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Is your business idea sustainable? 3 questions to ask yourself.

Data from the U.S. Bureau of Labor Statistics shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.


Business isn't for everyone, but it can be a great way to reach limitless earnings potential. Before starting your business, you need to have a stellar idea and solid business plan. Here's 3 basic but difficult questions you need to ask yourself before deciding if your business idea will make the cut:


1. What products or services will you offer?

  • Is there a need for your product or service?

  • Is there room in the market for your product or service?

  • Can you make a profit from your product or service?

If you're going to to sell a product or service, you need to intimately understand what the need and profit margin for your products or services will be. If there isn't a need or a profit to be made, consider if you should change your product and service offerings.


2. What is your target clientele?

  • Who will you sell your products or services to?

  • How will you reach them?

  • Where are they located?

  • How many potential clients are there?

Bigger isn't always better. Many new companies struggle to launch or reach profitability because they aren't focused on a target audience. You can't be everything to everybody and that's ok. Think about Apple. Die hard Apple users love their devices, from Macbooks to iPhones, iPads, and Apple Watches. Once you're in the Apple eco-system it is hard to escape. But, PC and Android users will never give in. Apple knows that and accepts that. Apple knows their target audience and does a great job of targeting them.


3. Who is your competition?

  • Who are your primary and secondary competitors?

  • What do they do well and what can you do better?

  • Is there room in the market?

  • What gaps have the competition left?

  • Why are you better or different than the competition?

Keep you friends close and competition closer... Or something like that... Your business can't depend on the goodwill of other business. As such, you need to know what your vulnerabilities are. If you think your competition will just sit back without putting up a fight, you're dead wrong. Business can be cut-throat and savvy business owners know there competition just as well as they known their own business.



 

Need help writing your business plan?

Check out our Free Business Plan Template.


Emory Alva- Business Plan Template
.docx
Download DOCX • 860KB

 

Bottom Line

Before jumping headfirst into your business idea, make sure it passes the smell test.



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