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Five Questions You Should Answer Before Starting a New Business

‘It’s wise to not be carried away by the picture in your head of a fully established business when you haven’t taken a look at what the road to that reality would look like.’

Every day, new businesses are born. They begin with much promise, as their founders eagerly seek to actualize the dreams that caused them to take a walk down the entrepreneurial path. However, more often than not, they end up collapsing into oblivion after hitting a brick wall. As the years pass, more ventures starve to death in the harsh reality of a punishing business climate, attacked by factors they did not originally anticipate. It’s a gloomy picture to paint of the startup world, but sadly, it’s how things tend to go- except the right questions have been answered prior to setting up shop.

Planning is the vital thing here. It’s foolhardy for one to go straight into a new business if he or she hasn’t closely considered its pros and cons. Of course, you should be excited about the possibility of being your own boss and running an outfit that grows on every right step you take. But it’s wise to not be carried away by the picture in your head of a fully established business when you haven’t taken a look at what the road to that reality would look like.

Here are five questions you should answer before starting your own business.

1. What problem is your business solving?

Let’s say you would like to sell children’s toys. Is there an underserved market for children’s toys around the locations you’re looking to sell in?

Businesses exist to fill need gaps and solve real problems. If there’s no demand for a product or service, there’s certainly no point in trying to supply it. There’s little chance of surviving as a new entrant in a market that is already saturated. You might begin by looking for a problem that you can solve, or by searching for a community that needs your solution; just try to make sure that what you’re offering takes care of a real want.

2. How much money do you need to start?

There’s a lot involved in answering this question than many people realize.

Determining how much money you need to begin a business will require that you ascertain what things you absolutely require to start, and what they will cost in monetary terms (if you are going to purchase them). Startup cost can incorporate amounts needed to run the business until it breaks even. You will have to do a forecast of these costs to determine when the enterprise will become profitable, and what is to be invested in it up until that point. Ask yourself whether you are willing to put money on the line for your venture’s sake.

3. Do you have the talents and skills you need to run the business?

Do you have what it takes to pilot the affairs of a business? Are you confident that you possess the creative problem-solving abilities that will be needed in good measure to tackle the challenges that will come up as your venture progresses on its growth trajectory? What trainings, if any, do you have to undergo in order to acquire the skills you need to run your business successfully? These are questions you have to answer.

4. Who are your target customers?

No business can survive without customers. They’re the ones around whom your business should revolve. It’s important to decide what segment of the population you’re targeting, and make your product as appealing to them as possible.

5. Who are your competitors?

You should know who your competitors will be before starting out. Find out how they operate, how they are faring in the space you are planning to launch into, their strengths and weaknesses, what makes them unique- any information about them that could prove useful to you. Think about what you could do to make your product or service more attractive than theirs. You could also learn some useful things about how to (and how not to) run your business from them. After all, they have been on the scene longer than you have and could prove to be valuable case studies.

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Ikenna Nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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