Starting your own business can be the most satisfying and profitable thing you'll ever do, but it can also be a risky endeavor. The best way to minimize risks and maximize the rewards of entrepreneurship is to ask yourself the hard questions before handing up your "Open for Business" sign. You answers should clarify whether your idea is worth pursuing and if now is the right time to be your own boss.
Here are five questions to ask before starting a business.
1. What Problem Will My Business Solve?
Most successful businesses are built around solving problems that existing companies aren't addressing. Evaluate the strength of your business idea by:
- Identifying how it will solve a problem better than potential competitors.
- Naming industry trends that make it more valuable than existing solutions.
- Recalling if people have commented they would pay for your particular skill or talent.
Reflect on your responses to help narrow down which products or services should be at the center of your business strategy.
2. Who Is My Target Market?
Target markets are the ideal customers for your product or service. These people have a problem that your product or service should solve. For example, you might market housecleaning services to homeowners. Learn more about your target market's wants and needs so you can better tailor your offering to satisfy their desires.
3. How Will I Advertise My Business?
If your target market doesn't know you exist, it will be tough to sustain your business. This is why one of your most significant startup expenses should be advertising costs. Whether you use online ads, postal mailers, or email marketing, advertising costs can add up quickly. Focus on advertising dollars on marketing efforts that your target is likely to see regularly.
4. How Much Capital Do I Need?
Many businesses close their doors because they run out of funds. When planning your new business, make sure you have enough money saved to cover costs until you generate revenue. Determine what it'll take financially for you to get your new business up and running. This might include things like a business license or permit, inventory, and advertising.
Draft a business plan to help identify specific needs and estimate your costs.
5. Where Can I Secure Funding?
Raising capital to open your doors can be daunting. Understanding where you business will get its funding is an essential first step. Will you self-find the business with savings or seek the help of outside investors?
If neither of those options makes sense for your situation, consider using a Vermont Federal Business Loan or Line of Credit to fund startup costs. Schedule an appointment to meet with a business expert at a branch location or call our Member Call Center at (888) 252-0202.
Vermont Federal Credit Union is a $900 million-plus full-service, not-for-profit, cooperative financial institution that has served Vermonters for more than 70 years, with eight locations currently serving over 50,000 members. Members are part of a cooperative, meaning they share ownership in the Credit Union and elect a volunteer board of directors. Vermont Federal Credit Union provides membership to anyone who lives, works, worships, or attends school in Vermont. Vermont Federal Credit Union is committed to supporting its communities and helping Vermonters prosper, no matter where they may be on life’s journey. Learn more about Vermont Federal Credit Union.
