In the United States, there are about 28.8 million small businesses. If you’re planning to start a business, you may want to ask yourself these four questions.
What Kind of Business Should I Start?
First, contemplate what skills you already possess, either through working knowledge or formal education. Then, cross-reference your skills with high-demand products and services.
Next, reflect on personal passions and values that you want to communicate through your business. This will help you develop products and services based on them and help you market more successfully to your customers.
Then, think of problem(s) your products or services can solve for your customers. Narrow that list into problems your business can solve most profitably.
Additionally, ponder your ideal work-life balance. Imagine your life in five years. Visualize precisely how much income you’ll want versus exactly how much free time you’ll have.
Finally, deliberate how freely you can obtain startup money. If you’re on a budget, you can start with a part-time side-hustle that can later become your full-time career.
How Much Money Will I Need to Start a Business?
Unfortunately, there is no definitive answer to this question. With the rising popularity of home-based, Internet-only businesses with little to no overhead or inventory, the range of required original investment can be as low as nothing, or as high as $80,000 (usually for a brick and mortar business). The amount of money needed depends on the type of business you’d like to start (brick and mortar, online, or services).
Common initial expenses include office space, equipment, supplies, communications, lawyer fees, accountant fees, website creation, utilities, licenses, permits, insurance, inventory, employee salaries, advertising/marketing, market research, and printed marketing materials. This is not a comprehensive list. You may encounter others or none.
Who Will My Customer Base Be?
If you don’t have a customer base yet, you’ll want to create a “customer profile”.
A profile includes demographics like their age, gender, location, income level, education level, marital status, family demographics, occupation, and ethnic background.
It also includes psychographics like their personality, values, attitudes, interests, hobbies, passions, lifestyle, and behaviors.
When you can explain who has a need for what you offer and who is most likely to buy it, you’ll know who your customer base will be. Finally, check on your competition. Find their target market and their customer base.
When Can I Expect to Become Profitable?
Most businesses take about a year to become profitable.
First, your business will hit a break-even benchmark when it’s bringing in just enough to match expenses. There is no money left over to invest in savings.
Second, your business will become “Ramen profitable”. This means the business is making just enough to support your (low) living costs. There generally won’t be money left over to invest in savings.
Third, your business will become “corporate profitable”. This means the business is making enough to make payments on debt, pay yourself a good salary, and have money to invest in savings left over. This is any startup business’ goal.
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