Potential entrepreneurs and inventors are individuals motivated primarily by the desire to create something new, the desire for autonomy, and financial independence who are equally convinced that their product or service idea possesses tremendous potential. However, without a structure in place and vital concerns to honestly deliberate, as well as confront, the prospective entrepreneur may be diving into an unfamiliar commitment prematurely.
Asking the right questions to prepare the road map ahead, along with predicting the worst-case scenarios, will place the aspiring businessperson in a superior proactive rather than in a totally capricious and reactive position.
As a serial entrepreneur stretching over 35 years and in three countries, I have developed a series of questions to asses prior to engaging in a new enterprise. The self-evaluation questions which should be addressed are as follows:
1) Will my product or service idea be viable, and does it solve a problem?
- Do an adequate/in-depth research of your target market(s) and your competition (if any).
- Know your potential size of your target market(s).
- Be familiar with your USP (Unique Selling Proposition). Can you articulate
- Establish a business model to identify the products or services the business will sell (whether B2C, B2B or both), and among other elements to ponder such as the target market it has identified, and the expenses it anticipates.
- If what you are planning to offer is considered disruptive and will make people’s lives easier, than your chances of acceptance and sales will be significantly higher than the average existing competition.
2) Do I have adequate funding to launch it and keep the business going?
- There should be sufficient start-up funds, as well as funding available to keep the business active for cash-flow purposes, as well as to grow the company. Every type of business has different funding requirements.
- Sources of funding are bootstrapping/own funds, debt (line of credit, credit cards, traditional and alternative bank loans) and/or equity (friends, family, potential investors, etc.)
3) Do I possess the characteristics required to deal with entrepreneurial hardships?
- An effective businessperson has an inquiring mind and should never stop learning. Familiarize himself or herself with the barriers and challenges an entrepreneur is often confronted with.
- Possess tenacity and able to think clearly. Intense emotions from pressure should be restrained. Cool heads prevail and easier to undertake problems.
- Organizational skills are critical along with an open mind and fiscal discipline.
- Should not feel uneasy delegating tedious tasks (whether in-house or outsourced) and focusing on the core business operations.
4) How much do I know about the industry I’m seeking to embark in?
A clear understanding of the business is imperative. The entrepreneur should be a perpetual student of the business and constantly seeking ways to innovate and improve oneself and the operations.
5) Can I succinctly address all 4P’s of marketing (a.k.a “the marketing mix”) for the product(s) or service(s) I desire launching?
Every entrepreneur should be familiar with the marketing mix (Product, Price, Place & Promotion) and how each one applies to his or her product(s) or service(s).
6) What are my financial projections (3 to 5 years)?
- Achievable? Adequate? What about profit and cash flow?
- Number of employees planning to hire (payroll costs), amount needed to spend on R&D, equipment, etc.
7) What is my exit strategy?
a) If things go awry.
An entrepreneur should know when to walk away if his or her business is floundering with little chance of turning it around. Perhaps sell it if someone else can salvage it. It is not a good idea to keep injecting good money after bad.
b) If the business is thriving in 5-7 years?
It may be a good time to pass on the reins to a capable family member, sell the shares to the partner(s), go public, or negotiate a buy-out from an established brand or competitor. If seeking funds from an Angel Investor or Venture Capital firm, this will need to be addressed.
8) Do I have a circle of outside support such as a mentor/coach, attorney, accountant etc.?
A savvy businessperson surrounds himself or herself with mentors and knowledgeable advisors, who will nurture the executive to become a better and successful entrepreneur.
The aspiring businessperson should be honest with himself or herself of the challenges that lurk in launching and operating an enterprise — it is not all rosy and glory. Start-ups do not occur in theory. These questions, when answered wisely and truthfully, ensure the would-be entrepreneur does not get caught in a sensual dream that turns into a living nightmare.