One of the biggest success factors when opening your own business is proper planning. Here are six questions to ask yourself before opening a business.
Who Will You Sell To?
The more narrowly you can define your target market, the better. Whether it’s urban moms with children under age 5 or senior executives of midsized consumer product manufacturing companies, focusing on a specific niche will help you market to their particular needs. Do market research to uncover the most profitable potential target markets for your startup.
Who is Your Competition and How Will You Differentiate Your Business from Theirs?
The market research you perform before opening a small business should also examine the competition. Determine what their key advantages and selling points are and how you can differentiate your business, both in terms of your product/service offerings and your marketing.
Where Will You Locate?
Location can affect your startup costs drastically. Do you need to rent a commercial or retail location, can you get by with a small office space or will you be able to work from home? If choosing the latter, be sure to look into applicable zoning laws.
How Much Will it Cost to Get Started?
Figure out how much startup capital you’ll need for opening a small business. Be sure to include the costs of location, utilities, equipment, inventory, taxes and employees (if any). Don’t forget to include a salary for yourself. Ideally, you should have enough startup capital to finance your business for six to 18 months, or however long you project it will take to become profitable.
How Will You Finance Your Business?
Getting startup loans is difficult, so they can’t find the financing from their own savings, many startup entrepreneurs convince friends and family to give them a loan. Be sure to treat this as a real loan, by drawing up loan documents and paying the loan back.
What Kind of Staff Will You Need to Hire?
You might need to start out as a sole proprietor with a one-person business, but hiring employees can take a lot of the load off you and enable you to focus on growing your business as opposed to day-to-day operations. If you can’t afford to hire full-time employees just yet, consider options such as hiring part-time or temporary workers or outsourcing to independent contractors.
Writing a business plan is a great way to put all your plans together in one place. There are lots of examples on the SCORE site of tools, templates and samples to make it easier.
While you’re there you can get matched with a SCORE mentor. He or she can help you answer all six questions…and any others you may have about starting a business.