When starting a new business there are a lot of things that are unknown and a lot of uncertainty. It is impossible for anyone to know everything at any point in time, fortunately for you to succeed in business you don’t need to know everything, just the important things. In order to succeed in your new business or at the very least avoid failure here are 5 questions, you need to ask yourself about your new business idea and the steps you need to take to answer them.
Do you have the skills?
I’ve often defined a business as a system of processes working together. This definition appeals to me because it best explains how we should look at businesses as entrepreneurs. When looking at a new business idea ask yourself if you possess the skills required to execute some of these processes. Create a list of both hard and soft skills required and perform an audit of your own skills to see how well you match up. Businesses can fail to get off the ground due to failure to execute on processes.
How well do you know the market/ competitors?
Build it and they will come. This strategy almost always guarantees failure in business. There is no substitute for knowing the market and its behaviour patterns. Big data is becoming bigger and bigger in today’s world. Just because you’re a small business it doesn’t mean data doesn’t apply to you. Things you should know include why the market buys, what they did to satisfy the need before your existence, what improvements they would pay to see in existing solutions and how the competition in the market behaves. These details are important because they will inform your strategy and plans going forward.
What is your business model?
The business model is more than just a sales channel it is how your business will strategically make money. While it includes matters such as whether you will operate on a business to customer or business to business basis it goes above and beyond that show how your system of processes is arranged. Consider using the business model canvas to find your way. A clear understanding of your business model means an ability to understand how well your business is performing from an overview standpoint and the ability to communicate the business idea effectively with others whether they be partners, investors, suppliers or customers.
Is it sustainable/scalable?
Some business ideas while born out of a real need are not always going to be scalable or sustainable. Take for example a business that involves your personal skill and expertise isn’t going to scale very well due to time constraints and the little thing about only being able to be in one place at a time. It doesn’t mean the business is doomed, it simply means that you will not experience growth through attaining more customers as there is a limit to how many you can serve. The only way for you to scale is to improve the quality and depth of your customers and the services you offer them. Many businesses are also the result of a response to crises but that doesn’t render them unsustainable. It is simply a matter of knowing how to sustain the business going forward. It’s not about the crises ending as I’m sure you can agree that while solar lamps and candle making are born from the same crises one may survive better after the electricity crisis is sorted out than the other.
Will they buy from you?
I’ve said this many times so once more will not hurt, a business is a customer. With no customer, there is no business. Time in planning and development is essential but time in the market is the only time that counts. So you really want to start interacting with the market as soon as possible. You can do this directly by pursuing customer number one but that’s not always possible with all products. Try creating focus or testing groups to gather market reactions. Depending on the scale you can also engage expert marketers. The idea is to be in touch with the market as soon as possible.