9 questions to ask before starting a business

Starting a business is part science, part art, and a large part hard work! It can get lost in all the excitement but you need to get the balance right.

Approximately 20 percent of all small businesses fail in their first year; and your chances of your business making it to five years are around 50/50.

One thing is for sure: leaving your success up to chance is not an option. Get clear on where you want to take your business and how you are going to get there.

Reasons small businesses fail include the following:

  • No market need for their products or services
  • Lack of cash flow
  • Not having the right team in place
  • The competition doing it better
  • Pricing and cost issues
  • Lack of a business model to follow
  • Poor sales and marketing ability

So what are the essentials needed for your business to thrive? How do you ensure your business doesn’t fall away due to one of the above — or any other reason?

By asking the right questions from the start. The following will get you thinking along the right lines from day one…

1. How passionate are you about this?

It sometimes gets lost in all the calculations but you should LOVE what you are about to start.

Is it something that you can see yourself doing in five or ten years? If not, maybe you need to look elsewhere.

Passion is what keeps you going through rough times. It sustains you and ensures the necessary energy goes into the venture. There will be difficulties in the years ahead but passion will see you though.

2. Do you really need to quit your ‘real’ job yet?

A healthy obsession with your business idea is fine. But it can blind you and cause you to make hasty and unnecessary decisions.

Some business owners give up their jobs before they start their businesses. They may be better advised to keep the job (and the steady salary) and start their business as a small side venture—often referred to these days as ‘a side hustle’—at first.

There are 168 hours in a week. If you’re passionate about your new venture, spending a few extra hours a week on it won’t seem like extra work!

Save the financial stresses caused by a business HAVING to support you from day one.

3. Who are you partnering with?

If you are partnering with someone in your business, make sure that it works for you both. If you complement each other and it makes the business stronger, great!

If not, then why are you going into business together?

A business is not the place for a ‘marriage of convenience’. If you take that path, it won’t be long before problems rear their head.

4. You can’t do everything — who is going to help?

How are you going to find the people that help you run your business?

Doing everything yourself might seem like a cost-saver at first but soon you’ll realise that it’s a false economy — and it will lead to burnout.

Hire professionals to ease the load: a business accountant (not only a tax accountant), a legal contact, a personal assistant, and a marketing assistant are some basic requirements. To avoid paying full-time salaries, outsource to the right professionals.

5. Do you understand your competitors and the market?

Passion alone won’t sustain your business. You need a clear understanding of the niche you are entering.

Who are your competitors? Is there room for another business like yours? If so, how will you stand out — Service? Price? Quality?

If you are breaking new ground, have you established that there is a genuine need for what you offer? Be sure that it’s not just you who thinks it’s a great idea?

Be clear on your target audience and who is going to buy from you.

6. How will you structure your business?

Establishing the right legal structure for your business is also a basic requirement.

Your options will vary depending on the type of your business and your family situation, but seek advice from a qualified accountant experienced in providing structuring advice to get the fundamentals in place.

The business structure you choose will affect taxes, administration, liability, and employee setup, amongst other aspects of your business, so it can be an expensive mistake to not get this right from the outset.

7. How will you fund your business?

Mapping out the capital available to you should be part of any business plan: the start-up money may come from savings, friends, family, business partners, investors, venture capitalists, or through bank loans.

Get clear on how you will raise enough to get your business going, what your weekly and monthly ‘cash burn’ will be until you reach cash flow break-even point (after which the business funds itself), and then, establish how you are going to manage your cash flow in the coming months and years.

8. How will you market and sell your products or services?

Sales and marketing are two areas that will help to define the success (or otherwise) of your business. Take advice on the best marketing channels — both online and offline.

Also, if your sales skills are poor, make sure you hire someone who can close the deals that will bring new customers into your business.

Many new business owners have already established some relationships to provide initial wins — but what do you do when these dry up? You need a healthy ongoing pipeline of leads and prospects.

9. Are you getting the right advice from the right accountant?

Business owners should be on top of their taxes, payments, and accounts; and keep a tight handle on outgoing expenditure.

A good accountant can advise you on this, as well as helping you identify opportunities to grow your business as you mature.

Make sure you have chosen an accountant you can work with and who has experience advising businesses like yours, as this will be a crucial relationship that shapes the future of your business.

Chances of success are actually relatively high if you ask the right questions before you start your new business venture. Many new business owners get caught out by the unexpected because they have not planned properly with cash, personnel, market research or other key factors.

Start by asking the above questions and go in with your eyes open!