When an entrepreneur starts a business venture, they are sure that it will succeed. After all, they followed the reality checks list, devote their talent and time to their business; thus, they are expecting to get a positive cash flow after a few years. They hope to control a profitable business with tremendous opportunities for growth or sale.
However, after a few years of operation, the reality starts dawning on them. Research shows that nearly 50 percent of the startups fail in their first five years of operation. For the half that survives, the owners have to put more time and work. Odds are against every new entrepreneur in the first years, but this changes as the business mature. Businesses mature as they age, and their rate of survival increases as years pass. For that reason, a new business person must be prepared for this.
Thus before spending your savings to roll out a solution, you need to perform due diligence on your business idea. It would help if you answered the following questions.
Reality Checks Questions
1. Is a Startup a Get Rich Quick Schemes?
You may start your business as you still work for another employer. Owning a business is a life-changing experience. However, don’t assume that this new venture is a means of escaping problems or a get rich scheme. It requires a lot of hard work, learning as well as determination and your efforts are paid off after some years.
2. Does your Products or Services have a Target Market?
Your target group may love what you’re offering, but do they have money to acquire it? Customers will only pay for what they need emotionally or physically. They may lack money to pay for it; thus, you need to talk to experts in this field or listen to their unspoken requirements.
3. How is the Market Opportunity?
Instead of relying on your passion, conduct market analysis, or obtain data from a third party that is credible and unbiased. You can use data from Forrester, Gartner, or IDC to study the market.
4. Have you understood the Costs?
Most optimistic entrepreneurs underestimate costs and overestimate sales at the early stages of their business. You need to write a business plan with realistic financial projections and invite the expert’s opinion.
5. Do You Have The Necessary Skills To Run The Business?
As the founder of this startup, you need to realize that the buck stops with you, and there is no room for a blame game. Most new businesses fail not because of a lack of time or money but because their founders gave up.
6. Does Your Startup Have Intellectual Property That You Can Defend?
Don’t allow another entrepreneur to register your trademark or patent. Therefore, start the process of protecting your IP elements immediately you commercialize your idea.
Reality Checks Myths
Most entrepreneurs spend a considerable amount of time learning how to grow their business; but, not enough to question whether it’s right to start it in the first place. Thus, they naively start the business with certain expectations based on what they have heard or known. The following are some of the myths surrounding startups.
You’re now your own Boss
One of the reasons why you want to start a business is because you want to be your own boss. However, you need to realize that you’ll lose that freedom immediately you accept funding from angel investors and customers will become your boss.
You’ll Make Boatloads of Money
The result of this venture is a business empire that you can keep or sell to get tons of money. Your business can create other values besides money. It’ll give you a learning experience and social capital. Therefore, it’ll allow you to meet other founders and the expertise to put failures into a proper context.
You have Nothing to Lose
It’s normal to want to cover your failures to avoid judgment and embarrassment. However, when you start a business, you expose yourself to public scrutiny as you market it. Your business can fail just like 80 percent of the businesses that have failed before. Therefore, stay positive and learn from your mistakes to make things better next time.
This is a Big Dream Come True
Your expectations are almost becoming a reality with this new business. You can now move to a bigger office, hold a big company party, or get recognition in the industry. However, it would be better if you realized that starting a business is a huge undertaking. It can turn out to be better or worse than you expected.
Key Resources for Startups
You may be wondering what you should read and where you can find these reading materials now that you’re starting your business and having adequate information is part of reality checks. The following are the best resources to turn to when entering the business world.
- Google My Business is an important tool for startups and entrepreneurs. It helps them to provide their customers with quick and accurate information
- Lean Startup is a book that teaches you how to take an iterative approach when growing your business.
- Four Steps to the Epiphany should be your bible. It gives you suggestions on how to validate your idea quickly. Being right when starting a business is not all that matters. What is important is your forward momentum.
- Twitter is a fantastic platform for yourself and business. It allows you to follow tech thought leaders and other startups.
- Venture Hacks is a site that will help separate noise from signals. It will help when making decisions touching on several things like legal structure, hiring programmers, or convertible debts.
Entrepreneurs spend a lot of time learning how to establish and grow their business. However, starting a business is nothing like what you anticipate. The article has provided you with a list of reality checks questions to ask yourself and myths to avoid. Do thorough research before commercializing your ideas. Use the resources started above to gather adequate information. Your business may turn out to be one of the most successful ventures in the market.
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