Just about every single day, I hear from a business owner who is in desperate need of help. His business is struggling—financially, organizationally, or otherwise. It’s amazing how, once you get to the root of the problems, how many business owners make the simple mistake of not knowing where they are going before they begin. Now, I’m not suggesting that every business owner needs to have a detailed plan for the next 30 years—but it is essential that any start-up answer several basic questions. Who are your customers going to be? How will you attract them? Can you afford to operate? How much will you charge your customers? If you’re thinking of starting a business, or if you own a business and haven’t addressed these issues, now is your opportunity!
What would you think if you saw a butcher passing out fliers outside of a vegan food store? It’s an absurd scenario, but the complete lack of target market is not uncommon. Who are your customers? Are they other small business owners? Housewives? Teachers? Attorneys? Identify your target market, and make sure you have a plan to get their specific attention.
What if you don’t make many sales for the first six months of operations? Can you afford to keep your doors open? Far too many entrepreneurs haven’t even addressed this possibility—only budgeting for the cost of getting the business started and simply assuming that sales will come the moment they open the door. Unless you have a very good reason to believe that your sales will be enough to cover your expenses very early on in your business life, it’s critical to secure funding to keep you afloat until you start to turn a profit.
Have you thought about your pricing strategy? Many businesses make the mistake of thinking “since I’m new in town, I need to charge less than the competition.” While low pricing makes sense for certain companies, what’s important is not the length of time you’ve been in business. What’s important is the value you provide to your customers. If you are providing great service and differentiating yourself from the competition, charging high prices won’t be a problem and may even be the best strategy.
There are hundreds of questions that need to be answered before you open a business. What we’ve covered today is only a small sampling. It’s critical that every business owner create a business plan—not only will a plan help them answer important questions, it will make them aware of questions that they didn’t even know existed. Starting up a business is challenging enough—don’t make it harder by failing to do your homework.