To start your own business, you need more than a dream. Sure, a dream is where it all begins, but having a clear understanding of what it really takes will help ensure your success as a new business owner.
Statistically, many new businesses have a hard time getting off the ground. According to the Small Business Administration (SBA), which pulls it’s data from the US Bureau of Labor Statistics, about one-third of businesses will fail during their first two years. And that number continues to climb during the first ten years of a new business, as the SBA states:
About half of all new establishments survive five years or more and about one-third survive 10 years or more.
Okay, so the stats can be downright bleak, with the initial years of any new business being a struggle for survival, but that shouldn’t deter you.
Just the opposite: These stats should motivate you to ask yourself the tough questions.
So can you make an intelligent decision about whether the time is right for you to start a business? Or, if your venture has what it needs to make it? When you know what you’re up against as a new business owner, your chances of succeeding drastically increase.
Business ownership brings many benefits like:
- being your own boss
- setting your own hours and schedule
- being in control of your company growth and how much you make
That’s why it pays to start your own business.
But are you ready? Do you have the mindset, resources, and skills it takes to start a business? The benefits of building a successful business are clear, but with so many business failing to gain traction in the marketplace, what will make your’s succeed?
Here are the 25 questions to ask yourself beforehand, so you can make sure you’re prepared to start a business, and take the necessary actions that will help ensure your success.
- 1 1. Can You Afford to Take the Risk?
- 2 2. Are You Independent Enough?
- 3 3. Are You Passionate About a Product or Service?
- 4 4. Do You Hate Your Job or Feel Stuck at Your Current Job?
- 5 5. Are You Able to Organize Yourself Well?
- 6 6. Is Your Industry Stagnating?
- 7 7. Are You a Planner and Thinker?
- 8 8. Can You Free up Enough Time?
- 9 9. Do You Want to Help People?
- 10 10. Can You Negotiate Well?
- 11 11. Are You Persuasive?
- 12 12. Do You Have the Creativity?
- 13 13. What Is the Nature of Your Business?
- 14 14. Who Is Your Target Market?
- 15 15. What Exactly Is Your Product or Service?
- 16 16. What Is Your Unique Selling Proposition?
- 17 17. From Where Will You Run Your Business?
- 18 18. Will You Need Some Employees to Help You?
- 19 19. What Are Your Startup Costs?
- 20 20. Do You Have a Business Plan?
- 21 21. What Is the Legal Structure of Your Business?
- 22 22. Do I Need Business Insurance?
- 23 23. Who Are Your Competitors?
- 24 24. How Will You Market Your Business?
- 25 25. How Will You Manage Your Business?
- 26 What to Do After Answering These Questions
1. Can You Afford to Take the Risk?
Let’s get one thing straight immediately: Starting your own business is a risk. It’s risky to quit your day job, and give up your regular paycheck, to try your hand at something with no guarantee of success.
If you have some savings in the bank, no dependents and are single, then this calculated risk could well prove to be an adventure worth chasing. If you have a family depending on you, then it’s still viable to start a successful business, but your risk factors are different. In either case, you want to make sure you weigh the risks first before getting started.
Our guide to determining if risk is worth it can help you make a better decision.
2. Are You Independent Enough?
Starting a business means that you’ll be your own boss. It’s liberation, of course, but it’s also being self-sufficient. So ask yourself the sobering question of whether or not you’re capable of making decisions confidently on your own, without always having someone sign off on them.
If you feel like you can trust your instincts and aren’t afraid of being wrong or getting rejected sometimes, then starting a business could be for you.
3. Are You Passionate About a Product or Service?
Do you truly believe that you have a product or service that has huge demand in the marketplace, but no one’s yet thought to bring it to market? Having a brilliant, creative vision for something the market craves is the hallmark of entrepreneurship.
If you know that your idea for a product or service is going to be an in-demand item, then it may be time to open your own business.
4. Do You Hate Your Job or Feel Stuck at Your Current Job?
Perhaps no other barometer is as accurate for determining opening your own business than how you feel about your current employment situation. Going to work each day and slogging through a job where you can’t stand your boss, co-workers or duties is no way to live.
If you hate working where you work now, then starting your own business can be the long sought-after solution.
5. Are You Able to Organize Yourself Well?
Running your own business is no walk in the park: It’ll be an operation that requires structure and efficiency, even as you start out as a small business with only you as the sole owner/employee.
If you know you’re well-organized, know how to prioritize tasks, and manage your time excellently, then entrepreneurship could be for you.
Our productivity guide can get you started in the right direction:
6. Is Your Industry Stagnating?
In the wake of the COVID 19 pandemic, which we’re still feeling the effects of, has your industry recovered?
If your job is in an industry that’s just treading water, and you can’t find a job (or have to take one with less pay because you’re overqualified for it), then you may want to take a hard at starting your own business.
7. Are You a Planner and Thinker?
Entrepreneurs, solopreneurs and anyone starting their own business love to think. It’s just a fact of life, as starting a business requires lots of strategizing, creativity, and planning.
If you want to finally act on your ambitious thoughts and plans, then it may be time to quit the daily rat race and open your own business.
8. Can You Free up Enough Time?
Starting your own business is a huge commitment—if you truly want to succeed! Think of it like a marriage, only with even more devotion. To succeed in your first few years, you’ll have to work 12-hour (or more) days for many days of the week, and this isn’t ideal if you have a family or commitments.
If you feel, nonetheless, that you could shift around your schedule to free up enough time for your new venture, then running a business may be a good fit.
9. Do You Want to Help People?
Part of starting your own business is a sincere desire to help people. The product or service you’re going to bring to market will solve someone’s problem, so there’s definitely an altruistic side to running a business.
