and the movie theater are competitors, for example. Regarding the competition: are there opportunities for collaboration in terms of promotions, advertising, etc.? Understand how you are unique, different from the other guys.
4. Realistically, how much start-up capital do you need?
Do you have enough reserve to support the company for six months while the business gets established? How soon will you be able to turn a profit? What are the hidden costs (undoubtedly there are some)?
5. Do you have a reliable source for operating capital?
A dependable lender can be a small business’ best friend. When you experience a series of lean months do you have a creditor willing to front working capital to pay bills and make payroll or will you have to close the doors? Even if you don’t need a loan today, get cozy with your banker.
6. What are your personnel needs?
Is this a one-person show or will you need to hire staff? Will your local market provide the kind of talent you want for your company? How are you going to train them? What specialized skills will they need? How will you instill loyalty, strong work ethic, commitment to your values, etc.?
7. What is your marketing, communication, pr plan?
Getting the right message to the right audience is critical. How do you intend to spread your message and cut through the clutter on the airwaves, web, etc. How are you going to ensure consistency, authenticity in your branding, imaging, messaging?
8. How do you make your business trend-proof?
Otherwise, you may very well be “so yesterday” in a couple years. How do you intend to position yourself ahead of the curve?
9. Realistically, what is the effect of today’s economic downturn on your business plan?
There is reason to believe that the recession is, in fact, behind us and that better days are ahead. Still, we’ve just experienced the worst economy since the Great Depression and recovery will be slow. For some businesses, this presents a great opportunity; other businesses can expect to struggle for some time to come.
10. Who do you know?
This might be the most important question to ask yourself. Make a list of anyone who has clout, influence, interest or can provide entrée to those who do (friends, family, colleagues, associates, acquaintances). Think of them as your advisory board. Get input. Nobody can do it on their own. Think pragmatically about your list and try to include an attorney, accountant, banker, marketing pro. Find mentors! And don’t be afraid to ask questions.