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Your answers to these questions will help you conceptualize, formulate and understand your planned business – and whether this business fits your personality and that you really want to do and have the capability to do. It may not be possible to know everything at the very beginning, but research and planning will help you minimize the unknowns and help you become better prepared. Always remember that lack of planning is one of the leading causes of business failures. When you start a business, your goal is to see it succeed, and you can only do so if you are able to control all the variables and turn them into your favor.
CHECK YOUR IDEA
What niche will my business fill? Before you actually launch or expand a business, spend time checking out the market for your new product or service. Since it is easier to sell a product or service for which a need already exists, look for problems that are being created because the right product or service does not exist, then challenge yourself to provide it.
What services or products will I sell? Ideas for businesses come from many sources. You can turn your interest or hobby into a business. Sell what you know, and put to work technology and equipment that you already have. Use your imagination to find a need and fill it.
Is my idea practical, and will it fill a need? If it is not available and if there appears to be a need for it, these factors are in your favor. Conduct market research to find out if there is a need for your product or service before committing a great deal of time and money to the project. Take the time to identify your customers and find the means to get your products or services to them. In order to be successful, you must know your market.
Who is my competition? There are two kinds of competition: direct and indirect. Direct competition will be a business offering the same product or service to the same market. Indirect competition is a company with the same product or service but a different market. Identify all your competitors, look for their strengths and images, and evaluate their image and their markets.
Can I deliver a better quality service? Build on what you know and do best. Look for marketable products or services compatible with your work background or business contacts, or those that tie into your professional or personal fields of interests. If you already have a good understanding of the field you would like to enter as a business owner, it will be much easier to market your business.
Can I create a demand for my business? The difference between financial success and failure will depend on your management and marketing skills; your clever approach to the marketplace; the way the business idea is publicized or advertised; the way the product is packaged, presented or delivered; or the zest with which the service is performed.
Once you’ve determined that your idea is feasible, answer these questions:
What skills and experience do I bring to the business? A logical first step for the undecided is to list potential areas of personal background, special training, educational and job experience, and special interests that could be developed into a business.
Is it a business that suits your personality and tastes? The business you choose is one that you feel good about and fires your imagination. Enthusiasm can be a priceless ingredient in the formula for success!
What will be my legal structure? Understand the advantages and disadvantages to each form of organization. The type of legal format you choose will depend on your need for capital, your type of business, when you want to start your business, your ability to finance your business, the number of people involved in the business, the liabilities and risks you are willing to assume, your personal tax situation, your plan for taking money out of the business, your plan for continuing the business if something should happen to you, and your long-range business plan.
How will my company’s business records be maintained? Good record keeping provides you with tax information that can easily be retrieved and verified. It also provides you with information that you can use to analyze your business. Accurate financial statements will help you to see trends and implement changes during the life of your business. On the other hand, poor record keeping can cause you a multitude of problems and may result in audits, penalties and even the termination of your business.
What insurance coverage will I need? Today’s world of rapidly expanding technology goes hand-in-hand with a society steeped in lawsuits. The most innocent business owner can find himself/herself involved in legal actions against the business. In addition to liability, there are many other insurance considerations such as fire, flood, earthquake, auto, theft, worker’s compensation, health insurance, etc. that need to be addressed during the period of ownership.
What are my resources? In order to determine what you have available for a business investment you should determine your net worth on a personal financial statement. If this is not enough (as it often is the case), you can seek personal contributions and support from family and friends. You can also seek money from banks and lending institutions, but only if you could offer liquid assets as security. Other sources include government-assisted loans, taking on a partner or investors, and joint venture capitalists.
What financing will I need? The lack of sufficient and ready capital can quickly lead to business failure. You need to determine whether you need to borrow money, how much you need and when you will need it. Check out possible sources of financing available to meet your needs. Most importantly, know how much financing could cost you.
Where will my business be located? Your most important consideration in choosing your location is your ability to satisfy your market. Your customers must be able to reach your business easily, safely and pleasantly. Other considerations include the location of the competition, sources of supply, availability of labor force and square footage costs. Consider early on whether you want to have an online presence to improve market reach.
What will I name my business? The name you choose will have a great deal of bearing on the image you project. Be sure that the name you choose is available for use. Avoid cute and clever names; they do not project a businesslike image. Make your name description to advertise your product or service, and consider alphabetical listings in the directory.
If you are starting a home-based business, you will want to answer these additional questions:
Does my home have the space (preferably separate) for a business? Whether you allow customers or clients into your home office or not, you need to give special consideration to where you work. Ideally, your office will be located away from the main family activity, such as a spare bedroom, or even the garage.
Can I successfully run the business from my home? If you are going to operate out of your home, there are several things you can do to ensure that you will be more successful. Conduct your business in the most professional and efficient way. You need to organize your workspace and set business hours. Protect your work hours, inform your family and friends that you are serious about your business, and will need to work without interruption. Be self-disciplined. Most importantly, expend extra effort to prove credibility and attract customers.
Can I deal with the isolation of working from home? One of the most difficult problems of a home-based worker is the feeling of isolation. To counteract this feeling, you can join professional business groups, plan weekly lunches with colleagues or other home workers, and network with people inside and outside your profession.