If such a selfless desire can keep you going through the highs and lows of being a new business owner, then you may be ready.
10. Can You Negotiate Well?
Being a great negotiator is essential to being a business owner. As the owner of a startup in particular, you’ll need to negotiate everything from your rates and contract to your lease, should you occupy an actual physical location.
If bartering and meeting people in the middle sounds like what you already do well, then it may be time to start your own business, too.
11. Are You Persuasive?
Mastering the art of persuasion is key to running a business since you need to convince leads, customers, partners and those in your industry that your product or service solves an essential problem. This entails in-person networking, meetings and perhaps even the odd public-speaking engagement at an event or showcase.
If you know you can persuade people to see things your way, then consider opening your own business.
12. Do You Have the Creativity?
Starting a business takes creativity. If your business is an agency or other creative enterprise, then that goes double. Too many people know what it’s like to be in an office environment where their creative ideas are underappreciated or just dismissed.
If you know you have the creativity it takes to start a business, then read our guide to the Creative Economy for excellent inspiration:
13. What Is the Nature of Your Business?
Business is so much about branding. Without a crystal clear indication of who you are and what product or service you provide, it’ll be hard to stand out in the market. By understanding what type of business you are (agency, creative, startup, etc.), you’re that much closer to successful branding.
To help narrow down what business you want to run, read our tutorial on simplifying your business ideas:
14. Who Is Your Target Market?
Determining to whom you’re going to sell your product or service is fundamental to business success. Your product or service will solve a problem for one, particular demographic, and knowing this will help you advertise to them more effectively.
See our tutorial on selling to your target market to help you excel in this ambition:
15. What Exactly Is Your Product or Service?
When you know what type of business you want to start and what problem you want to help people solve, then you’ll have a better idea of what your product or service is going to be. Do you want to provide creative services for people? Will you be an agency doing design or development work for your customers?
When you know the exact nature of your product or service, you can start your own business with more confidence.
16. What Is Your Unique Selling Proposition?
Every business requires a unique selling proposition, which is the great differentiator between you and your competitors, explaining what your brand, product or service can offer your customers that no one else in the entire marketplace can.
If you can articulate what sets apart your business from all the others in your industry, then you have a leg up when starting your own business.
17. From Where Will You Run Your Business?
These days, small businesses can be run out of the home quite easily if they provide creative services like web design. Decide if you can get away with running your business from a dedicated home office, or if you need a physical space to get clear on your business structure.
If you’re leaning toward working from home, then our guide to starting a freelance web-design business will prove helpful:
18. Will You Need Some Employees to Help You?
When you’re starting out as a small business, it’s necessary to save money and try to do everything yourself. However, when you become profitable and realize that delegating can free you up to running your business more efficiently, it may be wise to consider hiring some employees, if you can afford them.
If you have a good idea about how much work you can handle yourself, then you may be ready to run your own business.
19. What Are Your Startup Costs?
Understanding how much money you have to invest in your startup goes a long way to helping you plan for sustainability. If you have an online business or work from home, you won’t have traditional overhead costs, but you’ll still have to pay for an Internet connection and any tools (computer, printer, etc.) to run your business.
If you have a good breakdown of your operating costs, then you can be more confident in starting your own business.
20. Do You Have a Business Plan?
Think of your business plan as the blueprint of your business vision. This is the document that basically sets down the roadmap for how you see your business growing, expanding and thriving in the years to come.
For some ideas on how to compose a business plan, check out our tutorial on writing a business plan:
21. What Is the Legal Structure of Your Business?
If you’re a solopreneur, things are pretty straightforward, as you’ll be a sole proprietorship, but what if you have a couple of employees? It pays to understand the difference between different business entities, so you know how you can operate and how you can’t.
If you know what legal structure your business will take, you’re a step closer to running your business. Learn more in our guide to the subject:
22. Do I Need Business Insurance?
Different business types need different insurance. For instance, if you’re going to perform a service at someone’s home (electrician, handyman, etc.), then you need insurance. If you’re a creative agency, then not so much.
To understand the difference between the kinds of insurance and to determine if you need it, read our how-to on protecting your business with insurance:
23. Who Are Your Competitors?
Understanding who your competitors in the same industry are is crucial to formulating the right business strategy. Knowing this can help you plan your marketing campaigns and decide where to direct your advertising dollars. Plus, you might even pick up a thing or two from your competition.
If you can identify your competitors, you’re in a better position to start a business.
24. How Will You Market Your Business?
Marketing your business is essential to its success. You need to get the word out there about your business, and you need a good advertising strategy. You have to understand principles like persuasion and scarcity and urgency to make an impact with your ads.
For ideas on cost-effective ways to market your business, see our tutorial on content marketing:
25. How Will You Manage Your Business?
Running a business is hard work, so it’s necessary to devise a plan to manage its operations effectively. Do you have any prior experience in running an enterprise or organization? If not, then it’s going to be an uphill climb learning on the fly. Relax, though, as you can learn as you go.
If you understand the basics like setting a budget, providing great customer service, and keeping track of expenses, you may be ready to start your own business.
What to Do After Answering These Questions
Asking yourself these sobering, hard questions is a prerequisite for starting your own business. These questions will keep you honest and ensure that you have a handle on what’s expected of you as you take on the responsibility of starting a business.
Jump into our comprehensive guide to starting a business for next steps:
If you feel that you can answer most or all of these questions with confidence and competence, then it’s time to make that fateful decision: Join the ranks of those who have already started a business, and see if you have what it takes to make yours a success.
Editorial Note: This content was originally published in May of 2016. We’re sharing it again because our editors have determined that this information is still accurate and relevant.