5 Questions to Ask Yourself Before Opening a Business
As the Big Albion Plan comes to life and commercial spaces are finished, businesses will fill those locations. You may be wondering, who can rent these spaces and start or grow their own business? The answer is that anyone can rent a space and start a business. The more critical question individuals should be asking is, who is prepared to open a business? Below are five of the first questions you should ask yourself before taking the leap and opening a business.
Why do I want to start a business?
What is your reasoning for wanting to open a business? Are you doing it because you love what you plan on doing and are passionate about it? Are you just in it to make money? It is essential to understand your WHY. It’s what will keep you going through the most challenging days. Opening a business takes much time, energy, and money. Many companies are not profitable or even break even in the first year. On average, it takes 2-3 years for a new business to be beneficial. Suppose you are in it for the money. In that case, you need to make sure you know that you may not see a return on your investment (ROI) for several years, yet you have to keep working and keep the business going in the long run. You may run this business for the rest of your life; you have to make sure, deep down, that it is something you genuinely want.
What type of business will I start, and is there a demand for this business?
Do you plan on selling goods or services? What type of goods or services will you be providing? Is there a market for my product in my area? Who will my competitors be, and how will I make myself stand out? These are all essential parts of planning what type of business you plan on opening and whether or not there is a demand for that business. For example, a swimsuit business in downtown Albion might make some profit during the summer. However, there is not enough demand to keep the business going. You can open a bar, but you have to understand that you have competition and work to find what will make your bar unique and attract customers.
Albion Reinvestment Corporation Board Member Pastor Albert Amos would love to see a nice restaurant in the new downtown. “Somewhere people in the community can go to get a nice steak or typical home-cooked meal that also serves a nice sitdown breakfast.” Albion has many restaurants, but what would set this business apart would be its food offerings.
Where is the start-up funding coming from that needed to start my business?
There are several options when it comes to funding a new business. You can self-fund it with personal savings. You can choose to find investors who are willing to support your business for a return on their investment. You may search for a business partner so you can split the start-up costs. All of these are viable options with pros and cons. If you choose to invest in yourself by using cash or savings, you will pay for your business upfront. You won’t have to worry about paying back an investor with interest. However, you may find it hard to expand or grow your business in the future due to limited funds.
Investors can be people or banks, and if you qualify, you will have the money quickly. The downfall is that you will have to pay your investor/bank back on a specific schedule, often with interest. Paying back an investor adds another bill to pay each month which can be challenging when just getting started. New businesses require a lot of money for equipment, inventory, staff, rent, utilities, and more. It is vital to plan how your business’s early months will be funded and always plan for it to cost more than you projected.
Do I know how to operate the backend of a business?
Many things go into operating a business. Depending on the type of business, you will need to hire individuals, conduct interviews, training, payroll, writing schedules, etc. You also need to be able to keep your financial records. You can hire someone for this position. However, a business owner should always know how to read financial statements and understand what the reports tell you about your business.
Additionally, you will be responsible for keeping inventory and understanding what your customers will buy. You also have to pay taxes and know how to pay those taxes. Some professionals can help you with each of these tasks; however, hiring professionals also costs money. As a business owner, you will always be asking yourself what you can do for the business and what I need an expert’s support. Building a business plan and a network of fellow business owners can help you make these decisions and understand your business.
Am I physically, mentally, financially, and emotionally ready to dedicate a lot of time and energy to starting a new business?
Starting a business takes a lot of time and energy. There will be unexpected hurdles along the way, things will not go to plan, and it will be a lot of hard work. Eventually, that hard work will pay off, but it will take time. Once you start a business, you need to get it running and start making money; otherwise, you lost all of the time and money you invested. Suppose you always feel short on time. Starting a new business may cause unnecessary stress and hurt your ability to run the business successfully. In that case, it might not be the best time to start a new business. Before starting a business, you need to make sure you can take on more challenges and have the time and energy to dedicate to your new business.
There are many more questions you could ask yourself before you start a business, but these are the basics to help you get started. Answer these questions as honestly as possible. Identify the areas where you may need help and reach out to your community. Anyone can start a business; the important part is making sure you are ready to succeed.