20 Questions you have to answer before starting your business

If you run a business or are just starting one, there are few questions to answer that are worth thinking about. If you have well researched answers to those questions, you will have an easier time attracting critical resources – like capital and talent.

Here are the 20 questions to answer about your business.

1. What is your business’s overt benefit, dramatic difference, and real reason to believe?

Unless it is really obvious why your product is better than anything else on the market and that you can deliver on your promises, you may not want to bother with the other 19 questions.

2. How will your business help society, the environment, and any other affected stakeholders?

Your business ought to make the world better off. You should make it clear how you’ll do that.

3. What is the mission of your business and what overarching goals is it striving to achieve?

If you want to inspire talented people to join your company, your company should have an emotionally compelling reason for being.

4. What have you learned from systematically talking with potential customers?

If you want to convince someone that people will pay for your product or service, ask 100 potential customers. If most of them ask how soon you can get them your product, you may be on to something.

5. How has customer feedback changed your view of the business opportunity?

Use customer feedback to make your company better.

6. Which groups of people are likely to be your best customers?

You’ll have more luck getting customers if you focus on the ones who are most likely to buy your product. Know the traits those potential customers share.

7. What are the revenues in the market you’re targeting?

To calculate this number, multiply the number of people in your target market by how frequently they buy each year by the price you’ll charge them for each unit they buy.

8. What product features and benefits do your customers seek?

You will be competing with other products – know which factors that potential customers compare in picking yours over theirs.

9. What evidence convinces you that customers would buy your product?

I’d be encouraged if you talked to 100 customers and many of them said that your product outperformed rivals on those factors.

10. Who are your company’s competitors and what are its competitive advantages and disadvantages?

You ought to figure out the capabilities – e.g., product development, sales, purchasing – that your competitors are using to gain market share and then take an objective look at how well you perform those capabilities compared to rivals.

11. If you sell a product, how will you distribute it? If a service, how will it be delivered?

Mostly entrepreneurs think distribution is an after-thought – customers consider it hugely important. So you should deliver quickly and correctly.

12. How much will you charge customers for your product?

Have a clear pricing strategy that will help you gain market share.

13. How much does each unit of product cost your company?

Know how much it costs your company to build, deliver and service each unit you sell.

14. Which companies will supply your raw materials or key services and what are the terms of those partnerships?

Find suppliers who will provide the raw materials you need to run your business, Make sure the suppliers deliver quality products or services, on time and at a reasonable price.

15. Are your suppliers socially and environmentally responsible?

Pick suppliers that share your sense of social and environmental responsibility.

16. How will you advertise your business and promote your product or service?

Develop a marketing strategy that gets you the maximum amount of attention among potential customers without spending too much money.

17. How much capital will you need to start your business?

Estimate all the costs you’ll incur to get your business off the ground — then double your estimate.

18. What will your income statement look like over the next three years?

Make reasonable and well-sourced assumptions to project your future income. Investors will question every assumption.

19. How long will it take your company to break even?

To find the number of units you need to sell to break even. divide the profit from selling each unit of your company’s product by its fixed costs.

20. What are the risks of this business?

Be sure you have thought of everything that could go wrong and try to run your business in a way that keeps those risks under control.

With good answers to these 20 questions, you have a shot at getting investors’ cash.

Image credit: blog.cloudmagic.com

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