5 Things To Figure Out Before Starting A Business

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As human beings we’re very good at talking ourselves out of stuff, especially when it comes to starting a business. Many people have long harbored a dream of one day running their own business but have convinced themselves that they are not ready, the timing is not right, it costs too much or they don’t have the right experience. The reality is that there is never a perfect time to start a business — you just have to start — and the good news is that there are really only five things you need to figure out before you take that leap.

1. Business Idea

What is your big idea? You need to be able to articulate your business idea in simple, plain English. Define what it is you plan to do, what you will sell and how it differs from other competitive offerings on the market.

2. Revenue Model

How will you make money? Think about what you plan to sell and how to package it up. For example is it a single fixed-price product, a single fixed-price service, a software license, or multiple offerings? Is there the potential for recurring revenue? Determine how long it will take you to get your first offering ready for sale so that you can project when you might start to generate revenue. This will help you project your cash flow requirements, which is critical in the early stages of building a business. Nothing kills a business faster than lack of cash flow.

3. Customers

Who will pay for it? This shouldn’t be fuzzy or vague in any way. The more clearly you can define your target customers the better chance you have of finding and reaching them through a targeted marketing campaign. Create a persona of your ideal customer including location, age, job, income level, hobbies, likes and dislikes etc. Once you create this persona it becomes easier to find and market to them because they feel real. It helps define your language, tone of voice, positioning and helps you communicate in a compelling way.

4. Value

Determine how exactly you will deliver value to your customers. What is required to fulfill this exchange of value whereby they pay you and you deliver your product/service? Do you need to figure out shipping logistics? Will you require a physical space to offer your product/service? Is there an online or in-app component? Determining the exact exchange of value will help you think through the necessary steps in fulfilling your end of the bargain and delivering value to your customer.

5. Validation

Test your theory in advance. This is arguably the most important thing you can do before you start. Your business idea remains a theory until you confirm that strangers are willing to pay you money for your offering. Far too many startups are launched without first being properly validated in the real world. Once you have defined your target customers you need to test your premise, and not just on your friends. If you can get strangers to pay you real money then you’ve got a valid business idea.

That feeling of being overwhelmed has the power to force you to defer starting a business until a later date. Don’t allow it to take over. Be ruthless and work through these five critical steps, documenting your ideas and findings as you go. The more clarity you can gain in advance the more confident you will be as you press the launch button on your startup.

[“source=forbes”]