20 Questions to Ask Yourself Before Starting Your Business
Tired of your 9-to-5 job? Fed up with your constant nagging boss? Irritated with the negligible annual increments? Worried at the prospect of never amassing sufficient wealth? If you have ever felt these, the thought of starting up your own business or venture must have definitely crossed your mind. You might have a great idea of a product in your mind but might feel unsure of all the nitty-gritties of starting your own business or even about the prospect of whether leaving the comfort of your secure and stable job makes sense in today’s uncertain world.
Being one’s own boss can be exhilarating and rewarding but it isn’t for everyone. Statistically speaking, most new ventures fail and only a tiny percentage succeeds. But fret not, irrespective of what you might feel, this is the greatest time to be alive for an entrepreneur. Not only are the investors ready to hear people out and be more accepting of the crazy ideas that are proposed, they are also ready to cough up huge sums of money to see them (at least some) succeed.
But before you set out on your entrepreneurial journey, you must ask yourself these 20 questions:
Why do I want to start a business?
If you are doing it because you hate your job or because everyone else near you is doing it and it is the latest fad, your venture won’t last long. You have to love and be passionate about what you are doing.
What problem do I look to solve/what niches have not been served/what gaps exist in the market?
Your idea is worth zilch if you are shooting in the dark. Try to understand what problem in the market you are trying to address or if there are gaps or niches that are not being served by anyone else. If those areas intersect with what you like, then you have hit the sweet spot.
What is the target market for my business?
Neither is every product meant for everyone nor do companies have the time and resources to reach everyone. Zeroing in on the target market not only helps you set your marketing and development strategies in place, it also can lead to higher returns on investment in the long run.
What funds are needed to start my company? How to get those funds?
Every company needs funds but there are certain funds without which you absolutely cannot do in a company. Every company needs to figure out which funds are most essential, so as to cut costs, especially in its initial days. Funding by venture capitalists makes all the news headlines for a startup but there are other ways to raise funds too like getting a bank loan, crowdfunding, factoring etc. Of course, bootstrapping (funding from one’s savings) remains the most obvious option. In the long run, the company has to turn profitable and cannot depend on raised funds to sustain itself. The revenue model of the company will determine how the company manages its expenses and generates profits.
Do I have the personal and financial support of friends and family?
There are good days and then there are bad days. In entrepreneurship, bad days can be extremely bad. In those challenging times, support of friends and family can help you stay upbeat and sane.
Is the business idea scalable? If not, how do I make it scalable?
For a business to be scalable means you being ready to handle increasing number of customers and vendors. Businesses need to grow to become successful. If you can’t see growth for your business in the future, then you must ask yourself what changes to its business model shall make it scalable and help it grow.
Who are the competitors/who else is already doing what I want to do?
First mover advantage is always wonderful to have. But sometimes being the second mover also has its advantages. When it is a completely new field, the consumer habits need to adapt and for that, lots of investments in the form of discounts and promotions are required. Just imagine someone doing all the hard work of setting up the ground for you and you swooping right in and taking the pie. Irrespective of whether you are the first or second or Nth mover, it is always one of the first tasks to assess the competition and determine who is doing what and how so that you can formulate your strategies accordingly.
What makes my product or solution special or different from the competition?
If someone is already doing the same thing that you plan to do and doing it better than you ever could, there is no point going forward. Your solution or product might operate in the same space as its competitors but it needs to provide a unique value to consumers that others cannot for it to sustain itself in the long run.
How will I test and validate the product idea?
Just imagine the amount of effort and time and resources you would need to turn your great idea into reality and then launching it in the market just to realize that idea wasn’t really “great” after all. Nobody wants it and it ends being a dud. That’s where idea testing and market research come into the picture. Relatively newer product development approaches like Lean and Sprint allow you to test your ideas in just a week. If it works with the target audience, you can go ahead else it’s still not too late to go back to the drawing board.
Am I ready to give the required time, resources and capital to succeed? What sacrifices and risks am I ready to take for the business?
Starting up requires lots of time, sacrifices and risks. If you thought that being your own boss meant chilling to your heart’s content, you are in for a surprise. If your job demanded 8 hours of your day, your own company might need twice that amount plus working even on weekends. The initial phase of your company might need dipping into your savings and forgoing a stable salary. This is just the tip of the iceberg. So you should be prepared for all of this before you decide to startup.
