8 Questions to Ask Yourself Before Launching Your Own Business
If you’re thinking of finally starting your own business, or maybe even a side hustle, congratulations! There has never been a better time to start a business. Access to global economies is easier than it’s ever been. Testing new ideas via online meetings or surveys has become the norm. Operating a business from home is common. Social media offers a low-cost option to help spread the word. And consumers have become increasingly more comfortable with researching and purchasing products/services online.
You don’t need to have the details of your idea perfected. You don’t even need to have an idea yet! The most successful businesses start with the customer first, then move to finding a problem to solve. So, don’t stress if you don’t have an idea, or have one that’s “half-baked”. The most important part is to start. Once you have your customer, and the problem to solve, the rest will evolve over time.
Before you explore how to start a business, take a moment to ask yourself these key questions.
1. Who is the customer?
Are you the customer? Being your own customer is important not only because you’ll have important insights, but also because you’ll have easy access to other potential customers. And access is the most underappreciated aspect of starting a business. To be successful, you need lots of access to customers because you’ll typically collaborate with them to make the best solution. You’ll use your “early adopters” (people who have the problem you have identified) to test your idea, and then to test your MVP (minimum viable product). You’ll go back to them periodically to improve your idea, solve issues that may arise and get feedback along the way. You’ll pivot, likely more than once, based on your early adopters’ reactions to your idea. They are your test market.
Bottom line: Serve a segment that you belong to.
2. What is the problem you are trying to solve?
Now that you have a customer segment to target, explore the big problems that this group is struggling to solve. What is the most inelastic problem facing those customers? Meaning, what is so important to them that would they gratefully pay to have solved? You want to find a problem that is serious enough that early adopters will pay even when the solution is not perfect. Many entrepreneurs start by selling their product/service even before explaining the problem they are trying to solve. Don’t make that mistake. Ensure you are solving a REAL problem that your potential customers have articulated for you. Don’t guess – ask them. Do your customer discovery and find out how they feel about a problem you’ve identified. This will ensure you are solving a problem that exists and help you find out how inelastic it is.
Bottom line: Find an inelastic problem that people will pay to have solved.
3. What’s wrong with the status quo?
Take time to explore the solutions that currently exist so you can understand why they are not adequate. What does a new solution have to address to overcome these flaws. Do it differently and better!
Bottom Line: What is missing from the solutions that currently exist?
4. What is the USP (Unique Selling Proposition)
Competition is natural. In fact, it’s a good thing. It proves that there is a market for what you are selling. Now the question is… what sets your product or service apart from the competition’s? What is UNIQUE about your solution that others don’t have. Your solution must be 10 times better than the competition’s in order to win over customers. If it’s not, change it up based on customer discovery interviews and make it so!
Bottom Line: Make sure your product/service offers something that is unique and significantly better than what the competition offers.
5. Will anyone buy it?
The cost to launch a prototype solution has dropped significantly, making it easier and easier to test new ideas and pivot based on customer feedback. It is more important to get early user commitments than it is to perfect your solution. Create your Minimum Viable Product and go test it by selling (or pre-selling) it. In other words, sell the product or take orders for the final version. If you can’t find buyers for your beta version, it could be that the problem you’re solving isn’t big enough for a larger market. Get proof of concept. Sell now, perfect later.
Bottom Line: Get proof of concept by taking orders based on your beta version.
6. How/Where will you market the product?
Looking back at the answer to Question 1, you’ll have identified who your customer is. Make a little Avatar of your customer. Give the Avatar a name. So why is Johnny frustrated with the problem they have? How painful are these frustrations? What are they currently using to solve the problem? How old are they, what do they do for a living, what type of accommodations do they live in? Do you know what Johnny’s hobbies and interests might be? What are Johnny’s hopes and dreams?
Now, look at your Customer Persona (Johnny’s page) and figure out where you can reach them. Since YOU are a member of the group that has the problem you’ve identified, you are in a unique position to figure out where to reach them. Think social platforms (which ones), educational institutions, blogs, influencers, reddit groups, forums, specialty stores, transportation preferences and so on. Wherever you can find your customer, that’s where you can market your product/service. They are all different channels. Try several, drop some and add new ones, until you find the right mix.
Bottom Line: Where, online and offline, does your potential customer hang out?
7. Can you generate a profit?
If you can’t eventually generate more revenue than costs, your venture is dead. Find the lowest-cost way to attract new customers. Facebook ads? Contests? Trade shows? Organic social media? Find and convert users quickly and at a low cost. Then, once you have that, find ways to increase revenue by extending value (upselling) to your current customers.
Bottom Line: Are you generating more revenue per customer than it costs to attract that customer?
8. Can it scale?
Scaling is the process of building your profitable business and selling to a larger market or a new geographical location. It is premature to scale until you have an ability to make more money from each new user than it costs to attract and onboard them. Once you can do that, determine if the infrastructure is in place to go from $100,000 in revenue to $500,000, 2 million and even 50 million. It won’t be but you’ll have to ensure that it can be done when necessary. Remember, in order to scale effectively you have to have margins that will allow for that. The most scalable companies have profit margins greater than 50%.
Bottom Line: If you can add many more customers without significantly increasing your costs, your business is scalable, and will be profitable. Do you have a vision that includes the team, infrastructure and margins in place to scale profitably?
If this is the year you finally become an entrepreneur, ask yourself these questions first, then just get on board and start!