Updated: May 20, 2020
According to the Kauffman Index, in 2015, there were 550,000 adults who went from being employees to being entrepreneurs with their own budding businesses. Trends show that 25% of start-ups will fail during their first year, however, this does not have to be the case. Before venturing out into the world of entrepreneurship, there are several factors that you need to take into consideration. While our list is not exhaustive, knowing the answer to these five questions is essential to making any business viable:
1. Is my product or service something that people need? The most important consideration is whether there is actually a need for the service or product that you plan to offer. In order to have a successful business, there needs to be a market with a substantial need or demand. Ask friends, family, and acquaintances whether they would find your services useful and what you could do to make it more attractive to potential customers or clients.
2. How will it work? It is great to have an idea, but ideas are abstract. Spend some time thinking about the logistics and how things will operate on a daily basis. This is relevant for both products and services. If you are offering a product, you need to understand how users will interact with it. The best products are those that are user-friendly and easy to use. Make use of your product as seamless and simple as possible. For services, it is important to understand how customers will engage and to make yourself amenable to their needs. When considering how to bring your startup to fruition, consider how it should work from the consumers’ perspective.
3. How is my product or service different from competitors? If you are a start-up, the last thing you want to do is create a “me-too” product. Your biggest undertaking will be to create something that is different than competitors. Even if your idea has been done before, how will you enhance user experience? How is what you are offering different and/or better than what is currently being offered? In order to be successful, you need to be able to both answer this question and demonstrate the difference to clients.
4. What is my break even point? If you are staking your all on your business, it is essential to understand at what point you will break even. Consider your initial investment as well as any capital or maintenance costs. Next, consider what your service or product is, how much you will charge, and how much you will need to sell in order to break even. If you don’t know this prior to investing, you could be in for a rude awakening. It is better to plan ahead and be aware.
5. Am I passionate about what I'm doing? This is undoubtedly the most important question. All other things aside, if you don’t have passion behind your business, you don’t have anything. Before others can believe in you and your idea, you must believe in it yourself.