The 10 Most Common Business Startup Questions
Posted on 19th September 2017 in Business
Written by Freya Hughes
To save you hunting through the internet for answers about your startup, we’ve provided you with the answers to the ten most common startup questions…
1. Do people need what I’m selling?
You must research market need for your offerings so you know what makes you stand out from the rest. The vast majority of new business ideas are just that: ideas. Some entrepreneurs dream up solutions to problems that do not really exist, or rather only exist because of a personal need or experience. They might then find that there’s no desire for their product on the market. Doing your research will protect you from making mistakes.
Once you’ve identified a need for your offerings, you must make sure you’ve priced it out fairly and competitively. This must be in your business plan: the need and desire for your product or services, and how much you should sell it for.
2. How much money will I need?
This may be the most-asked question of all. There’s no exact answer though, as each business is unique, and they’re unique to their own markets. Some companies will need thousands to get off the ground, while others can turn profit with little investment. The best way to overcome this worry is to set up a forecast. Put your estimates into a forecast to see you how much you need to earn to progress to the next step.
To take this one step further, create a base scenario in the scenario builder and input your best, worst and middle-of-the-road outcomes to see how likely you are to be able to expand, or invest in a premises, or hire staff.
“Obviously, the more cash you have to fund your startup, the easier your life will be during the often hectic first months. Your first task is to research what it will cost to start your business in your geographic region, in your industry, or in your marketing niche.”
3. What do I need to know about the financial side of things?
First of all, you need to have a good understanding of the three financial statements you’ll be using throughout your career. These are:
- Balance sheet, showing you the financial state of your business at a given time
- Profit & loss, which depicts whether or not you’ve turned a profit at a given time
- Cash flow statement, giving you a break down of your cash position at a given time
Keeping these three crucial documents up to date will allow you to forge your path with far less risk. 3 way forecasting combines all three to show the most accurate financial projection you can get. If you’re unsure as to how to set these up then your accountant will be able to help, or do it for you. You’ll be able to log all transactions, sales and purchases, giving you great insights into how much money you have to play with.
4. Should I write my own business plan?
Definitely! That’s our answer, because only you know the exact direction you want your business to take. A great business plan can turn an idea into a successful business. It can be daunting to get started, but it’ll give you direction.
Adapting to what your consumers want and need means you can set up your business to be agile from the off. The world is ever-changing, and so you need to ensure your business is able to change with it.
5. Where can I get investment?
A large number of entrepreneurs look to their own bank accounts, their friends or families to secure their first round of investment. This is because your first investment will probably be a fairly low figure, so the people around you might well have the amount of cash you need. Many first time entrepreneurs are tempted to trade investment for a percentage of their company, but this is a risky move. Your first few years may be a struggle but if your business really takes off, do you want full control or would you mind an investor having a say in what you do? Ask yourself this before you make any rushed decisions.
There are many options to consider for funding, and while most will require an amount of hard work from you, they will almost always pay off. From seed funding to Angel investors, crowdfunding to cash advances, make sure you’ve done your research and come up with a plan to suit your own needs.
6. What skills do I need?
While this is a broad question, it’s an important one. It’s good to be charismatic, but you need to be able to follow through with any commitments and promises you make. Flexibility is a key trait to have, because in a tumultuous climate you must be able to adapt. You can’t always predict a market change, so ensuring you’ve got the nerve to take risks will see you through. That’s not to say you can chase every whim you have, of course. Be tactical and thoughtful and you’re likely to survive.
Sometimes the worst will happen, so being resilient and agile is invaluable. If you can pick yourself up and dust yourself off then you’re in a much better position than most.
7. Am I measuring the appropriate metrics?
When we spoke to The Peloton, a firm combining marketing and accounting, marketing manager Anna told us their mantra: ‘what is measured is managed’ (read more about how they approach KPIs here). If you can identify the core KPIs in your company – and measure them regularly – then you’re going to feel in control of your business. The metrics you choose must be personal and specific to your business. The ‘one size fits all’ approach simply isn’t appropriate for any business, because each one is different.
8. Do I have the right people?
As your business develops and grows, you’re going to start attracting the right people, but as a startup your staffing may be more circumstantial. It’s a big step to make your first hire, so make sure you’re completely ready to be relied upon, and have all of the legal paperwork completed. If you happen to be starting out with a load of cash in the bank, it may be worth investing in a recruiter to help you out.
There’s risk in hiring loved ones, as sometimes focus and productivity take a backseat, which can ultimately test your relationship. This said, if you think your friendship can cope with the pressures of work, set out clear boundaries and guidelines – read more tips on how to overcome more of these struggles courtesy of Inc.com.
Remember that the candidate has to be a good fit. If your business has you and another person at the helm, things will run a lot smoother if you all get on well. Entrepreneur.com wrote back in 2012 something that is still true today:
“If a new employee doesn’t fit in with the company rhythm or perform well during the first few months on the job, don’t delay in discussing your dissatisfaction.”
9. Do I have the right customers?
This is going to be impacted mostly by your marketing efforts. If you open up a physical shop or have a site in a town or city, naturally the people who notice you first are the locals. While you’ll probably get some friendly faces through the doors, they might not be your target demographic.
When you made/make your business plan, you’ll have researched the market and industry, which shows you which kind of people are going to want or need your product or services. Target them with digital advertising, using Google and social media. This is one of the cheaper options and you can track your results. Soon enough you’ll work out exactly what kind of marketing best fits your business. It’s all about experience.
Have a look through this list by business growth champions, Thrive Hive. They’ve broken down the best ways to reach the right customers by industry, and by method. Again, you’ll learn how to attract customers over time, but this will get you going.
10. What if I fail?
We really hope you don’t, but if things do go wrong try not to get too disheartened. It’s good to be aware that there’s a high chance things won’t go to plan, but it’s important to not be too negative. A predicted 90% of startups fail, and this is usually down to not market need, being happy with lack of growth, poor leadership and, the most common reason – running out of cash.
To give you a real-life example, Julia Elliott Brown wrote for The Telegraph about her business failure. Starting a footwear company, they eventually arrived at a point when investors were expecting them to have really taken off. She writes,
“the business simply wasn’t growing fast enough. Our cash was running out. I felt like the captain of the Titanic, with the iceberg looming rapidly. We were unable to secure further investment, nor find a buyer for the business in its entirety. We sold our key assets to a competitor, and our dream came to an end.”
Failing is nothing to be ashamed of, rather you should be proud you’ve set about your venture at all. And if you think about the likes of James Dyson, Walt Disney, Thomas Edison and Vera Wang, they all fell before they rose.