There are many paths to entrepreneurship. Perhaps you’ve always known that you wanted to start a business. Or maybe there was an “aha” moment along the way, an event that triggered a desire to leave the W-2 life behind.
Whether you find yourself starting at square one, looking for a business idea, or have a side hustle ready to grow, it’s critical to do your homework before taking the leap.
RISBDC business counselors Amanda Basse, Manuel Batlle, and Paul Harden compiled a wealth of initial questions to answer before you can bring your small business dream to life. To make the most out of a future counseling session with one of our experts, take time to work through each of these questions.
How can I come up with a good business idea that suits my experience, skills, and interests?
The best businesses answer a need in a space where you are driven and passionate about filling the gap. It is the joy of this pursuit that will keep you up late at night and rising early to build your business.
When evaluating business ideas, first take personal inventory. Find the alignment between your passions and talents and skills. You don’t have to be an expert to get started, but leaning into existing skill sets helps. Another way to consider it is to identify your biggest frustrations, then to name all the solutions to this problem. Think in terms of what do you solve right now, and how will that evolve over the next 15 years.
- What sparks my joy enough to motivate me to put in the early mornings and late nights?
- Has anyone ever made a living doing, teaching, or selling what I feel driven to do?
- Do I have enough experience in that field, or do I need to work in the industry for a bit to gain experience and become a more credible financing applicant?
If you feel stuck, walk back a bit and consider:
- What did I enjoy—or dislike—about previous jobs?
- Based on my work experience, is there an unaddressed need I can uniquely fill?
Questions about your capabilities and fit:
- Do I have the ability to create a product or service that solves my customers’ problems?
- What additional training and certification would I need to get started?
- Is my credit history strong enough to get financing?
- What type of business suits my lifestyle, and would provide me with the income I need?
- Am I prepared to spend 60 (or more) hours a week working on my business, managing every aspect from janitorial to HR, and ride out the peaks and valleys?
- Can I do this alone, or do I need a team from the start?
- Can I tolerate—and learn from—failure along the way?
Your startup will take on many changes while you figure out exactly what works. If you are not willing to push through a string of failures to refine your product, message or delivery, entrepreneurship may not be a good fit. If you are excited about everything you will learn on this journey, and can implement the necessary changes, you’re on the right track. A resilient mindset is one of the biggest skills required of an entrepreneur.
[Additional reading: Is Franchise Ownership Right for You?]
How will I know if my business idea is viable?
While the most successful businesses stem from passion, we caution entrepreneurs against falling in love with the business idea itself. The bottom line and break-even points must speak for themselves. Once you’ve come up with an idea, you’ll need to put it to the test.
Above all else, ensure there is demand for your product or service. You can create demand for a product or service, but it will cost you much more in time, money, or both. Identifying a gap in an existing market will vastly increase your chance of success. When you serve a market need, there will always be demand for your business.
While the additional questions below aren’t exhaustive, they are a good starting point, and an example of the areas you will need to evaluate before moving forward.
- What value does my product or service provide to the customer? Does it save them time or money?
- Is there a specific problem that needs solving?
- Is there an audience for my product or service?
- Do current trends (such as COVID and technology) point toward my business idea staying strong into the future?
- Is there competition for my audience? How is my product better or different than my competitors’ product?
- Is the profit margin large enough to make success possible?
What should I watch out for?
While you’re paving the way for a successful venture, keep an eye out for these red flags.
- Just because no one else is doing it, doesn’t make it a good business idea. There may be a good reason no one else has tried it, or a history of ventures that have failed.
- Your business won’t scale. Does your industry support both small- and large-scale businesses? Can you leverage your expertise on a larger scale or easily tap into wider markets? Can you delegate and automate to grow? If not, you may be better off keeping your day job and a side hustle.
- You love your hobby but not all the other parts of running a business. While you may be pursuing a passion project, at the end of the day this is a business and must generate revenue. Otherwise you’re likely not only to fail as a business, but kill your enjoyment of your hobby in the process.
- You’ve only gotten feedback from friends and family. If the only people telling you this is a great idea are people who may not be objective, you haven’t tested the idea enough. You need input from outside sources—people who aren’t afraid to challenge you and give you honest feedback.
What else must I do before I jump in?
Our RISBDC business counselors had a few more pieces of advice for aspiring entrepreneurs:
- Know your numbers. How much money do you need to bring in? Most businesses don’t turn a profit right away. Factor that into your planning and be realistic about your timeline for generating revenue.
- Consider buying an existing business. This can be one way to hit the ground running with cash flow and customers on day one.
- Build your business on the side. Set the foundation for your business while you have steady income. It’s much harder to perform at peak levels when you have the stressors of covering your living expenses in a do-or-die situation.
- Have a marketing plan. No matter how strong your business plan, you’ll falter if no one knows about your business. Make a solid plan for how you will get word out, generate leads, nurture leads, and close sales.
Entrepreneurship is a journey— you must be equally able to celebrate your wins, and to pick up and pivot when the market demands.
Our small business startup workshop, The Right Foot, is a great place to test your business idea and explore answers to all these questions and more. Get virtual access today.