Do I have the necessary skills and abilities to start and manage the day-to-day operations of a company?
You need to ask yourself if you see yourself capable to run the company operations. At the end of the day, 80% of running a company is operations. Do you have the required entrepreneurial skills and if not, how can you acquire them? There are tons of courses, seminars etc. to get you up to speed on these aspects.
What are the short and long-term goals, personally and financially, for both myself and my business? Can I see myself doing this 5 or 10 years down the line?
Your financial and operational strategy for yourself and your company will depend on your goals. How you raise funds, what the product roadmap is going to be like, how many teams you need to have, how many employees you will need, what costs to cut etc. will depend on these goals. Ask yourself where your company shall be in 5-10 years and if you are passionate enough to continue doing this even then.
Do I have sufficient knowledge and understanding of the industry I am looking to enter? How can my past experience and education help me?
It is absolutely essential to have a thorough understanding of the industry that your company would operate in. If you want to start an apparel company, knowledge of the apparel industry is a must. The same applies to automobiles, chemicals, pharmaceuticals or any other industry for that matter. If you do not understand that industry, it is best not to enter that industry. You should always look as to how your own education and experience can help you understand the industry better.
Do I need a co-founder(s) for the business? If yes, what complementary skills would the co-founder(s) need to have for the smooth and successful functioning of the business?
Not everyone is good at everything. You might be an excellent Product and Engineering person but you might still lack at marketing skills or finance knowledge. A startup founding team should have all the necessary skills and that is why finding the right co-founder is most crucial. The co-founder(s) should not only complement your skills with his/hers but should also share your vision with utmost zeal and passion. Selecting the right co-founders is one of the most difficult and crucial steps in starting a company.
What organization structure would I need for my company in the short term and long term?
In a typical Organization Design class in a B-school, you will be taught a plethora of organizational structures. While it might look useless, all of them have a purpose. A small company can work with a flat structure better and as it grows bigger, the structure keeps on getting more hierarchical. There are various types of structures like functional, divisional, matrix etc. and you need to understand and figure out which structure suits your company best at which stage for its optimum functioning.
How many employees will I need?
Think about the costs and how much you can afford. Keep in mind the value that you expect from each employee. While starting up, the quality matters more than the quantity. One great employee can be equal to tens of average employees. Recruitment takes utmost priority. The initial team of a company is the hardest to form.
How is the legal structure to be set up for my company?
It is one of the most important decisions while setting up a new company. Your choice depends on the tax consequences and how much risk you are willing to take. Depending on that you can choose a legal structure as per your requirements, be it a sole proprietorship, partnership, LLC or corporation.
What kind of taxes would I have to pay for the business? What other expenses, including insurance, do I need to take into account?
You should know how to navigate tax landscape as a startup founder. Taxes and liabilities vary a lot depending on the legal structure of the company. For example in India, startups are exempt from capital gains tax and they also have to pay no income tax on their profits for the first three years. With risks running high, startups should definitely insure themselves in case things go awry due to unforeseen circumstances. Investors also like it when risk is eliminated as much as possible from the equation.
Am I ready to relentlessly meet and network with lots of people for investments, promotions, advertisements etc.?
Starting a new company means going to lots of conventions, seminars, workshops etc. and networking with as many people as possible. Sometimes to recruit people, sometimes to pitch ideas to potential investors, sometimes to just listen to ideas from fellow entrepreneurs. You must be comfortable networking with hundreds of people on some days. If you think you are too shy and the thought of all these makes you uncomfortable, maybe it’s not the right path for you.
How will I exit my business few years down the line if I want to and how will the responsibilities be transferred in such a case?
You might want to sell the startup to a bigger company few years down the line or make an exit from the company yourself. Evaluate all terms and conditions carefully and make a note of all the available options in your head. Even an IPO can be an exit strategy. The focus should be to leave the company after adding significant value holding your head held high and pockets heavy with profits. The transfer of responsibilities should be carefully handled with a proper business succession plan so that the company keeps doing well even in your absence. A lot of thought should go into choosing your successor.
The Startup Process
We know how important your dream business is to you. Therefore, we’ve come up with an all in one guide: The Startup Process to help you turn your vision into reality.
Now that you know the 20 Questions to Ask Yourself Before Starting Up, let us move on to Research, Evaluate and Validate Your Startup Idea.