In these economically challenging times, it is important to know what you’re getting into before you start that business. You can test your readiness to start a business by honestly answering a few key questions regarding finances, marketability of your idea, your understanding of business practices, and your expertise.
Specific questions to help you determine your readiness to start a business are:
Can you afford to start a business?
- How much money do you have saved toward starting your business?
- It usually takes businesses at least six months to start receiving regular payments from clients and customers. How much money do you have saved to live on during the first six months of your business?
- If your business doesn’t make money at first, how long can you wait for profits to roll in?
- How much will the start up of your business cost? Is this money above and beyond the money you have set aside to live on during the first six months of your business?
- Can you run the business on your own or do you need employees in order to succeed?
- If you need employees, do you have enough to pay and to provide for benefits for them while you wait for your customers to pay you?
Is your product or service marketable?
- Have you tested your idea in the marketplace?
- What proof do you have that your service or product is needed enough for people to pay money for it?
- Have you tested the viability of your product or service on a small scale? Did you find customers easily and were those customers pleased with the service or product you are proposing to provide?
- Have you determined ways you will market your product or service and how much this marketing will cost?
Do you have the business knowledge necessary to start a business?
- What do you know about running a business? Is it enough?
- Do you know the best business structure for a business with your product or service?
- Do you know the ins and outs of setting up a business?
- Do you know how to keep the books for a business such as yours?
- Do you know what documentation to keep for business and tax purposes?
- Do you know how to track the inventory of your business?
Do you have the expertise to run the business you have in mind?
- Do you have the background and knowledge required to run business such as yours?
- Do you have the appropriate educational credentials and business licenses to run a business centered on the product or services you are offering?
- Do you know who your competitors are?
- Why do you feel you can compete with them?
If you assess these areas thoroughly and honestly and you determine that you have the expertise, the financial backing, and the market for your service or product, it just might be the right time to dip your toe into the business world. If you can give positive answers to most of these questions and are willing to work to overcome your weak areas, you will have done all you can to determine your readiness to start a business.