5 questions to ask before starting your own business
Starting your own business is a really big decision. It is likely to involve a lot of your money, require even more of your time and will probably influence a whole host of other parts of your life. That is why taking the time to consider whether it is the right decision, is well worth the extra time and effort. We have put together a range of questions worth asking yourself before you go all in on your new business. While this list of questions isn’t exhaustive, it is a great place to start.
Is there enough demand for your business?
Your business might seem like a great idea, but have you thoroughly checked whether there is the demand for what you’re trying to create? A great way to start is by drawing up a business proposal in which you scan the relevant area and also to look for similar examples of what you’re trying to create and how they’ve gone in the past or are going currently. If you’re looking to create a business in a space where there is an expanding market and it is not saturated with businesses that could be a great sign, whereas if there are few businesses in the area that you’re looking and scattered to little investment or demand perhaps there is a reason to be hesitant before going all in (unless your idea really offers a powerful disruptive solution).
Action – Draw up a business plan and test it out with some trusted mentors and preferably people who have experience in the industry and environment you’re looking to move into. We have attached a link at the bottom of this blog to a range of relevant resources for this.
Who will make up your team and is it worth finding a cofounder?
Starting a business is a big task full of ups and downs. This can be easier when you have another person with a complementary set of skills to you. This is a challenging thing to find and it could be the make or break of your business to find the right person to help you to build your organisation and team. Collaboration and problem solving as a team is critical to the success of all businesses and if you spend a little time thinking about someone who could go on the journey with you, you could save yourself hours and drastically change the odds of success.
Action – Contact relevant people you think would be able to provide valuable insights around your idea and sound out whether they might be a good fit to work with. Also, don’t forget to ask if they can recommend anyone else and keep meeting with people to see if anyone who is a great fit appears, as they might also be looking to do a similar thing.
Do you need to go ‘all in’ to get started?
Diving straight into your own business is a big risk. Is there a way you could test out your business without automatically gaining all of the risk? This might look like working on your business one day a week, or beginning the initial stages while still being employed in your current role. Start by thinking creatively about how you might be able to test out or try your business before you leap into investing your life savings.
Action – Write down on a piece of paper a range of the different methods you could use to test out your business idea before going all in. It might be setting up a website and starting to sell things online or even dropping one of your work days per week and piloting a project on your newly free work day.
Is someone else doing what you’re doing?
If someone else is already doing what you’re looking to do should you just go and work for them? This is a tough question worth considering and a whole range of variables impact the answer. Is it worth spending all the time setting up your own business or could you work with another organisation that are already making an impact in the area? Part of this question might be answered by how much you want to be your own boss, or whether you are more interested in particular aspects of a business that you might be able to spend more time on if you were working within another business instead of building one?
Action – Reach out to businesses who are working in the area that you are looking to move into and spend some time exploring whether there is a synergy in the work you’re doing. This will never be lost time as you will either better understand who your competitors will be and what their unique advantage is or learn that you might actually consider working as part of their team. It is worth noting that you should be somewhat cautious about who you share your idea with as you don’t want to give away all of your valuable ideas. Think about what is unique about your information or idea and what you are happy to share freely.
Can you afford to start your own business?
When thinking through your business plan it is worth asking yourself whether at this point in your life with everything considered (family, lifestyle, debts, etc) you can afford to go out on your own (especially considering almost 70-90% of businesses fail)? While in the best case scenario you could be making a profit in 12 months, what might the challenges be and what would the worst case scenario mean for you and those who are dependent on you? Sometimes it might even be worth waiting two to three years to start something before the level of risk is fair on those who depend on you. The most important thing is that you at least run the numbers and talk through the process with everyone involved to make sure you’re all on the same page.
Action – Run the numbers alongside your business plan to check whether you can actually afford to start your own business and then sit down with the relevant people to talk about whether this is a financial decision worth pursuing.
What do you value most?
At the basis of starting a business for so many people is the wish to have more autonomy in their lives, to pursue their passion and to have a more flexible lifestyle. What is often not said when people begin the process of building a business is that it is a question of prioritising your values. For a lot of people starting their own business, while they increase their autonomy, they also increase the level of responsibility that is placed on them. No longer can they leave their work behind, they are instead beholden to the ebbs and flows of the business. So it is gaining more independence, but at the cost of increased responsibility and at times stress. This is a choice. Another typical trade-off is the security provided by working for an employer and all of the benefits that come with that, which you then become the provider of when you begin your own business. Neither is right or wrong, but it is a choice that you make in deciding whether to set up your own business or to stay employed by an organisation.
Action – Take some time to sit down and write down what you value about your current role and what you would value in opening up your own business. Compare these to your priorities in life right now. Which values are most important to you and are worth considering seriously as you look to open your own business.
Keep reflecting and asking questions
Starting your own business is a big decision which is why we highly recommend that you do spend time reflecting and also exploring what is already available in your industry of choice. Often a little bit of initial good planning can save you an incredible amount of time, money and stress into the future and will help you get started more effectively, increasing your chances of success.
We also recommend that you spend quite of bit of time digesting a range of free resources that are out there and available for people looking to start their own business. For example: https://www.business.gov.au/planning/templates-and-tools