10 Questions That Entrepreneurs Should Be Asking Themselves Before Starting a Business – Part 1

10 Questions That Entrepreneurs Should Be Asking Themselves Before Starting a Business – Part 1

According to the Merriam- Webster dictionary, the following the definition of an entrepreneur:

entrepreneur noun

en·​tre·​pre·​neur | \ ˌän-trə-p(r)ə-ˈnər  , -ˈn(y)u̇r, ˌäⁿn- \

Definition of entrepreneur:

One who organizes, manages, and assumes the risks of a business or enterprise

As per the definition, we can clearly see that an entrepreneur is one that takes risks. Although risk is a companion of businesses, the steps that the entrepreneur takes to evaluate the risk can limit it and ensure a more favorable result. For business opportunists, it may help to begin the evaluation process through the following 10 questions:   

  1. What is new and novel about your idea? Are you solving a problem or unmet need?
  2. Are there similar products/services out there? If so, what makes yours better?
  3. Who is your target market? How many people would use your product or service?
  4. Have you talked with potential customers to get their feedback? Would they buy your product/service?
  5. What about production costs? How much do you think the market will pay?
  6. How defensible is the concept? Is there good intellectual property?
  7. Is this innovation strategic to my business?
  8. Is the innovation easy to communicate?
  9. How might this product evolve over time? Would it be possible to expand it into a product line? Can it be updated/enhanced in future versions?
  10. Where would someone buy this product/service?

Source: Introduction to Business, Chapter 5 Entrepreneurship: Starting and Managing Your Own Business, accessed June 14, 2020

  1. What is new and novel about your idea? Are you solving a problem or unmet need?

It is very important when starting a business to consider the reason you are establishing your company. Many young entrepreneurs make the mistake of basing their company on personal pleasures such as financial freedom and a flexible schedule. Don’t get me wrong, these are great desires to have, but they should not be the basis on which a company is established. 

For a company to be effective, profitable, and scalable, it must provide a solution to a problem  or create something new. 

Elon Musk did both when he founded Tesla. In his Mission of Tesla statement, Musk stated that the goal of the company when it first started was “ to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” That is what is being implemented today. 

What problem did Elon Musk want to solve? Were there not enough car companies in the world? 

Yes, there was! However, there were problems that the other car companies were ignoring, sustainability and automation.

Because he saw the environmental risks that cars created on humanity, he wanted to create cars that were environmentally friendly and promote environmental sustainability. Independent of sustainability, he also saw the positive impact that automation could have on lowering accident rates and transforming people’s lives.

This technology is mind, blowing. This brief video from Intel serves as a quick introduction to what automation can do. 

For the purpose of this article we will focus on the business side of what Elon did. He saw a problem and created a solution that for years no one believed enough in it for it to be possible. 

So the question is what problem is your business solving? 

2. Are there similar products/services out there? If so, what makes yours better?

Not too long ago I had a guest on one of my radio shows that was telling how he shifted his focus on the type of products he was creating. He said that when he first started in the industry he was one of the only people producing this product. After many years he looked around and saw that the industry had become oversaturated to the point where almost every product looked and felt exactly the same. That’s when he decided to alter his production in a way that would focus on something that not everyone could be making and was not as easy to duplicate. He looked at the industry and made the absolute right choice. 

When considering the market you are hoping to enter, you have to thoroughly evaluate that market and the type of products or services you will be offering. You have to ask yourself, if I were to take my logo off the product, would customers still recognize that this product is mine? If the answer is no, then something has to change. 

Think of Apple, if Apple was to remove the Apple logo from the back of its cell phones or computers, people would still recognize that the product belongs to Apple. 

Why?

Because they have created a product that stands out from its competitors. To some it may not be the more superior product, but nonetheless it is unique and not easily duplicatable.

So, when evaluating the products or services you are hoping to offer, make sure that they add a value to consumers’ lives that is only found through your products.  

3. Who is your target market? How many people would use your product or service?

It is not enough to simply create a product and hope that someone will buy it. When creating a product or a service, you have to create with purpose for a particular group of people. If you keep in mind that your business is a solution to a problem, then it becomes easier to identify the group of people you are targeting. The reason being is that these people have a common problem.

Once you’ve identified your target market is, then you can estimate the size of your market. Try to answer questions like how many people would actually buy your product? 

There are some websites that will help you further understand your target market such as IBIS World, and the International Trades Administration.

Answering these questions will allow you to determine if your investment in that particular business is worthwhile. If these things are not taken into consideration then the chances that the business will fail are a lot higher. Oftentimes how people think the market it looks like and how it actually looks is not the same. The key aspect is to rely on data, and have it reshape your business so that it will become the solution that the target market is looking for. 

4. Have you talked with potential customers to get their feedback? Would they buy your product/service?

Before venturing out into the business world, it might be a good idea to talk to the people you are looking to sell. Once you do, you may find that the problem you are looking to solve already has a really good solution, or you may find that if you tailor your product it will solve a much bigger problem.

Whatever the results are, the more you know your potential customers, the better your products and services will become. This is because they become more personalized towards the people you are looking to target. 

At the very beginning of my marketing career, I told a business owner that I am planning to open a digital marketing agency, and his response was “oh, the people that annoy business owners.” I was taken aback by what was said to me; my intentions were to help businesses grow and develop, but alas, it was honest feedback about the industry I was planning to enter.

So, I took the feedback. 

I knew that for my agency to succeed it needed to be different; it could not fall under the category that the business owner described. My mission was clear, to help businesses grow through digital marketing without annoying business owners, and without  relying on marketing jargons that would trick them into purchasing my services. 

My point is, talk to your potential customers you may find out things you never expected. 

5. What about production costs? How much do you think the market will pay?

Let’s talk money; is this business profitable? Should you invest in it? Let’s go back to our Tesla example.  Elon Musk wanted to create an affordable electric car with great technology, but he knew that this would not be possible at first. 

In fact he said “Our first product was going to be expensive no matter what it looked like, so we decided to build a sports car, as that seemed like it had the best chance of being competitive with its gasoline alternatives.” 

He conducted his research, found out what it would cost to create a car like the one he was aiming for; he looked at how much the market was willing to pay for the product and he made his decision. Musk understood that overtime as the technology became more advanced it will eventually get to the point where he could achieve his mission. This he knew by understanding the industry he wanted to be a part of, and by positioning his company accordingly. 

This was part 1 of the 10 Questions that Entrepreneurs Should Be Asking Themselves Before Starting a Business. Part 2 is in the following blog post.