Becoming a business owner is an adventure into new, exciting territory. It takes a special blend of dreams, business sense and looking within for what matters most to you in order to succeed in starting a new business.
If you watch Shark Tank, you know that entrepreneurs go in front of the expert panel looking for funding. It’s great entertainment, but it’s also a learning opportunity to see if these entrepreneurs have matched their dreams with a plan that makes others want to invest in their new business.
Now that I’ve been an entrepreneur for 19 years, I get lots of calls for advice and tips on how to start a new business successfully. In truth, there is no one easy answer. But if you can answer these questions, it can help you make sure starting a business is not only the right decision, but that it’s the right time to do so.
1. Why do you want to start a business?
Know the deep-down, real reason you want to create this new business. It must be more than having a career or job you want to leave behind. Motivation comes from what you want, whether that’s the desire to attain something or to avoid a negative outcome, not avoiding something you dislike.
If you are looking for a completely flexible schedule or a quick financial payoff, talk with other business owners and get a realistic picture of what’s in store before you take the leap. Be honest with yourself and make sure your reasons will carry you through the twists and turns you’ll experience as an entrepreneur.
2. Why does the marketplace need your product or service?
Know why your new product or service will meet a need in the market. It doesn’t have to be one of a kind, but find something that will distinguish your business from the rest in very real, practical ways.
3. How will you get your clients or customers?
Determine where your customers will come from and how they will hear about your business. If you have a product or service that needs lots of customers in order for you to reach your financial goals, then you’ll need a high-volume marketing plan.
As an example, if you’re starting a jewelry business or a retail store, you’ll need the continued awareness and business of lots of people in order to succeed. In contrast, if you’re starting a consulting or niche expert business, you’ll likely place a greater emphasis on growing key relationships with target clients and those who will recommend you to others.
How you get your customers and how many you’ll need determines how you spend your time and how long it will take to reach your income targets. Knowing this is fundamental to your plan and can help you confirm that your financial goals are realistic.
4. What will it be like when you have reached your desired state for the business? How long will it likely take to get there?
Dream. Know your North Star. Your desired state must be unique to you, not just a revenue target. Write down what it will be like, what will be happening and the evidence you’ll see as you begin to reach your target. This vision will be updated over time, but think big and remember you will get there in steps. This clarity will help you make wise short-term decisions and stay motivated.
If you know you’ll have a long ramp-up time before getting your business to that desired state, get started as early as you can. Consider transitioning into your new business by starting it while at your current job or before you finish school.
5. What financials are essential for starting a business?
If it looks like, in the best-case scenario for your business in two or three years’ time, that it won’t provide a high enough income, then you’ll have to adjust your plan.
Also consider: What is the maximum you want to invest in the first one or two years? Can your business be successful with this investment? Take the time to build out a realistic financial plan for your business, and avoid ending up someplace you never intended.
6. Who are your expert advisers to help you make it happen?
In 2012 I wrote about the need for a blend of advisers—your “dream team”—especially when starting a new business. Build relationships with multiple experts to advise you on marketing, the operational keys for running a business and the marketplace, and include another entrepreneur who can be your wise counsel. Some may be paid advisers, but others should be mentors who offer you guidance.
This gap in knowledge was one of my biggest surprises as an entrepreneur, because there was just so much to know—so much so that, at first, I didn’t even know what I didn’t know. Mentors and advisers were essential in educating me along the way.
7. If anything were to get in the way of starting a business, what would it be?
Answer this honestly. It’s essential to do so if you want to anticipate and plan accordingly.
I’ve heard answers such as “my lack of knowledge about this market,” “my discomfort with selling,” “that I have no investment money” and “second-guessing myself.” If selling your ideas or products makes you uncomfortable and you are about to start a business that will require you to do so, you have some options:
- Get help to dramatically improve your skills and your comfort level
- Partner with someone who does this well
- Regroup on your plans
Just don’t overlook this question. Leaving this unaddressed will guarantee the problem will reappear again in the future. This is not as tough as going on Shark Tank, but finding the answers will take some thought and work.
Follow your dreams. Take risks. Be bold. But also make sure to be smart, plan and get the advice you need. It’s not one or the other. This balance of dreaming and planning is what successful business owners do.
This article was published in April 2013 and has been updated. Photo by Prostock-studio/Shutterstock
Patti Johnson is a career and workplace expert and the CEO of PeopleResults, a change and human resources consulting firm she founded in 2004. Previously, she was a senior executive at Accenture and has been recently featured as an expert in The Wall Street Journal, The New York Times, NBC, Money Magazine and Working Mother. Patti is also an instructor for SMU Executive Education and a keynote speaker on “Leading Change.” Her first book, Make Waves: Be the One to Start Change at Work & in Life, hit shelves in May 2014. Visit her website at PattiBJohnson.com.