Dear M & M: I am considering starting a business can you give me five questions I should answer to help me determine if this is a good idea? – Bill
Many factors can cause any business to fail or succeed. I wouldn’t rely solely on being able to answer any five questions, but here are five that need to be considered not in any order.
Number one; Do you have a market for what you are trying to sell? Are their enough people ready, willing and able to buy in the trade area you are operating in? You might need to sell 10 units a day just to cover expenses. Can you with certainty identify that there enough people willing to buy enough units to make a profit in the market you are planning to operate in? If you need a thousand people to buy one ticket and there are only eight hundred people available it won’t work.
Number two: Who is your competition? How strong are they? What will they do if you enter their market and start competing against them? What about substitutes? What substitutes are out there competing against your products or services? Understanding who the competition is and how they will react is important. If there are competing products or services you need to know what market share they have.
Number three: Do you have any experience doing this? You will be spending a lot of your time starting and running a business. If you have done it before, you will know what you are getting into and should know how to do it better. Lenders want to see that you have experience with a proven track record before they will loan any money to any venture.
Number Four: Do you have the proper resources to do this? Resources could be time, money, equipment, people or building(s). How many and what kind of resources do you need to get it up and running. Once you are up and running what resources do you need to grow and sustain operations? If you need any additional resources or more the ones used to open where are you going to get them?
Number Five: Can you communicate to your audience or customers you are the place to go to get whatever it is you are selling and still make money doing it? Is it going to cost more money than you are going to make to attract a sale? What does it cost to acquire a customer?
I know we set out to answer five questions, but you have to ask yourself a sixth question. Do you have the passion to do this every day and to keep going when everyone else says you should quit?
We are talking about an intense drive or conviction to keep going. If you need an alarm clock to get up in the morning to do it again, you probably shouldn’t do it. People buy for many reasons from need to value. Yes, we need to solve a problem. Sometimes, we get lucky and people will jump on a bandwagon and buy just because everybody else is doing it, they want one too and we are the place that happens to have what they want. Very rarely is it that easy.
We need to know and understand that unique dynamic thing we have that makes your customers and prospective customers choose your products and services over the competition. We need to exploit our natural opportunity or unique difference to be the best we can be at everything we do. We can’t rest on the past. We need to be certain every day we are the one that can best solve their problem. It helps if you truly care about what you are doing and pay attention to what people want.