Novice or seasoned businessmen will agree that there is nothing like the thrill of planning and running your own business. The rush of having that great idea, burning the midnight oil trying to come up with a foolproof business plan, getting resources, and finally, after trials and tribulations, seeing your business idea become fully functional and, who can deny it, the first win! There are those who live for this, and there are those who dream of it. The essence is to go from the second to the first and while doing so, it is very important to ask yourself certain questions that will determine if one is capable of making the transition.
1. What exactly are you selling?
Although this may seem like a very obvious question, it is important to understand its context. For example, Mercedes sells cars, but what people really buy is the prestige and status associated with buying a Merc. So while you’re selling a service or product, what are you really offering? Your revenue model will also depend on the answer to this question, especially if your revenue is not going to come directly from sales, but through other methods.
2. Is there a market for what I am going to sell? If there is, what is it like?
Having a market, existing or potential, is extremely important. Even more important is understanding this market. How big is the market? Are a lot of people buying what you plan to sell? Does it look like they could? Do you have competitors? Are they strong or weak? Do you have what it takes to compete? How sensitive is the market to factors such as price, cost, location, trends, and the economy? This is not to say that you shouldn’t consider a difficult market or one that doesn’t exist yet. Many companies started out in what people thought were hostile markets, but became success case studies. The answers to these questions will only tell you how hard and how smart you will have to work.
3. What is your USP?
USP stands for Unique Selling Proposition. If you’re entering a competitive market, your product or service will need something to set it apart from its competitors. This USP is what you will travel on; which will help you keep start-up costs down and also help you make a profit. However, it doesn’t take long for the competition to catch up, and you’ll have to keep thinking of new USPs or reviewing them all the time.
4. What is your initial cost and how long can you recover it?
An analysis of your finances is very important. You will need to estimate how much it will cost you to set up this business. While initial financing can be arranged, what is more important is determining how long it will take to at least recoup the cost. Earnings can be slow and steady, but being able to recoup your cost within a reasonable time is essential. No business can sustain a loss for long unless it has a rich uncle behind it.
5. What is the growth potential?
Do you see yourself making expansion plans, adding services and products, diversifying? If you want to stay and compete, you will need to keep growing. Some companies succeed doing exactly what they did when they started, but they are very rare. And also, it eliminates the main objective of the business: growth. It is essential that your business be such that it can expand in many directions; on which you can build. This is what will give you a competitive edge all the time.
Whether you’re thinking of starting an online or offline business, you’ll find that these questions are the ones you need to answer first. It’s always good to deal with them before you start, instead of dealing with them at a later stage, when even finding the answers won’t help much.
