7 Questions To Ask Before You Launch A Business

September 11, 2008

Before you launch a business, aside from doing thorough research, there’s a few questions you need to ask yourself. Don’t skip these questions. I ignored the first one once and actually sank one of my businesses.

Am I Truly Passionate About This Business?
Passion really is far more important than anything. If you’re not passionate about the business you’re about to launch, find something you are passionate about. Otherwise, you’ll wind up wasting a lot of time and money, or stuck in a business
you don’t enjoy.

Do I Know Enough About This Business To Get Started?
If you can’t truthfully answer yes, go out and learn some more about the business first, even if it means delaying your launch.

Am I Self Motivated Enough?
Some people seem to find it easier to motivate themselves than others. Are you the type of person who would be more likely to watch tv than work on their business, if you based your business at home? If you’re not sure, it might be worthwhile starting your business on a part-time basis to begin with.

Do I Have A Decent Amount Of General Business Knowledge? Do you have a basic understanding of how to run a business? Do you know enough about sales, marketing, accounts etc to get started? You can and will learn a lot as you go, but it will be far easier if you improve your knowledge before you launch your business. You can do this through reading books and taking courses.

Is The Business A Good Fit For The Type Of Lifestyle I Want To Lead? Think about this one carefully. Will you be able to carry on doing the things you enjoy doing now, if you start this business? If you’re an outdoor person, you may not enjoy running a business that keeps you indoors all day. And if you’re not a morning person, starting a business that requires you to get up at 4am may not work out.

Do I Know What My Business Is Going To Look Like When It’s Complete? This may not sound relevant - especially if you think you might want to keep your business forever and never sell it. But you really want to know what your business is going to look like when it’s complete, before you even launch it. That way, you can plan to reach that point and you’ll also know what you need to do to get there.

Will I Be Able To Raise The Start Up Capital Needed For My Business Launch?

Even if your start up costs are low, you’ll still need money set aside to live on. And how much you need will depend on many factors. For instance, if you need to employ people from the beginning it may take longer to break even than it would if you are working alone.

If you don’t have at least enough cash, on top of your start up costs, to meet your daily living expenses for one year, you might want to launch your business on a part-time basis to begin with. Unless you can come up with other ways to meet those expenses.

In a future post, I’m going to cover ways you can raise cash to help with the launch of your business. If you’d like to learn about this, click here to subscribe in a reader.

Can you think of other things you might want to consider before you launch a business?

7 Tips For Covering Your Ass In Business
The Power of Blogging For Business Without A Business
Did You Plan Your Business Journey Yet?
Are You Ready To Give Up The Day Job?

Image Credit: Steve Jurvetson

The Secret Ingredient of Online Business Success

February 8, 2008

Secret Ingredients Business

When you’re starting an online business, it would be useful to know why some online businesses die and others are successful wouldn’t it?

The following online businesses are successful because they contain a secret ingredient. Can you guess what it is?

You Tube
Trip Advisor
Stumble Upon

People Power

It’s People Power

These are all great online businesses and they have many strengths, but what makes them stand out is people power. Each of them encourages lots of customer interaction, and they also do things to ensure that customers talk about them.

So how do they do it? Here’s a few things they do, and I bet you can think of many more:

What They Do That Involves People Power

Amazon: Customers review products and compile lists of favourites. The following resources encourage customers to recommend amazon to their friends: Associate programs, amazon stores to resell their own books, wishlists.

Zazzle: Customers design their own products and interact in the forums. They can also create their own stores and there is an associate program. All these things encourage customers to tell their friends. They’ll tell friends who want to earn money about the design and stores and they’ll tell prospective purchasers about their online store.

You Tube: Customers can make and upload their own videos free of charge and comment and rate other videos. Those who have uploaded videos tell others about them. And viewers share videos they enjoy with others, by linking to them from their websites, blogs, myspace profiles etc.

Trip Advisor: As with Amazon, the key to Trip Advisors success is the customer reviews. They also have forums where customers can interact and share travel advice. Go lists encourage customers to share places they’ve travelled with others.

