The Top Five Questions You Should Be Able to Answer Before You Start Your Own Business

So you've decided to become an entrepreneur and start your own business? You might feel a little overwhelmed by the task at hand. It may seem like there's too much you need to know before you start your own business and that you're just not ready. You probably shouldn't even consider starting at all.

Not so!

Yes, there is a lot to learn, but, no, you don't have to wait to learn it before you start your business. If you do, you'll end up waiting forever because you'll find you always have a lot to learn. Nobody knows everything they need to know, even the most accomplished of entrepreneurs.

What the successful entrepreneurs did know before they decided to start their own business was a handful of things, things you should know as well before embarking on your own journey as an entrepreneur.

1) What Are You Selling?

Whether it's a product or service, deciding to start your own business means you're aware of a need that consumers already have. Perhaps your city doesn't have a Chinese restaurant for 20 miles, and you know plenty of people who would go if only there was one available. So you decide to start your own business - a Chinese restaurant! Or perhaps you've developed a unique style of jewelry or fashion design that you hardly see in stores, so you decide to start your own business - a jewelry or fashion line!

As an entrepreneur, understand the need you're filling and be able to explain to others quickly and simply what that is. If you can't explain your business clearly in one or two short sentences, take a good look at why you decided to start your own business in the first place! Then ask yourself, again, what need it is you're filling. Let this question guide you in the pursuit of a successful endeavor.

2) What Are You Buying?

Almost as important as what you're selling is what you're buying. Why? Because no matter what business you're starting you'll need raw materials or inventory first. Understanding this cost will help you understand what you should charge for your product in order for your business to be profitable and, ultimately, self-sustaining.

The first goal of any entrepreneur should be to get the business to sustain itself financially. Otherwise, the business becomes a black hole, sucking you dry as an entrepreneur and as a person. Even if the only cost for your business is your own time as the entrepreneur, assess how much to charge for your time or else you'll find yourself working your way into debt.

If you do have to purchase inventory, do research to find out how much everything will cost before you buy it. Consider at least three different suppliers and look for the least expensive deal from the most trustworthy source. Choose a supplier you're comfortable creating a relationship with because they'll become your lifesaver some day. Make sure they're people you'd be proud to work with, and you can trust.

3) What Makes Your Business Unique?

There are thousands of entrepreneurs starting new businesses every day all over the world, and there are already thousands more that were in business long before you. Chances are, at least a handful of these other businesses are your competitors. What makes you so different from them? Why would someone go to you instead of the entrepreneur down the street offering the same type of product, just in a different color?

Don't let this question become brain surgery. The answer is very simple. There's a reason you decided to start your own business, and that reason is already unique. In the San Francisco Bay Area, there are at least twenty Polynesian entertainment groups similar to my own. What makes my company different? We're the most professional you'll find. We pride ourselves on this and it's reflected in every aspect of our business, from our website to how promptly we answer phone calls to the dancers' behavior during performances.

Your answer shouldn't be complicated. It should be simple and strong. It will become the backbone of the business you're out to create. You've decided to start your own business - why? The entrepreneurs that succeed start businesses that stand for something they believe in, even if what they believe in is simply "the best customer service possible".

4) Who Is Your Ideal Customer?

To answer this, you may have to play a little trial and error at first. But before starting out, you should already have a pretty good idea of who you'd like to attract. Understanding this customer can influence everything from your website font to your packaging, so understand them well by understanding where they go, who they are, what they like, etc.

This may seem hard but as an entrepreneur, you and your business are in service of them. You decided to start your own business - for who? How can you help them, make their lives better, easier or happier? Most of all, who are they? Who would benefit most from what you as an entrepreneur has to offer through your work?

If you're trying to sell car radios to twelve-year-olds or baby clothes to elderly men, you're wasting your time. Understanding and respecting your ideal customer BEFORE you start your own business will save you tons of time and money in the long run.

5) How Much Money Will You Need?

If a small company's marketing campaign fails, people can quickly develop and implement a new one. If a sales plan performs poorly, a new one can be quickly put into place. If human resources behaves unethically, they can quickly be fired and be replaced. If the money runs out, the game is over. There's no quick fix for running out of cash as an entrepreneur.

Sure, you can mortgage your house and sell your cars, but is that the life of an entrepreneur that you'd envisioned? Is that why you decided to start your own business? I highly doubt it. Prepare yourself by answering all of these questions, putting together a business plan and pulling together as much capital as possible before you start! And don't start your own business until you have the amount of capital you're comfortable with. I've seen many a brilliant entrepreneur fail due to mismanagement of finances. I've personally run a project into the ground due to lack of funds!

As an entrepreneur, you've worked this hard and come this far, doing research and preparing your product. Don't let finances be your downfall, especially if success was waiting just around the corner.

I sincerely hope these questions prepare you as an aspiring entrepreneur to start your own business confidently. In the many endeavors of my lifetime as an entrepreneur, I can honestly say they've helped me!