On this episode of She’s Off Script, we’re talking all about the 5 questions you need to have answered BEFORE YOU start a business.
If you’ve ever thought “I would love to start a business but I just don’t have the right idea.” or “I think I have an idea but I’m not sure if it translates into a good business. This episode is for you!
When I say business, I don’t necessarily mean the next Facebook or the typical Silicon Valley startup. I mean your next side hustle or the business you’ve secretly been dreaming of starting but haven’t had the courage to take the first step. If you’re finally ready to take that first step, this episode is for you.
1.) AM I SOLVING A PROBLEM?
Looking for the right idea before you start your business is a bit like putting the cart before the horse. Before launching a venture or side hustle of any kind, you need to know that it’s solving a problem for someone…hopefully a significant group of people. It can’t just be something you and only you are interested in working on. If your plan is to launch a viable business, there needs to be someone on the other end willing to pay for whatever product or service you’re selling.
Once you have identified the problem, you need to find out how willing people would be to pay for what you’re offering. Is your idea a painkiller or a vitamin. Does it solve a major problem for someone or is it a nice-to-have. This is not to say that vitamins don’t make for viable businesses. They can if you hone in on the people that need the vitamins more than anyone else.
To take this question to the next level, you would also need to figure out who you would be selling your product or service to. This is often called creating an avatar or a customer persona.
2.) IS THIS A GOOD TIME TO FOR YOUR BUSINESS?
By this I mean, is this a good time for your idea to actually take root and thrive in today’s political, environmental, social, technological climate? This framework is known as a PEST analysis. Very few businesses can successfully swim upstream against these factors. And if they do, they tend to be disrupters. An example of this would be Uber or AirBnB who disrupted the status quo and forced the regulatory environment to catch up with them. Given how much funding they have, these companies have been able to withstand lawsuits and social pressure. If you are starting a venture that could be considered disruptive, I would go into it with eyes wide open on the PEST front and get the right backing and allies to set yourself up for success. If you’re not one for a fight, you may want to start out with a less controversial venture. Also, if the technology for what you’re trying to build doesn’t exist or is in its infancy, you need to either be willing to build it, which takes money or wait for it to mature before moving forward.
3.) HOW BIG IS YOUR MARKET?
Said another way, how big is your customer base? Is this group of individuals or companies growing, stagnant or has it been the same size year over year? This information is free from the sites like the Bureau of Labor Statistics or thinkwithgoogle.com. For this question, you’ll also want to consider whether this is an easy business to get into and how intense the competition is as a result of how easy or difficult of a market it is to get into. Not to say that you need to shy away from a market with competition. Competition is not a bad thing. While it can be amazing to be first to any market, as a first mover, you have to bear the cost of learning on the job since there is no blueprint. In fact, there’s a 47% failure rate for first movers or first entrants into any market. Think Friendster which no longer exists, Myspace which a shell of what it used to be vs. Facebook which launched 3 years after Friendster and is now the social media standard. I say that all to say, yes you need to be mindful of who the competition is when you’re first researching a new business and be sure there’s a big enough pie of customer for everyone to have a sizeable piece.
4.) HOW ARE YOU GOING TO MAKE MONEY?!
In other words, while you may be able to sell to the customers you identified in question one, will you be able to keep costs down and find creative ways to make money? Sometimes, new businesses prematurely go under when they find out that while they are able to sell a ton of merchandise, production and other transactional costs are bleeding them dry. Even if it’s a quick back-of-a-napkin type of list, I would encourage you to brainstorm how much you think it will cost to run your business. Even if you find that you’ll need initial funding to get things going, at the very least you will go into your venture with eyes wide open.
5.) WHO’S ON YOUR TEAM?
While I would love to believe I can tackle almost any challenge, I know that’s not the case. As a solopreneur, I have key people I can go to for help in areas where I have no expertise. If you would prefer to have a co-founder work alongside you, try to find someone with a complementary skill set. While it might to amazing to work with someone who thinks, speaks and looks like you, you may find yourselves in a groupthink situation where you are constantly reinforcing each others’ not so great decisions.
Besides personality and skillset, it’s good to know what your co-founder’s motivations are for getting into business with you. When push comes to shove, how committed will they be? You want to make sure they have as much skin in the game as you do.
Listen on Apple Podcasts
If you found this episode helpful and are someone who has been wanting to start your own business, I would love for you to join my New Year, New Venture 5 day Instagram challenge launching in January 2019. If you’re interested and want to save your seat, you can sign up today at newyearnewventure.com.
You’ll get a daily email with resources on the focus for each of the five days. I will host live daily masterclasses in a private Instagram group which you will receive info on after signing up as well as a chance to interact with an amazing group of like-minded women within our Instagram community.
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