When starting a small business, there are a seemingly endless number of steps involved to get it launched. To some, this list is far too daunting, and becomes an insurmountable hurdle—preventing them from ever seeing their vision become a reality. For others, the thought of leaving the 9-to-5 grind behind, not having to answer to a boss, and dreams of endless profits is too much to resist. They jump in with both feet, anxious to get their hands dirty.
If you’re currently considering starting a small business, I encourage you to start the process by answering these three questions. The answers you give for these three simple questions will help you decide if you should spend any more time (and possibly money) on pursuing your current idea. If you answer a committed “yes!” to these questions, then by all means, carry on and I wish you the best of luck in your endeavor. If, however, the answer to any of the following questions is “no”, you should seriously consider shelving your idea and moving on to the next one.
Are there enough potential customers?
While your idea or product may seem perfect to you, to be successful, it has to appeal to a large enough pool of customers—folks who are willing to pay you for it. Figure out your minimum basis—the number of customers you need to sell to every day/week/month to not just survive, but bring in sufficient revenue to pay the bills, keep the business running, and pay yourself. Then look at your potential customer pool and determine what percentage of them would need to regularly buy from you to hit that number. The smaller that percentage is, the better. For example, getting 90% of a potential customer base to repeatedly buy from you to hit that minimum basis is a lot more difficult than only 9%.
Are people interested?
When answering this question, you should be relying on your own research. Market research has its place (as you’ll see below), but here, you are the one that needs to be in the trenches hearing the good and the bad first hand. Remember, no one has more interest in your business than you. Conducting your own research will give you an unpolished, real, invaluable account of how people feel about your potential product or business idea. Some of my favorite ways to gather this info, and gauge peoples’ interest is by:
- Talking with friends and family. These are your biggest supporters, but they usually won’t hesitate to let you know if you’re wasting your time or if your idea is just bad. While certainly not always the case, it’s generally not a good sign if you can’t get them excited about your concept.
- Forming your own focus group. Reach out on free platforms such as Craigslist asking folks to participate in a focus group. If motivation is needed, consider paying them a small amount, giving out gift cards, or entering all participants in a prize drawing. Everything about this process can provide valuable insight—from how hard it is to get participants, to the type of feedback you get—and since you’re conducting it, you have unfiltered access to all the nitty-gritty info.
- Going door to door. If your business idea is local in nature, get out and get personal with members of the community you’re looking to launch in. This is an excellent way to ask people directly what they want and can give you a clear sense of what would, or wouldn’t, be successful.
- Reaching out to potential customers on social media. Ask your online social circle to help out and post some information about your product or business and ask their circles for feedback.
- Posting your project/idea on a crowdfunding site such as Kickstarter, FundRazr, or Indiegogo. By posting to a crowdfunding site, you’re forced to do some deeper thinking on your concept so that you can present the best listing for potential customers and backers. You can also respond to comments and questions from interested backers, which can further help mold and improve your idea. In the end, you can get a good idea of interest depending on how many backers you got (or didn’t get).
Research, research, research.
If you need help figuring out if your prospective customer pool is deep enough and filled with enough interested folks, figuring out who your ideal customer is, then diving a bit deeper into what that customer likes and doesn’t like can help you.
The Buyer Persona tool from HubSpot is a great resource to dial in the challenges, goals, and demographics of your ideal customer. Not only will this assist you gauging the possible size of your customer base, but it will deliver crucial marketing information to reach those customers if/when you do launch your business.
Looking at competitors in your space can also give you useful data. How many competitors are there? How big are they? How long have they been around? Have any of them gone out of business in the past couple years? If so, why? Study their websites and social media channels, read reviews on Amazon and other online stores, read case studies and white papers that they’ve published. Read industry blogs and online forums.
Are you ready to eat, drink and live this business?
Without a doubt, this is the most important question you need to ask yourself when contemplating starting a small business. If you can’t answer this question with an enthusiastic “yes!” you need to seriously reconsider your plans. Starting and running a business isn’t easy. It isn’t all working only when you want to, taking regular vacations, and sitting around watching the money pile up in the bank. In reality, starting a small business takes endless hours, working long hours (often without getting paid), and it can take years before you notice any money beginning to “pile up.”
Even if you plan on adding employees right from the beginning, you will still need to be (and should be) everywhere in your business. Failure or success lies completely with you—not the circumstances or employees. It’s true that your own business presents you with endless possibilities, opportunities and can reward you with an overwhelming sense of purpose. But it comes with a price and requires incredibly hard work, grit, determination and an unwavering sense of belief in what you’re doing. Your hard work and constant thought about your business are the primary tools that will bring your dreams to fruition. To succeed, you have to be prepared to give it your all, all day, every day.
If you can answer every single one of these questions with a resounding “yes!” you should feel confident forging ahead with your idea. If not, I encourage you to rethink, reevaluate, and take another look at your concept before moving forward. By doing so, you’re considerably more likely to find success in your venture.