Small businesses form the backbone of our country’s economy and according to Forbes, they outnumber corporations 1162 to 1. That being said – and surely you’ve heard this before – only 50% of small businesses make it past their first five years.
In order to maximize your chances of success there are some ideas and questions you should consider before jumping in with both feet:
- Is my idea truly a business?
One mistake that people often make is conflating ‘hobby’ with business. Just because you love making cupcakes and they’re in high demand, it doesn’t mean you should open a bakery, as evidenced by Crumbs Bake Shop recently closing down all of its locations.
You should be able to offer more than one product or service – diversifying your contribution and having a robust idea will protect you from the ebbs and flows of popularity or trends.
- Is my idea better than my competitors’?
Doing market research will help you determine whether there is demand for your product or service. Find and audit thriving businesses that have similar offerings. Take note of what you think makes them successful, but also where they could improve.
You should offer something better than the rest. Remember, people are addicted to convenience and will buy into almost anything that will save them time, stress, and money – in that order of importance.
- Do I have the right skills and attributes to make this work?
Not only should you have skills relevant to your business, but there are some personality traits that will serve you well.
Excellent money management. If you can create and stick to a budget, are prepared to put your revenue back into your business, and can keep track of your business and personal debt, then you’re on the right track. Get QuickBooks and make it your best friend.
Tenacity, resilience, patience. You will face failure many times over. You will need an unrelenting spirit and confidence to get through the tough times and having a half-hearted attitude will get you nowhere. Running your own business requires 110% effort.
Organizational skills. You will need to keep records, do accounting, file taxes, and keep track of staff, clients, and sales and so on. One trait common among entrepreneurs is the ability to wear many hats and to be adaptable. Start keeping track early: learn to create and review monthly revenue and expense reports, get intuitive CRM software for small businesses like Method, write and prioritize tasks and to-do lists. Hire someone to do the things you can’t, or don’t like, to do.
Sales and marketing. Small business owners need to know how to sell their products – that means finding your unique selling point and having people agree with you. Getting consumers to part with their money isn’t as hard as it seems, but you do need to find your niche and audience. Speak to them, understand their needs, do something exciting (like this guy who quit his job to start a cake business by writing his resignation letter on a cake) to build a buzz, and keep track of what is working and what isn’t.
- Who is my ideal customer?
It is important to know who your customers are or will be. Be clear about who is going to buy or use your product so that you can target your marketing, branding, pricing and location to those specific people.
To do this effectively, pick three potential customers, often called “personas”, and make a profile for them: name, age, occupation, what they do in their spare time and anything else you can think of. Then, putting yourself in their shoes will help you come up with ideas on how to reach them.
- Will this work make me happy 16 hours a day, 7 days a week?
This is typically the kind of dedication required to start a business. You may be doing this to get out of the rat race or so that you can travel more; however, being an entrepreneur can be difficult especially when you’re starting out. There is no one there to pick up the slack if you don’t work so your business really has to be a labour of love.
Just start with doing some research. Becoming a business owner is a large commitment, so be sure to question your motives and competencies thoroughly. On a positive note, owning your own company is highly rewarding and definitely worth the time and challenge.