Over 600,000 new businesses are launched every year in the U.S., but unfortunately, some of these businesses will not make it. In fact, the Small Business Administration estimates that about half of all small businesses will not remain open long enough to celebrate their five-year anniversary.
Small businesses fail for a wide variety of reasons, but many of them are unsuccessful due to poor planning. If you want to launch a new business, make sure you are prepared for what lies ahead by answering these questions:
Who is the customer?
You need to know who you are trying to sell to before you launch your business. What is your ideal demographic? Define your brand’s target demographic as narrowly as possible. What problem does your product or service solving for this demographic? How will your customers find your products or services? Learning more about your target audience is the key to determining the best way to market your business. If you can’t answer these questions, you aren’t ready to launch a business.
Who am I competing with?
Researching your competitors is just as important as researching your target audience. You can’t succeed unless you know who you are up against, which is why market research is so crucial to your company’s success.
Identify the strengths and weaknesses of each competitor. Then, analyze your own strengths and weaknesses. How do you compare with the brands you are competing against? What are you offering to customers that your competitors aren’t? For example, a lower price, faster delivery, or higher quality product might set you apart. Figure out what it is that differentiates you from other brands so you know what to focus on when selling your products or services.
How will I make ends meet?
It can take anywhere from six months to several years to make a new business profitable. If your new business is your only source of income, it’s important to figure out how you will make ends meet until the business is profitable.
Tapping into your savings is always an option—that is, if you have savings. If not, you may need to consider taking out a short-term loan to cover your expenses while you grow your business. Personal unsecured loans are always available, but they’re not right for everyone. If your credit score is low, explore other secured loan options such as car title loans. Since these loans are supported by collateral, your credit score will not affect your eligibility.
Does my brand have a voice?
Before launching a business, it’s important to figure out who your brand is and how your brand will speak to consumers. Some brands adopt a playful and relatable brand voice, whereas others stick to an authoritative and informative voice. Ultimately, the decision is yours. But be sure to choose a voice that your target audience will respond to or they won’t hear anything that your brand has to say.
By answering these questions, entrepreneurs can ensure they are prepared to handle the challenges that arise when starting a new business.