What to do Before Starting a Business?
Before you actually start a business, you've gotta make sure the idea you have will actually work.
Starting a business is exciting and rewarding but can also be intimidating. There is no magic pill to ensure success, but ensuring that your idea is viable and will attract customers is certainly key. That's why it's essential to do market research before planning how your business will operate.
That all starts with business viability.
What is Business Viability?
At its core, business viability is the ability of a company to make money. It can be measured by the business’s ability to cover its costs and generate a profit over time. If your business idea does not create enough profit to be sustainable over the long term, it is not viable. If the business is not viable, it will eventually fail because it cannot generate enough revenue to pay for itself.
There are a couple of key components that can help determine the probability of success for a business. To understand these, we have to do the following (don’t worry, they don’t cost you any money).
Conduct Market Research
Before you run with your idea, plan, and begin building your business, you need to conduct market research.
You should start by learning all you can about the industry and its customers. Then, once you know what they want, how they want it, and how you can provide it, it's time to start planning.
This has two primary elements: evaluating your competitors and talking to potential customers.
Part 1 - How To Evaluate Your Competitors
Competition is a good source of information. It's important to know what your competitors are doing and how you can improve your products and services.
To evaluate your competition, you need to look at their products, services, prices, marketing strategy, business model, customer service, and reputation. You're trying to judge what you need to do to operate at or above your competitor's level.
What to do before starting a business involves conducting a competitive analysis that begins with asking some questions like:
What other competitors exist?
Is there any business in your target market providing a similar or identical service as you hope to deliver?
If you are offering bespoke courses about digital marketing or how to build an online Etsy store, it helps to know if others in your particular niche are providing the exact same information. You want to differentiate yourself just enough, so potential clients see how valuable your brand is and will choose to spend their money with you.
What do your competitors do well?
What are the strengths of their business? Do they focus on providing excellent service or products? Or do they offer something unique in its category (e.g. a business coach targeting food delivery companies looking to connect with international suppliers)?
Are there any features that catch your eye when browsing their website or scrolling through Instagram—a beautiful logo, high-quality images of products/services being used, etc.?
Are there any weaknesses that jump out at you as well? Do some research into whether these weaknesses might also be opportunities for you—that is, can you capitalize on them by taking advantage of what makes your business different from theirs (e.g., lower prices than higher-ranked businesses in your keyword categories).
3. What do you do well?
If you think about it, people will always seek out those brands and value propositions that offer them real value. Even if they do not have a lot of money available, they may share the news, updates, and marketing you put online - organically growing your word-of-mouth marketing.
So what's different between your idea and other service or digital providers? How will you solve a problem in this industry that has not been solved before? Why would someone want your offer? What is unique about the service that sets you apart from others in the same category? What makes it special?
Part 2 - How To Talk To Customers
Talking to customers is the best way to understand their problems. You can speak to them in person, on the phone, or online. You can also use surveys and focus groups to secure feedback. Finally, you can rely upon social media and online forums to ask questions too.
Leveraging any and all methods to connect and engage your target audience will provide you with valuable feedback. This feedback will be beneficial in informing you what to do before starting a business. This begins with asking questions like:
What problems are they experiencing?
You won’t know what problems are in your customers’ lives until you ask them about them directly. Asking about their pain points and frustrations is one of the best ways to get an idea of what problems or challenges your business can solve for them and how you can help them overcome those challenges.
What is the level of "pain" they have associated with their problems?
The next step is to ask yourself what level of “pain” they have associated with their problems.
Pain is the difference or distance between what they want and what they have. Pain can be subjective, but it can also be quantified as a numerical value. Let's look at an example:
You want to start an online course that teaches users how to play American Blues on a Spanish guitar. When you do a quick online search, you discover there are three other courses similar to what you want to provide. But you notice their courses are extremely high priced compared to what you were thinking.
Your first instinct might be to undercut your competitors' prices by selling your courses for 10-20% less.
However, considering this from a customer's perspective will help us understand why lowering prices isn't always the best strategy for starting a business (or any project).
Most of the time, what people are willing to pay is equivalent to their level of pain and perceived value of the material or convenience of what is being offered. This is why expedited services or results often cost more. So in the example above, perhaps they promise results within a shortened time period. Whatever the reason, don’t automatically assume that being “cheaper” will result in more customers. Factor in the perceived value of what you’re offering compared to the competition.
It’s important they see that you care about the quality of the course being offered and that users are receiving real value for their money. Ultimately, that will be a stronger determining factor than price alone.
So, Are You Viable?
Now that you’ve taken a look at the competition in the marketplace and spoken with some customers, you need to strategize how you solve pain points in the long term. That means:
Does your idea sufficiently solve a legitimate problem in a meaningful way?
Go back to the guitar course for a moment. Maybe the problem isn’t the price but the variety and quality. If you can find a way to offer a price-competitive product, even at 2% less, without sacrificing quality and convenience, you will have a viable business.
Then, if you can develop a full service suite with more variety according to customer feedback, you will have a clear pathway to growth and securing more of the market.
Let us help you figure out if you're viable by grabbing our course Just Start Simple
Can you differentiate yourself enough from others to have a unique selling proposition (USP)?
A USP is a promise of value, the differentiator that makes you stand out from the crowd. If it’s not clear what your USP is, it may be time to do more research or reconsider your idea altogether.
Identify your space in the market.
Before you start your business, it is crucial to identify your space in the market. You’re hoping to carve out a niche target market that will transform from potential lead customers to long-term loyal brand ambassadors.
Conclusion
The point is you need to consider how well your business will succeed by taking a long look at the current market environment. Dive into the details of your competitors and speak with customers. Then, once all your info is gathered, ask yourself some hard questions.
As long as you have clear answers with research-backed insights, you have a business opportunity ready to start. This means you know what to do before starting a business.
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