Running a business is a lot harder than people think. Data from the Bureau of Labor Statistics show that only 79.6% of businesses manage to survive their first year of launch, and only 54.3% survive long enough to reach their fourth year of operations.
To mitigate risk, entrepreneurs that plan on launching new businesses first need to evaluate the feasibility of their ideas. A good starting point would be to ask questions about your business’s purpose, competition, promotion, and protection efforts. Here’s what you need to ask yourself before starting a business.
1. Why do I want to do this?
Is it because you want to prove something to your parents? Is it because you think this will make you rich? Or is it because you believe in your idea and want to see it flourish?
None of these reasons are necessarily wrong, but remember that businesses are long-term commitments. As such, your reasons for starting one need to be long-term as well. These reasons also need to be strong enough to withstand any setbacks you may face. Think long and hard about this one, because it’s going to be your driving force when you become an entrepreneur.
2. What will set me apart from the competition?
Let’s say you want to sell cookies. That’s all well and good, but there are hundreds of other cookie merchants out there. If you want to make sales, you’re going to have to make your cookie different from all the rest. There are different ways to answer this question.
Forbes cites seven ways your business can stand out, putting special emphasis on stellar customer service and innovation. After all, you don’t have to bring something absolutely new to the table to stand out. Sometimes, all it takes is letting your clients feel like they’re being listened to and cherished. But it’s even better, of course, if you can do both!
3. How will I promote my business?
Given today’s increasingly digital landscape, it’s definitely worth thinking about how you will market online early on. There are so many moving parts to consider — from your website design and content, all the way to SEO. So consider your options. The end goal is to make your business known.
Social media is a great option for promoting your business. An AskMoney article on growing your Instagram following suggests that Instagram can be a particularly powerful tool for boosting your business’s reach, because it allows you to build strong relationships with your customers. Tools like hashtags can help increase your account’s visibility, while tag a friend strategies let you tap into your audience’s friend networks. Other social media platforms, such as Facebook, YouTube, TikTok, and LinkedIn can also help you grow your online following.
4. What will it take?
This is a loaded question. The answer involves your finances, resources, as well as your own efforts. The finances and resources are the easy part. Work on a budget that lists all the necessities, and you’re done.
But gauging your efforts is the tricky part. Starting and maintaining a business requires a lot of effort. Are you willing to put in the work? And to persevere, despite the numerous setbacks you’ll inevitably face?
5. Do I have what it takes?
Of course, you do. If you truly believe in your business and what it stands for, then you can make it work. But it’s going to be an uphill battle. Just remember: You don’t have to be alone in this. Build a network that can support you and further your vision. The relationships you create can become vital business connections in the future.
Our article on the 5 Best Ways to Protect Your Business also recommends investing in other business services to keep your company secure for the long term. Business insurance can help cover unexpected financial costs during emergencies or liability cases, while cybersecurity can protect sensitive data. It will also be wise to have an emergency fund. Building cash reserves can help keep your business running during times of crisis.
Starting a business can be a high-risk endeavor. However, when you ask yourself valuable questions, such as what your business’s purpose is, how you plan on standing out, and how you plan on protecting yourself, you are already giving yourself a solid starting foundation. Use these questions to create a more comprehensive business plan, then turn your plans into action.