Starting a business can be an overwhelming experience. Your brain could be flooded with ideas, questions, and answers. It is important to know which questions are important at an early stage and which questions are not.
5 Important Questions To Ask Yourself Before Starting A Business
1. What problem does your business solve
2. How does your business generate income?
3. What is your pricing strategy?
4. How will you retain your clients?
5. Do you have a long-term strategy?
1. What problem does your business solve?
The BEST businesses are built by providing the BEST solution to a given problem. A problem could be a new one or an old one. It could be a problem that everyone is aware of or it could be a problem that no one is aware of. As long as your solution is better than the one in the market, your business is good to go. Your solution could be better in terms of any dimensions such as - quality, service, price, accessibility, timing, trust etc.
Sometimes you have to look beyond your prospects expectations to identify the “gold mine” opportunity. Consider this quote to get a better understanding of what I’m saying.
“If I had asked my customers what they wanted, they would have said a faster horse” - Henry Ford
2. How does your business generate income?
How is the cash flow in your business? How much is the initial investment, what is the running cost, when will you reach the break-even point and how much is your payback period? Which product or service produces the most revenue and which part of your business consumes the most time and money?
Once you have the basic estimates, tweak these estimates to your benefit.
3. What is your pricing strategy?
Have you noticed how popcorn and soda are priced at the cinemas? The pricing is usually like this small - 80 bucks, Medium - 110 bucks, Large - 120 bucks. Ideally, the pricing should have been like this small - 80 bucks, Medium - 100 bucks, Large - 120 bucks. Most people prefer to buy the medium popcorn and coke. But the price difference between medium and large is so less than most people end up buying the large popcorn or coke.
This is a basic, easy to understand example of how pricing affects the buying behaviour of consumers. If you price your products and services perfectly, you can also boost your sales.
4. How will you retain your clients?
Client retention is the true test of the quality of your product or service and the satisfaction of the customer with your business. If your business is not able to retain enough clients, there is a serious issue with your business. The problem could be with your product or your service, customer support, pricing, client expectations etc. You need to identify what the issue is and fix it immediately.
Low client retention is one of the major reasons why most businesses fail with the first 5 years.
5. Do you have a long-term strategy?
Where do you see your business in 5 years or 10 years or even 50 years from now? How are you going to make your vision a reality? Is there a long-term scope for your company? You need to have an exact actionable plan as to how much will your business grow year-on-year. How will you acquire clients initially and how will you acquire them in the long-run. How will you deal with the competition? And other such long-term issues.
Every action you take for your company today should have taken into account how this action will affect your business in the long run.
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