Ebay: Customers can sell their own products at auction or in a store and rate other sellers and ratings by other customers encourage people to buy. They can interact through forums and blogs. Both sellers and buyers tell others about Ebay, because more buyers and sellers make it a better experience for everyone.

Stumble Upon:
Customers can rate web pages and share favourites with friends, join groups and interact through forums. And once again, the more like minded people they encourage to join, the better the StumbleUpon experience is.

Can you see how this works?

Most people love the opportunity to give their own opinion. And when you’re looking for reviews online, which do you trust more - the reviews of customers, or the reviews of the business actually selling the product?

And any online business which encourages customers to spread the word has a huge potential for success. If the experience is enhanced by more people joining, there is more chance that your customers will spread the word. Forums have always worked well. A busy forum is a successful one, so people encourage their friends to join.

And online businesses that allow customers to make and sell their own stuff, or show it off (You Tube) will always do well, because customers will tell their friends.

So, Here’s The Next Challenge

After you’ve completed part 1 in the series: 7 Must Do’s Before Starting An Online Business, begin thinking of ways that you can use people power in your own online business. How can you get customers to interact and also tell others about you?

This post is part of a series inspired by a request from Dawn at Iowahippiechick Blog. Don’t forget to subscribe to read the next part in the series: The Recipe.

Image by Photopia

Want to learn more about how to build a successful business? Click here to subscribe in a reader. It’s free.

Starting a Business? Don’t be a 95% Loser

July 22, 2007

It is common knowledge that 5% of the world’s population control 95% of the wealth.  So, it stands to reason that by doing what 95% of the population do, you have little chance of becoming successful.

You have a far higher chance of winning in business, if you start something that the vast majority of the population are not interested in starting, and sell it when everyone wants to get into that type of business.

Business ownership is much the same as any other market, such as the stock market and the housing market.  Before a crash, the majority will be rushing to do the same thing - eg. buy shares, before the stock market crashes and buy houses before the housing market crashes.  The problem is, far too many people are influenced by “follow the crowd mentality” and by what they read in the popular press.  Don’t be one of them - especially when it comes to starting a business.

So how do you know when this is happening in business?  What are the signs that tell you when to buy and sell?  It’s not too difficult - just observe what is going on in your local area and in the media.  Let me show you an example from my own experience:

Until last year, I owned a fire and flood restoration business. The area I lived in wasn’t in massive demand for this type of business, as it didn’t have a history of widespread flooding.  I knew that the global climate was beginning to change, and other areas of the country that hadn’t experienced much flooding in the past were beginning to suffer bad floods. 

It wasn’t long before the area I operated in began to suffer widespread flooding.  We were rushed off our feet, and this flooding continued in various areas for a long time.  Then my home town was flooded badly - bad enough that it even made the TV in Japan.

Of course the business did well in the floods, but after that, the risk of flooding was being discussed all the time in newspapers, magazines and on the Internet, and the message was that it was going to become much worse.  Suddenly, everyone was an expert on floods, and more and more flood restoration companies were springing up everywhere. 

At the same time, the amount of money that insurers were willing to pay restoration companies to carry out flood restoration was rapidly decreasing.  As in any other business, when you have hundreds of companies all doing the same thing, they run out of things they can compete on, and they have to compete on price.  Once you start reducing your prices, it will affect not only your profits, but also the quality of service you are able to offer.

So for me, it was a good time to leave, and of course it was easy to sell, because everyone was wanting to jump into what was becoming a saturated market.  I knew that the floods would continue, but I also knew that the competition would become intense, and that the profits would continue to decrease.

So before you start any type of business - do your research and consider the following:

How many people are starting a similar type of business in your local area? 

Have you read a lot of stories in newspapers, magazines, and on the internet, about how your particular type of business is booming?  By the time that anything is described as booming in the popular newspapers and magazines, it’s a good sign that it’s about to take a downward turn.

Are you noticing a lot of price competition in your chosen business?  For example, are the bigger players always advertising sales and the lowest prices?  If they are, the chances are that the industry has become so saturated that they have nothing left to compete on but price.

So don’t be a 95% loser.  If everyone is doing it, don’t be afraid to go against the crowd, because the majority of the time, the majority are wrong.

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