If you’re thinking about starting your own business, you have a great deal to consider. You must weigh the financial ramifications of your endeavor, balancing them against your expectations for future success. To run a company, you’ll have to become a renaissance person who can do a little bit of everything. Without a wide body of skills, you’ll expend a lot of energy, but probably won’t get positive results. Here are four things to consider when starting a business.
What’s Your Product?
Image via Flickr by Andrew Mason
You probably have an idea of what you want to sell as your product or service already. What you need to ascertain is whether there’s enough demand in the marketplace to justify the attempt. You’ve likely heard that only half of new businesses survive for five years. Starting a new venture will drain a great deal of your most important resource, time. You don’t want to waste years of your life on something doomed to failure.
For this reason, it’s imperative that you correctly determine if your goods have sustainable value. You won’t know for certain, so you’ll have to perform some projections. Still, you should have enough data available to decide if people want the thing(s) you’re choosing to sell. Otherwise, you should spend your time on something more gratifying.
Can You Afford the Attempt?
Financing a new company requires a tremendous amount of capital. No matter how lean you plan your startup to be, you’ll need more money than you ever have before. There are many aspects of running a business that you not might even realize. Assuming you can’t run the business out of your home, you’ll need office space, and that comes with accompanying building expenses such as internet, telephony, and utilities.
To sell your product, you’ll need to spend money on marketing. Otherwise, people won’t know that your company exists. Whether you pay for online search engine optimization or more conventional tactics such as commercials and billboards, you’ll quickly burn through a lot of capital, at least until your product earns enough awareness to stand on its own.
Where Will You Get the Money?
Determining whether you can afford to start a business comes down to a few key factors. How much can you afford to invest of your own money? Will friends and family members chip in as well? Does your service sound appealing enough that you could crowdfund some capital? Have you researched your ability to obtain a small business loan from a local bank?
Assuming you’ve answered yes to at least one of these questions, how much money can you raise? Are you confident that’s enough to fund the shaky early days of your business? Prior to starting a business, you have to ask a lot of hard questions. You also have to be honest with yourself about the answers. One of the easiest, most damaging mistakes possible is to delude yourself about your fundraising ability. Consider partnering with a reliable and trustworthy company like Amway if you want to sidestep the fundraising issue altogether.
What Are Your Competitive Advantages?
This is one of the trickiest aspects to consider. The brutal reality of the digital age is that virtually every idea you have about a business endeavor is something someone else already does as well. In an era of few new ideas, what you have to do is come up with ways to differentiate your products and services. The question is whether you can do that.
Without competitive advantages, you’re selling the same product as other people, only they have more experience with the process than you. As such, you’re playing from behind from the moment you found your company. It’s not impossible to come out ahead in such situations, but it’s that much more difficult when you’re already mathematically likely to fail. Be honest about whether you have that something special that will cause consumers to pass over other products in order to choose yours. You need every edge you can get.
Starting a company is a bold decision. In order to position yourself to succeed, consider all the questions above. If you feel comfortable with your answers to most of them, you should move forward with your new endeavor.