Five questions to answer before you start a business
You don't need a 40-page plan to begin. You do need honest answers to these five questions.
· 5 min read
Plenty of good businesses started without a formal business plan. Very few started without their owner thinking hard about a handful of basic questions. Here are the five worth answering before you spend real money.
1. Who will pay for this, and why?
Be specific. "Everyone who likes coffee" isn't a customer. "Office workers within a ten-minute walk who want something better than the vending machine" is. If you can picture a real person handing you money, you're on the right track.
2. How will they find you?
A great product nobody hears about doesn't make money. Write down the first three ways customers will learn you exist: a sign on a busy street, word of mouth from your first customers, a listing on Google, a booth at the farmers market.
3. What will it cost to open, and to stay open?
Split this into two numbers:
- Startup costs: everything you spend once before opening, like equipment, deposits, licenses, and a first batch of supplies.
- Monthly costs: rent, utilities, insurance, software, and what you need to pay yourself.
Our startup cost checklist walks through both.
4. How long can you go without a profit?
Most new businesses take months to cover their costs. Divide the money you have set aside by your monthly costs. That's your runway: how many months you can keep going while the business grows.
If your runway is shorter than six months, plan to start smaller, not to hope harder.
5. What's the smallest version you could test?
Before signing a lease, could you sell at a pop-up, take a few pre-orders, or offer the service to five people? A small test tells you more than a big plan, and it costs far less to change course.
Working through these questions? Get in touch and we'll help you turn the answers into a simple plan.