America is an entrepreneurial place. Since the first European colonists landed on the continent’s eastern shores, men and women alike have endeavoured to make something of themselves through their pursuits and businesses. It’s not surprising, therefore, that 15 million Americans are self-employed, and almost half claim to have a side-business. Unfortunately, the business landscape in this country is relatively bleak: nearly seven in every ten new businesses will fail within ten years. It is all too easy to become a statistic. That’s why we have compiled a list of questions for those of you who are thinking about starting your own new business. Having clear answers to these questions will significantly increase your business’ survivability over the long term.
Here are five questions you should ask yourself before you start a new business:
What are my short-term, middle-term, and long-term goals?
Every entrepreneur and business owner must start with clearly defined goals. Goals serve as the roadmap to success for businesses and their owners and are essential to establish at the beginning. “Winging it” won’t cut it in this economy precisely because there are so many aspiring entrepreneurs and new business owners throwing their hats into the proverbial ring. It’s not good enough to have lofty goals, either. Goals need to explicitly state, with no uncertainty, where you plan to have your business in 1, 5, and 10 years. Goal setting can be a challenge, but there are many resources online to help you along the way. An excellent place to start is the Small Business Administration’s resources on goal-setting.
Who are my ideal customers?
Before you start selling, you need to define who your ideal customers will be. Whatever the product or service, you need to understand your future customers and their needs in detail. How do I figure out my ideal customer, you ask? A little research and careful planning go a long way to help with finding your answer. If you have already worked with a few customers (which is ostensibly how you came up with your business idea in the first place) interview them about their needs and whether your service might be a good fit. You can also ask them where they might look for such a product or service so that you will have some idea of where to get in front of other people like them. A great place to start this process is with a few quick tips from Hubspot about how to create a client profile. Their tools and guidance are a fantastic starting place to help you along with understanding your ideal customers before you ever open your business doors.
How many others are doing what I plan to do?
This is an essential question for those who are looking to start small, local businesses that provide necessary and non-essential services. If the local market is already saturated, it’s going to be an uphill climb to make money. Take, for example, local web designers. Web designers are, quite literally, a dime-a-dozen. Why? Well, that’s because web design is nearly fully automated these days, and so any old Joe Shmoe can design a website for pennies-on-the-dollar. In this scenario, it’s essential to learn about the local market and see if what you are bringing to the table is worth going after in the first place. Remember, your business will only be successful if there is a need for your ideal customers. If the market is saturated, there’s no need.
What is my marketing budget for my new business?
The ideal scenario for any small business getting off the ground is to have a massive referral network through personal connections so that nearly all of your new business is generated through word of mouth. These kinds of companies exist, but they are a rare exception. Most small businesses will need to spend some serious cash on marketing to get ahead. That’s why it is exceedingly important to know what your marketing budget will be for at least the next year, if not more. It is also important to understand how your marketing budget stacks up with your competition. If you open a home care company, for example, and only spend $500 per month on marketing when your competition is spending $5,000, you’re going to lose out to them most of the time. Look, there is a good reason why political candidates with more money backing them win almost every time: the more you spend, the more you will beat out the competition. Unlike politicians, however, small business owners need to be careful their marketing dollars aren’t spent in vain. If your local market is not large enough to justify $5,000 per month in marketing spend, don’t do it. Knowing what your competition spends is an excellent gauge to see what’s currently working in your local market.
What is my overall marketing strategy?
With all the buzz surrounding digital marketing, it’s easy to be swept up in all the hype. Many new business owners think they will have success online because–and this is true–the internet has empowered many new business owners to be successful. However, the glimmer of internet marketing is beginning to fade, mostly because the internet is now saturated. Ranking your business on Google, for example, is harder and more expensive than ever, and the returns are not as good as they once were. That’s why it’s important to understand what your overall marketing strategy will be to make your business successful. These days, the best approach is a mix of online and offline marketing. Some social media is good, but entirely relying on it to drive revenue will turn your business into a statistic. If applicable to your business, TV ads, billboards, radio, direct mail, and other old-school marketing tactics have been shown to be effective even today, especially in local markets. The lesson here is, as with your goals, plan it out.
Starting a small business is hard work, and there is a high failure rate to boot. That’s why it is imperative to plan carefully, set goals, and understand your local market before you invest the time, money, and tears required to make a new small business a success.