If You Can Say Yes to These 6 Questions, You’re Ready to Start Your Own Business

You cannot predict what will happen once you start your own business. There will be wins which allow your startup to make a difference and to better the lives of its customers. These wins will also have complex hurdles, like dealing with cash flow crunches, acquiring customers, and strategizing to increase sales.

Ask yourself these six questions, and make sure you can answer yes to each one, before starting a business.

1. Do You Have a Viable Business Idea?

Launching a business is a serious decision. You must understand your “why” for getting into business. Consider the viability of your business idea. This will require asking yourself relevant questions as it pertains to the idea such as the following:

  • What makes my business idea unique?
  • How can my product or service make life easier for customers and solve problems?
  • Is there a demand or need in my area for this product or service?
  • Why me? What qualifies me to start this business?

As you answer these questions, start surrounding yourself with a supportive community. You’ll need more than friends and family to help you vet a good business idea. Start gathering customer feedback. You can do this with the help of social media platforms, conducting a survey to gauge interest, and meeting with focus groups (when it is safe to do so).

2. Do You Have a Business Plan?

Once you know you have a thorough understanding of your business idea and offering, you’ll need to draft a business plan.

A business plan acts as the foundation for your company. You may set goals for the business on it, add timelines and steps for how you plan to reach each goal, and evaluate the feasibility of your business from an objective standpoint.

Here are a few areas your business plan should address:

  • Understanding what your business does, why consumers will pay for your offerings, and how the company plans to make money.
  • Overall strategy and goals for being in business.
  • An industry analysis which studies your competition, both direct and indirect.
  • A market analysis about your target audience and plans to attract, capture, and retain this audience.
  • Financial projections for your business which outline its cash flow and profits and losses (P&L).

As you reach each goal, revise your business plan accordingly. Your business plan carries a lot of weight, both in helping you stay on track with your goals and as documentation potential investors will review if you decide to seek outside financing.

3. Are You Financially Ready?

How much do you need to set aside in your startup’s cash reserve? The general rule of thumb is to have a cash reserve which covers three to six months’ worth of business expenses. You may determine this number by crunching your average monthly costs or the last twelve months. Then, multiply this number by three to six. If your business has $7,000 average monthly costs, for example, your cash reserve should be between $21,000 and $42,000.

If this sounds like a lot of money, consider where this capital is going.

You will need initial capital to start the business and pay for filing fees. This allows you to incorporate the business and obtain business licenses, among other compliance necessities. Then, you will have working capital in your cash reserve which will help keep your business open. You should also have home capital to pay for personal bills outside of the workplace.

Making the leap from employee to business owner requires building up a significant financial cushion. You will not have a steady paycheck coming in from your employer and will be responsible for paying for additional expenses, like healthcare, on your own. There are additional financing options available beyond self-funding, such as applying for a small business loan. Remember you will need to repay this loan once you sign for it.

4. Do You Have Time For This Business?

Time is a major factor when starting a small business. No matter what industry you go into, the business will consume a great deal of your time and energy.

Consider your work-life balance. What if you don’t have time to start a business and make it your full-time line of work? Ask yourself if the business is better as a side hustle. This gives you the chance to ease into the startup and determine if it is what you want to pursue in the long run.

5. Do You Have a Plan If The Business Fails?

What sort of alternative, or backup plan B, do you have if the business does not work out?

Draft a business plan for your personal life. For example, you may decide to re-enter the workplace or go back to school. If the business does not work out, speak with a legal professional about next steps for dissolution. This ensures you shutter the company properly and while remaining in compliance.

6. Are You Ready To Start Your Own Business?

Were you able to answer each question confidently? Or did you find some of these questions hit sore spots? It’s okay if you don’t have all the answers. However, you should not throw yourself into starting a business where you do not feel confident or positive about its short- or long-term outlook.

The position in which you start a business should be one where you are excited and ready to do great work. Set aside some time to speak candidly with friends, family, mentors, and legal professionals. They will provide you with honest advice and guidance about what to do next. This may mean making a leap forward right now or waiting it out for a short while until you are fully ready.

Incorporate your small business with MyCorporation. Contact MyCorporation at mycorporation.com or give us a call at 877-692-6772.