FRIDAY 5: 5 QUESTIONS TO ANSWER BEFORE STARTING A BUSINESS
At BrandProject, we meet with hundreds of founders each year. All are at different stages of building their businesses — some with rough ideas and others with customers and revenue. Which ones will succeed and truly break through?
The following are five of the questions we ask ourselves to help pick the winners. I think that they are great questions for every Founder to ask themselves about their ideas as they consider launching a business.
1. Does your idea solve a common problem?
Your idea doesn’t need to be a new idea — many of the world’s most successful startups showed up later to the party (ahem, Google) — but it should solve a problem better, easier or cheaper than how it’s done now. We hear a lot of good ideas, but good ideas don’t equal good businesses. There must be a big enough market for the product and enough customers willing to pay for your solution.
2. Can you build it faster than anyone else?
If you have a good idea and a large market, you may also encounter eager entrepreneurs ready to build it too — and they may have more resources and bigger bank accounts. In the startup world, every customer counts and it’s often the players who come out first and shout the loudest who capture the biggest share. Plans to scale quickly and efficiently can protect your business against others who are competing for the same wallet share. Investors want to know that you’ll be able to respond — successfully — to a competitive landscape.
3. Is it sustainable?
An idea without a path to profitability is a bad idea. Are people willing to pay a premium for your product or service? Can you deliver it more efficiently than others? Defining your profit model will force you to ‘stress test’ your business plan, and give you confidence that it’s worth taking the risk to launch it. Understanding what the first few years will look like — best and worst case scenarios — will help to gauge your probability of success.
4. Are you ready to be a Founder?
A good idea, a competitive advantage and a profitable business model still aren’t enough to give you the green light. Growing a business requires a specific skillset and a lot of determination. As I’ve mentioned before, many of the seasoned Founders we work with talk about how unprepared they were for both the volume of work and the range of areas they needed to manage in their first few years. Finance, HR, Logistics, Marketing, Legal, Customer Service, Cleaning The Toilets — you’ll be involved in all of these, extensively. If you’re not ready to lead the charge across each of these, then starting a business may not be right for you.
5. Who’s in your circle?
Many successful entrepreneurs claim that surrounding themselves with people smarter than themselves was single largest contributor to their success. Surround yourself with people who don’t just cover your blind spots, but are the best in their field. If you aren’t working with them, your competitors will be. Ideally line up your A-team before you launch. Find strong advisors for your business as well. They’re worth their weight in gold.
If you’ve answered all of these questions truthfully, check in to see how you’re feeling. Are you daunted by the path forward or excited to get started? Onward!