The decision to launch a business usually entails an avalanche of appropriate and inappropriate questions, the answer of which is sometimes difficult to be found.
To facilitate the ingenious entrepreneurs, our blog presents a list of 10 questions that everyone who has decided to start a business must have a clear answer to:
1. Is this your first risky endeavor?
If you already have some experience in setting up a business that you sold and you and your investors have received good returns from it and now you have another good idea, contact one of the investors. Present them your idea and determine what part of the company you are willing to give them in exchange for funding. In this case you can skip the next question, but the rest on the list may still be useful to you.
However, if your first entrepreneurial experience was unsuccessful, it may be better to first decide how much you want to jump in this again.
2. Are you a real entrepreneur?
There are two moments when you should be more than confident about that. The first is in the late stage of boom when everything seems simple, but it's not. If you start in this phase, you can raise money, but on the next stage, which will be delay, you will test your endurance. The second time when you should have an unconditional answer to the question is in tough times when you do not have a job. This forced entrepreneurship can be seen now, as well. However, it is certainly preferable to the fruitless results from your job search. Even a failed venture looks better in your resume compared to an empty box.
3. Does your new business refers to something that you have a pretty good idea of?
Can you answer any question coming from anyone without looking at your notes? This is not about passion and enthusiasm because of the initiative. Yes, you really should care, but the understanding, knowledge and competence are the key to success.
4. Does everybody understand the value of your idea?
The test, which will help you avoid any misconceptions about your idea is the presence of your closest people’s full understanding and their ability to present it to your friends.
5. Can you identify the right wave?
Every endeavor needs a push to succeed. The chances of failure before a starting enterprise are enormous. You need to find the trend that is your friend in order to be able to compete with the established players.
This may oppose to point 3, which is about the full and sound judgment beyond time. However, they both can coexist. An example of a trend is the transition from offline to online advertising. Anyway, you need to be able to explain how you would attract the attention of your audience on a sufficiently low price and sell advertising cheap but on a price high enough to make a profit. There are large waves and small waves. Large waves are obvious, they are a few and everybody takes advantage of them. Amongst large ones, find the small ones.
6. What would be your starting business, when it starts growing?
You want a business for life? Or a quick blow that you could sell in two years? Or maybe you want to build a huge public company and your photo would adorn covers of business magazines? You must be honest with yourself and with your investors and partners.
7. Starting a business is difficult and uncertain
The chances of a venture financed with your own funds to fail is 90 %. The risk of failure in companies using venture capital is 33 %. So there's a reason the last type of ventures to be preferred. Chances of attracting venture capital, however, are very slim for entrepreneurs without experience.
8. Do you need a partner?
There is no right answer to this question. It depends on yourself and what type of entrepreneur you are. The inclusion of a clause allowing the purchase or the sale of shares in the association agreement is a good precaution. People change. One day you might decide that you want to get out of the business or you might acquire the shares of your partner . Both options should be possible and the conditions should be the same for all.
9. Would you refuse a well-paid job because of this?
It is important to clarify for yourself how high the salary must be that would make you choose the proposal instead of your idea for a new business.
10. Can you raise enough money?
The definition of "enough" is based on what type of entrepreneur you are (point 6).
One final note: Do you know at least one investor reasonably well, who has the money you need and invests in ventures like this? If you do not know such a person, the chances of success are much slimmer.
The determination, competence and hard work can, however, overcome the statistics, but the risk assessment before launching the business is a wise step.
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