When you’re starting a new business, how do you know where to start, what business makes the most sense for you to get into, and how do you go about learning what you need to know? If you’ve already started a business, that’s great—this article will still be helpful to you. I’m going to challenge you and will ask you fifteen questions to help guide you in your decision-making.
I want to take you through the best questions that you can ask yourself to make sure that you start a business the right way. I’d like you to write out your responses to each one as carefully and thoroughly as you can.
Question 1: Do you know the business and the industry?
There are so many industries, and they are all very different. And they all have their advantages and disadvantages. If you know the business and you know the industry, you are at an advantage straight away. If you have no knowledge of the industry, and you don’t know the business, then you are at a disadvantage straight away. And when you’re going into business, as I’m sure you would agree, you want to put yourself at the best possible advantage, not a disadvantage. So, this is a very important question. Now, if your answer is no, and you don’t know the business or industry, does it mean that you turn down the opportunity? Well, not necessarily. You just need to do more analysis to make sure that you start right.
Question 2: Have you worked in the business and the industry?
If the answer is no, then you need to find somebody who has, and who has been successful in it. You need to make sure you know the rules, so you need to know the quirks of the industry. Sometimes being an outsider to an industry can be a plus, because you bring fresh eyes to it and can innovate, getting you better results. However, sometimes this can be a recipe for disaster. So, if you haven’t worked in the business or industry, make sure that you have a coach or have someone around you who does know that industry that can help you succeed in it. Otherwise, you will be at a distinct disadvantage.
Question 3: What is the potential of this business and industry?
This question has several different parts to it: Is it “hot” right now? Is it a great market right now? Are people buying in this industry right now? If they’re not buying in this industry, and it’s not hot right now, then this might not be the right opportunity to pursue. So, think carefully about the potential for the industry.
Question 4: Who is killing it in this industry right now?
You need some examples of success, because if you’re going into an industry or business you need to know that you can be successful in it; you need to know the opportunity. And don’t underestimate people who have succeeded. If somebody is absolutely smashing it in a certain industry and doing really well, it didn’t happen by luck. It didn’t happen for them overnight. They worked very hard to get those results. If you want success and you want wealth, you’re going to have to work hard. So, ask yourself, who is committed to the industry? What are they doing? How can you replicate, duplicate, and improve what they’re doing in order to get better results?
Question 5: What is the realistic margin?
What margin can you create from your product or service? Good service businesses tend to have slightly higher margins than product businesses, though this is not always the case. It goes without saying that you will need to achieve a healthy, sustainable margin.
Question 6: Is it in demand?
This is a most basic question, but you need to have a product or service that people want. Do people want to buy it? Can you sell it? And is there a margin that you can sell it for that is going to be sustainable and pay the bills?
Question 7: How can you stand out from the competition?
There are different ways you can do this, and I’ll give you two examples: innovation and marketing. If you can do something different from everyone else, you’re going to stand out. And if you can market it better, you’re going to stand out. Maybe you have some insane marketing skills that will help you stand out from the competition, or maybe you can innovate better and can come up with better ideas.
Question 8: What has been missed in this business and industry?
What are people doing in this business and industry right now? Does it seem outdated in anyways, or not very modern? Is there any reason it’s like that? Are there things that people are not doing? Can you bring something new into this business? Can you bring something into this industry that is going to improve it, that’s going to make it better, that’s going to make you stand out, that’s going to get you better margins, that’s going to improve your product or service? If there is something you’ve identified that you can do that has been missed in this industry, then you could well be on your way to being a winner.
Question 9: What relationship capital can you bring to the venture?
You may have heard the term “low-hanging fruit;” in this respect, it means people in your existing circle with who you have a relationship and will want to do business with you. That is what is known as relationship capital. The more relationship capital you bring to the venture, the more results that you can create quickly.
Question 10: What can go wrong if you get into this business or venture?
Understand the size and the scale of what can go wrong and how it can affect you. What’s the downside, and what’s the single point of failure? In other words, what would need to go wrong to put you out of business? For example, what would happen if a funder withdrew, if the bank withdrew, if Apple came out with the same product as you at a cheaper price, would it destroy you? Understanding your single point of failure is very important.
Question 11: If the worst was to happen, how are you going to deal with it? What would you do?
This is preplanning. You’re getting serious about going into the business. You’ve asked the right questions; you’re getting to the point where you feel this is actually something that could work. But if something goes wrong, what are you going to do about it? This is essentially going to be your “Plan B.”
Question 12: What’s the upside?
What’s the upside of going into this business? What will it do for you? What wealth will create for you? How will it help you in your life? How would it create more success for you? What impact will it have on you? What are the results that you can get? What is the wealth that you can create? Start to visualize what might happen if things go very well and hold that in your mind. Look in the future, if you were able to do this, and ask yourself what it could do for you.
Question 13: How passionate are you about this business or venture?
The reason I ask this question is that if you say you are a seven out of ten on the passionate scale, you’re probably going to find a way to make it work. If you’re at five out of ten, is it worth it? You only live once, so make sure it’s something you’re passionate about.
Question 14: What is the wealth opportunity?
How much money can you make from this? How much money can you make for your family from this opportunity? Are there cross-sell opportunities? For example, say you already have a business, and you’re going to start another business. You can add your existing customers to that new business. You can add different products into the new business. All of a sudden, you’re cross-selling. However, I would warn that if you have one business that is already floundering and you start another business to boost the first business, you may find yourself in trouble. Fix the existing business first, get it into a good position before you start to add more products and services into it.
Question 15: Are there other economic factors that mean you shouldn’t start this business or venture?
Are there economic factors that could change that would wipe out your business? For example, could the government change its rules for funding your type of business? If so, then your business would no longer be sustainable, and you shouldn’t do it. What are the economic factors surrounding this business and this opportunity? If you already have a business set up, I want you to take your existing business, your existing projects, your existing opportunity, and think of it in terms of this question.
This process and these questions are meant to help you narrow your focus and think through all possible opportunities and pitfalls that you might encounter. It is important to first know where you are now. You need to analyse where you are, set the right expectations, understand your strengths and weaknesses, and then make sure that you analyse your opportunities.
If you enjoyed this article and you’d like some in-depth training on how to grow and market your business, visit Big Business Events.