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Five Questions to Ask Yourself Before Starting a Small Business

Five Questions to Ask Yourself Before Starting a Small Business

Are you tired of working for someone else and want to start your own small business? Do you have an idea for a company and think you are ready to launch your own company? Before you quit your current job and say goodbye to a steady paycheck, it is imperative you understand that starting a small business isn't as simple as it sounds. Ask yourself the following five questions to ensure you are prepared for small business ownership.

Do I Possess the Skills Necessary to be a Business Owner/Boss?

Wanting to start your own business is admirable. Many individuals dream of one day owning their own company. The problem is that not everybody is cut out to be a business owner or boss. If you are afraid of confrontation (sometimes necessary for employee management or customer relations), you may not have what it takes to be an employer. Think very carefully about your people management skills before deciding to open your own small business.

What is My Target Market?

Having a great business idea is only the first step in starting your own company. If you don't have a clearly defined idea of your target market, you are dead in the water before you start. You need to know who your target customers are and how you will go about attracting them to your company. Define your market and plan your customer acquisition strategy before you start dreaming up names for your new company.

Who is My Competition?

Chances are good you're not the only competitor in your target sector. Regardless of what type of small business you're thinking of starting, there are already competitors in your niche. Without knowing who your competitors are, you can't possibly beat them at their own game. You need to understand who your competitors are, how they are marketing their business, and what you can do to ensure customers frequent your business instead of theirs.

How Much Can I Afford to Invest?

You'll need to know in advance how much you can afford to spend on your new small business. Everything from rent and insurance to shipping and marketing are going to be your responsibility. Starting a new small business isn't as simple as building a website or applying for a business license. You need to be prepared for multiple expenses as your company grows. From slip-and-fall insurance for a brick-and-mortar store to product liability insurance for an ecommerce shop, there are hidden expenses you need to consider. Without an accurate estimation of necessary expenses, your cash is going to run low in no time.

What is My Exit Strategy?

An exit strategy is something far too few small business owners plan for. Starting a business is one thing; knowing how you will get out of your business is quite another. Will you try to sell your business? Will you bequeath it to a family member? You need to understand how you will get out of your business before you even start your company.

Asking yourself these five questions will help to prepare you for the challenges of running a small business. You'll be better prepared and feel more confident in your abilities to handle whatever comes your way. Will you consider these tips before you dive into small business ownership?