Youve developed an exceptional business concept and are ready to test your product or service in the marketplace. Next come the obvious things: developing a business plan, finding an appropriate office space in or outside the home, and deciding whether to go it alone or hire employees. These decisions hinge on the scale and size of your operation. Before taking these steps, there are more important considerations to ponder. Take time to address the following issues before the dream of being your own boss takes shape.
Can You Arrange Funding?
While many people have great business ideas, taking them to the next level requires capital. Perhaps you have money saved or plan to take a loan from a bank or a family member. In either case, know that most businesses fail because they run out of money. A [study performed by Industry Canada] (http://www.theglobeandmail.com/report-on-business/small-business/startups/six-tips-for-bucking-the-small-business-failure-rate/article20941565/) revealed that 30% of small businesses do not make it past two years and only about 50% endure for five years. With that statistic in mind, it is vitally important to have enough cash on hand to carry the business through the first year, when startup costs are high and any income may need to be reinvested.
You need money to run the business, but you also need funds on which to live. If you are planning a full-time business pursuit, paychecks will cease and unless you are wildly successful, income may slow to a trickle. The expenses of food, transportation and housing costs will not. A good rule of thumb is to have six to 12 months of household expenses stashed away so that you can pay your essential personal bills. Maintaining the business may require sacrifice. It may be necessary to cut expenditures such as dining out or vacationing for the first year.
Have You Done the Research?
Your product or service won’t sell itself. You must determine whether there is a market for what you’re selling. Talk to potential customers. These prospects may develop through past business relationships or present acquaintances. Friends may find it difficult to criticize your game plan, but strangers are more objective, taking exception to features, benefits or pricing. Use constructive criticism to enhance your approach. Do some preliminary tests on the viability of your wares, and uncover objections that may prove valuable when it comes time to launch.
Competition in the market provides a challenge, but it also suggests an opportunity. Survey rival businesses to determine if your proposed pricing or service agreements are in line with customer expectations. More importantly, figure out what your adversaries don’t do well. If you can find a weakness in their operations, it may help to exploit that shortfall and differentiate your organization from those existing businesses. Creating a [competitive advantage] (https://www.thebalance.com/what-is-competitive-advantage-3-strategies-that-work-3305828) goes a long way in driving sales, generating revenues and turning profits, the lifeblood of any business pursuit.