Does the thought of opening your own business sound appealing? Being your own boss, setting your own hours, and spending every day doing what you love. This might sound great but opening a successful small business can be tough. Nearly 20 percent of small businesses fail within the first year according to data from the Bureau of Labor Statistics. Approximately 50 percent of small businesses fail in their fifth year. There are many reasons a business may fail, but that doesn’t mean you can’t have a new business success. Here are 8 questions to ask yourself before starting a business.
1 Why do I want to start a small business?
You might be passionate about a particular business idea, but do you see yourself doing this for years to come? Are you motivated enough to work to make your business a success?
2 Can my business idea translate into the money I need?
If you are looking to support yourself and your family with your small business? Will it generate enough income to make this possible? How do you plan to turn a profit and how quickly will you see that profit?
3 Does my family support my new business dreams?
The support of your family and loved ones can mean a lot when facing the struggles and demands of a new business.
4 Who is the target market for my business?
Do you have a niche market that needs your products or services? Are you jumping on the bandwagon of a hot product whose bubble may soon burst? It’s important to understand your target market and the long-term need for your product or service
5 Who are my competitors?
Is your market saturated with competitors? If so, what differentiates your product or service? You should look to provide a unique value. If you’re one small player in an over-saturated market, your competitors may continue to chip away at your market share.
6 Can I do this on my own, or will I need a partner or employees?
Consider all of the time and energy it takes to build and maintain a business. Will you have a partner or employees helping you meet your goals, or are going to fly solo? Do you have the time and energy it takes to make it a success? Do you have the necessary skills and abilities to manage and maintain the day-to-day operations of your new business? Surrounding yourself with talented employees who make up for any weaknesses you may have can mean the difference between success and failure.
7 What are the risks involved in starting my small business and what sacrifices am I willing to make?
It’s important to understand the potential risks of any new business, including the legal risks and costs involved. In addition, starting a new small business requires many sacrifices, from a great demand on your time to pinching every penny to make ends meet.
8 How will I fund my business?
Do you have the financial resources needed to launch your new business? In addition to the start-up costs, you should also set aside enough operating funds to help you get through the first few months or until you can get your business off the ground. A trusted commercial lender may have the small business loan options you need to get started. Benchmark Federal Credit Union is a great place to begin your search for financing.
When starting a small business, plan for everything
Starting a successful business and becoming your own boss can be extremely rewarding, but it isn’t for everyone. Businesses that fail usually do so because they were surprised by something they hadn’t planned for. This might be underestimating startup costs or how long it would take to turn a profit. It might be miscalculating the need for a product. Advanced and detailed research and planning are important for business startup success.
Better prepare for starting a business by reading our blog “Our Most Common Business Start Up Questions Answered.”