When starting a business, it’s easy to get caught-up in the hustle of the start-up phase. You can quickly spend all of your money before asking some important questions.
Here are 5 key questions to ask before starting a business, based on our own business experience.
Disclosure: Based on personal opinion, not to be taken as advice.
Key Questions For A New Home Business
We run a crafts business from home, but before success, we had a few failures.
We made a common mistake (as seen here at Investopedia): We failed to properly research the market we wanted to get into. It was saturated, and that was easy to see in the midst of our failure.
Too late by then, our only choice was to cut our loses and start again.
Here’s what we should have asked…
Before I start, please help me by pinning this image:
1. Do You Understand The Business?
Let’s say you want to buy cheap products from abroad and sell them at a premium to your local market. Maybe you want to use Etsy and Ebay as selling platforms. It seems straight forward, but here are a few important questions which are easily overlooked:
• Is there a market for the items you want to sell?
• Who is your potential customer? -and why do they buy that product?
• Is the market changing?
• Is there anything in the foreseeable future that would alter market conditions?
• Are there already companies who service the requirement?
• Do you need to test (trading standards) these products before selling them locally?
Also, do you understand how your business model works? From the moment you purchase the stock -to market -to sale -to tax -to profit?
If you can’t answer these questions, it’s worth going back into research mode.
2. What’s So Different About You?
Anything which can be sold, is being sold. You can’t really change that, but maybe there’s a personal touch you can add.
For example, we all like the idea of a family run cafe. We know the owners care because it comes across in the service they provide.
Or maybe you could streamline an idea/process. Get rid of the extra junk that comes with a product, and in doing so, reduce the cost to the customer.
There’s no need to be different, but it can help you stand out from the crowd.
3. Is It Financially Viable?
Have you worked out the numbers? Does it work on paper?
There’s no better time to find out than before you start. Don’t forget living costs, tax, insurance and promotional costs.
The back-up fund will ultimately decide how long you can keep going, so take the time to squeeze out each penny.
4. How Will You Promote It?
Promotion is the most important part of any business. How else will you get your customers?
Have a strategy prepared, and keep working on it.
Depending on the business, local newsletters might be integral, while other businesses may need an efficient online presence.
You may need to spend money, and/or invest your time, but whatever you do, you’ll need an answer to this question.
5. Is It Legal?
There’s no point building up a business only to have it torn down because it wasn’t legal.
It only takes a little research with your local government to discover the answer. Also, review any third-party contracts you might have, like with eBay or Pinterest, and ensure you’re not breaking any rules.
If you’re selling physical items, you may need testing and/or insurance cover.
It’s easy to create reasons for not trying something, for not starting your business, but this list isn’t designed for that.
Ultimately, the goal is to have a successful business that pays the bills, and hopefully this list gets you a step closer.
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