Entrepreneurship

5 Questions to Ask Yourself Before Starting a Business

By: Chad Bell
Recently, I met with a prospective client who had an idea to develop an eCommerce store for a new product he had created. He waxed on about how great the product is as well as the value that it would provide his future customers. Having met too many people who have not stopped to consider whether or not their brilliant new product or service will actually provide significant benefits, I was impressed. Excited, I asked, “Who is going to buy this?” That’s when we hit a brick wall. With an empty stare he responded, “I don’t know.”

Sadly, my new client was following in the footsteps of many before him, particularly those who found themselves broken down on the side of the new business highway. He, as so many others, fall prey to the belief that the criteria for a successful business is comprised solely of a good idea. The idea of ‘build it and they will come’ worked in “Field of Dreams”, but it won’t work in business. The art of business is spotting an opportunity, or an unmet need in the marketplace, and filling that space with your product or service.

So before you invest your, or worse – someone else’s, money you should be able to answer these 5 simple yet very important questions.

  1. What value will my product or service provide for customers? In other words, what pain will my product or service alleviate?
  2. Who will my customers be? More precisely, who is going to buy my product or service?
  3. How much will customers be willing to pay for my product or service? It is important to differentiate between what you provide and its perceived value.
  4. Why would customers choose my product or service over competitors’? “I don’t have any competition” is not the correct response here.
  5. What resources will I need to provide my product or service? Think production: financial, tangible, intangible (e.g. trademark), human capital, etc.

Whether or not you are beginning a new venture, you can minimize the risk of losing customers to competition by focusing on ways to better provide your services. Asking yourself these questions will serve to help you launch a new product or service, or to improve your existing business.

What questions did you ask yourself before starting your business?