Starting a business

In one of my business classes, I have groups of students research different businesses so they can choose one to work on during the semester. This allows them to put theory and principles into action as we talk about the different aspects of business. Their final project is to present the business to “investors” to evaluate which group has done the most thorough job with their business project, and which business would give the best return on their investment.

It’s getting more difficult to find employment, and with the threat of losing one’s job, many have decided to start their own business. If you have considered starting a business, here are 10 questions you should ask as part of your research to evaluate your idea. If you can’t answer too many of them with a “yes,” then you may need to do some more research, or reevaluate your business concept. If you answer the questions and still feel confident in your idea, then you may have the start of a business that will create greater wealth and allow you to achieve a lifetime of fulfillment.

If you already own or manage a business, these questions may help you to make better decisions in the future so that your business provides a greater return on your investment, or becomes the dominant leader in its industry.

1. What is the purpose of starting and building your business? There are many reasons why people start a business. If it’s to make more money, how much more do you want? If your purpose is bigger than money, how will you know when you’ve achieved it? Having a definite purpose before you start will help you stay focused and continue through the tough times.

2. Will customers want what you’re going to sell? It’s important to have an outstanding product to sell; otherwise, your product will be considered a commodity item and it will be difficult to compete against existing businesses. If you’re introducing a new product, it may be difficult to convince people they need it, unless you can answer the next questions positively.

3. Do the people you plan to sell to have enough pain or frustration that you can offer a solution? If the pain or frustration is great enough, and you can position your business and/or product so that prospects feel you have the solution, then your marketing efforts will be successful.

4. Can you identify enough prospects to make it worth your effort financially? You may have the greatest product that provides a needed solution, but if the market isn’t big enough and there are not enough customers, you won’t make enough money to stay in business.

5. Can you reach those prospects in a cost-efficient manner? If it’s too difficult or costly to reach your prospects, then it will be difficult to make a profit. Rather than use a “shotgun” approach to reach everyone, you should have a laser-focused marketing approach that specifically targets your ideal prospects.

6. Will your business have “limitations” that could affect your sales? Some businesses have a limited capacity based on the number of seats available, a limit to the number of skilled workforce, difficulty getting products or raw materials, shipping difficulties, or quotas and legal restrictions. Could any of these limitations have an adverse impact on your business?

7. Does your product allow you to charge enough so that your margins leave sufficient operating profits? It’s not just how much you sell, but for how much you sell it. If your product costs too much to produce or buy, so that you can’t charge a competitive price, then you’ll need to sell a large volume or find a way to increase your prices without losing customers.

8. Do you have a backend product or a phase two for your business so that you can capitalize on growth? What’s next after you make a sale or achieve an initial growth goal? Can you offer a second product after the initial purchase, or do you have a plan to expand, increase your market share or product offering to existing customers?

9. If you can answer “yes” to the above questions, can you leverage the business to achieve your purpose? This goes back to the first question to make sure your purpose can be achieved.

10. Do you have an “exit strategy” for when you are finished with your business? What do you eventually want to do with your business when it’s complete? Do you have a plan to hold onto it until you die, have your children take it over, or sell it so you can pursue other ventures? If you can begin with the end in mind, then your end will be much easier to achieve.