6 questions to ask when starting a business
- Every business needs a basic business plan
- Marketing your new business begins with the four Ps: product, price, place, promotion
- Before you start a business, define what success looks like in your first year
Owning a business is one of the most rewarding endeavors you will ever experience. With the right attitude, careful research, and hard work, you can have a successful company.
There are many questions to ask when starting a business. You want to make sure you’re prepared for the huge undertaking by anticipating what you need, what could go wrong, and how to make it right. It’s no wonder people often compare starting a business to having a baby—it requires a lot of time, money, and sacrifice.
Before you get started, read through this list of questions that every small business owner should be able to answer for their own business before making the leap.
6 questions to ask when starting a business
When starting a business, be honest with yourself when answering these questions. There’s not a “right” answer—the goal is to set yourself up for success by being honest about what you need to do to succeed.
1. What are the biggest challenges surrounding my new business idea?
Running your own business is no easy task, so start with realistic expectations about the challenges involved. Common challenges include lack of funding, having a unique and profitable idea, creating a practical business plan, knowing when and how to hire employees, managing competing priorities, and maintaining work-life balance.
When you start a business, many of these challenges will compete for your attention at any given moment. Rank them according to level of difficulty or time investment to help you assess your situation and come up with solutions. You can also compile a list of people you know who have started a business and ask them about the resources, tools, and referrals they used that could help you.
2. Do I need a business plan?
The answer is yes. A business plan is a must for anyone looking to start a new business. It’s a document that acts as a roadmap for your business, including where it’s going and how you’ll get there. A business plan outlines your core goals and strategies, but it doesn’t have to be complex—even a one-pager can do the trick.
There are two main types of business plans from the Small Business Association (SBA):
Lean startup business plan: This format is ideal for people short on time who still want the organization and structure that a business plan provides. It’s a tight one-pager that includes key elements for partnerships, marketing activities, resources, unique selling proposition, ideal customer, channels, and revenue streams. Startups use this format because it’s easy to update as you go.
Traditional business plan: A traditional business plan is better suited to more detail-oriented business owners who are applying for funding. Sections typically include an executive summary, business name and objective, market research, funding request, and financial projections. The SBA recommends including financial statements like income statements, balance sheets, cash flow statements, and capital expenditure budgets in this type of plan.
3. How will I fund my business?
This is one of the most crucial questions to ask (and answer) when starting a business. Even the best business ideas can’t succeed without money. Your business structure plays a role in how you’ll fund your business, and each comes with its own costs, risks, and tax provisions.
Once you know how to classify your business, there are five ways to raise money:
- Bootstrapping: This is not the easiest method for starting a business, but it grants you the most control. Bootstrapping means you use your own money to fund startup costs. It’s riskier than other options because your personal finances are on the line. But ultimately, it can add value to your company because you haven’t borrowed any money you need to repay.
- Loans: Applying for a business loan is straightforward no matter which type of loan you choose. Tribal loans, personal loans, or a line of credit are all good options. Consult with a financial advisor on your business goals to save you time and money down the line.
- Crowdfunding campaign: This type of funding relies on donations from large volumes of people (friends and strangers), usually on sites like Kickstarter, Indiegogo, GoFundMe, and countless others. Crowdfunding is ideal if you have deep social and professional networks and an idea that excites people. It also lets you raise money and awareness of your business at the same time. Service fees and terms vary, so be sure to do your research. For example, Kickstarter is an all-or-nothing platform. If you don’t raise your total funding goal, you get nothing.
- Angel investors: Unlike venture capitalists, angel investors use their own money to fund businesses. They usually support companies that align with their values or mission, so it’s your job to draw that connection with your sales pitch. To find angel investors, scour your network or search for them on sites like AngelList. When meeting an angel investor, always have your business plan ready, complete with an executive summary.
- Grants: This funding option often goes hand-in-hand with bootstrapping. Grants allow you to apply for funds from government organizations, nonprofits, and corporate organizations. The qualification process is intense, so you may want to hire a grant writer who can greatly improve your chances of receiving the grant. A contracted grant writer usually costs anywhere between 1-5% of the total amount awarded. It’s a small price to pay if your funding goes through.
Check these websites regularly for applicable grants:
- Small Business Development Centers
- Minority Business Development Agency
- National Association for the Self-Employed
4. What’s my marketing strategy?
A marketing strategy is the plan you create based on your market research to reach potential customers and promote your product or service.
While it might sound complicated, a marketing strategy can be broken down into four basic categories—what marketing guru Neil Patel refers to as the four Ps:
Product: This covers the item or service you’re offering the customer. You want to determine what problem you’re solving for customers and identify your unique selling proposition. In other words, you need to know why a customer would choose you over a competitor.
Price: The concept of price is easy. It’s how much your customers will pay for your product or service. But striking the right cost-value balance to set your product or service price is more difficult. Is your brand aiming for luxury or value? Maybe your business idea is to provide luxury goods at a lower cost, so it’s a combination. Investigate how your competitors price similar items or services to determine where your price fits in.
Place: Whether it’s online, offline, or both, place refers to where you connect with your customers and sell to them. It’s best to go where your customers already are, rather than trying to get them to come to you. This “P” encompasses the market, channel, and distribution methods you’ll use to reach your target customer base.
Promotion: This is another part of your marketing strategy that can help propel your business. While you might think promotion is just about posting on social media or paying for traditional advertising, there are other options. For instance, SimilarWeb is a free tool that provides data and insights on any website (including those of your competitors). The information you gain can help inform how you promote your own business. Get a free Yelp page Promote your business to local customers.
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5. What common mistakes do small business owners make?
It’s true that you learn from your mistakes. But sometimes it’s just as good to learn from the mistakes of others—especially if they openly share what they’ve learned.
Identify business owners and thought leaders you respect and admire. Google them and read their books. Follow them on social media, watch their YouTube videos, and put yourself in the mindset of a successful business owner.
Many famous entrepreneurial stories include tales of poor risk management, wrong product pricing, or underestimating the value of sales and marketing. Maybe some of your friends are business owners who will share anecdotes on the mistakes they made and how they got through them.
Even if your industry is different from that of another entrepreneur, you can always come up with questions to ask when starting a business and learn some valuable lessons.
6. What does success look like?
Asking what defines success is the million-dollar question that every small business owner must answer from the get-go.
While some might define success as earning the first debt-free dollar, another may determine it’s producing a meaningful product that improves the lives of others. Another small business owner might define it as opening a second location or simply being able to enjoy a full weekend with your family and friends without working.
However it is that you define success, make the goals clear, and remind yourself daily of how starting your own business is supporting this goal.
Knowing the right questions to ask when starting a business can ensure you set yourself up for success and invest your time, energy, and money in the most productive way possible.
A strategic approach to your new business informs budgeting decisions, helps you avoid potential pitfalls, and allows you to focus on what will captivate your next customer.
If you’ve taken the first step to start your own business, take it a step further by claiming your free Yelp Business Page. It’s an easy and effective way to connect with your community, reach more customers, and track interactions so you can do business better.
The information above is provided for educational and informational purposes only. It is not intended to be a substitute for professional advice and may not be suitable for your circumstances. Unless stated otherwise, references to third-party links, services, or products do not constitute endorsement by Yelp.