Entrepreneurs can not fully protect your business from the vagaries of the market. That they can, so it is to deal with fundamental issues that will determine the fate of any business.
Seek answers to these questions - a tedious task, requiring and intellectual and emotional honesty. Well, if you start to think about them long before the money is spent, goods are produced, and customers are lost. But the real work - not to stop to answer these questions.
As the business grew, new opportunities and threats, and yesterday's answers may already be enough. Perpetual meditation on the difficult question - that helps Microsoft, Wal-Mart, Hewlett-Packard and Google to keep on top.
Taking into account the need for this fight, we represent the 20 most important questions that must answer an entrepreneur, and continue to respond over and over again to build a thriving business.
1) What is the value of your proposal?
If you can not explain in simple words in three sentences why people need your product, you have no value proposition and, consequently, you have no business. Point.
2) Will there be demand for your product?
Character series "Seinfeld" was convinced that his key to riches - creating a bra. He has not spent any research to confirm that his goods are in demand. Do not think that you will be able to create demand where it did not exist. Do not sell another male bra.
3) What distinguishes your product from competitors?
Starbucks made people believe that they need a caffeinated brew for $ 4, and Louis Vuitton persuaded them to lay out $ 1500 for denim handbags. But it's not just marketing. If you want to succeed in business, you need to offer tangible value, which others do not.
For example, the lowest possible price (Wal-Mart), original design (Apple), exceptional convenience (FedEx). Find what are the advantages of your product, and beat at this point.
4) Your business is scalable?
The difference between the conservative state, and obscene wealth is to scale. Well, when the next issue of each product you are leaving less and less cost. Take, for example, software.
Once Microsoft paid for development of the code, the marginal cost of production of each additional copy of Windows is negligible. And some models do not scale. For example, in the service sector, where, together with revenues growing need for personnel.
5) How much are you personally committed to their cause?
Do you have a family and two children. You are willing to work 100 hours a week over the next two years to promote your startup? If you want to control everything, be prepared to sacrifice everything - at least to begin with.
6) What are your strengths?
Google is powerful search algorithms, Steinway works wonders with wood, Cisco sniffing and buys a promising new technology. Understand that you do well, and do just that. Obvious remark, but a lot of passionate entrepreneurs in this burnt out. In a world of so many possibilities.
7) What are your weaknesses?
Know what you do well, and what is bad. For example, Apple does not manufacture cameras for the iPhone, but buys them on the side. Countless online stores bought third-party developers to Web sites and payment systems. Spend resources to get mediocre results - suicide. Do what you know how to find reliable partners, to be administered with everything else.
8) How will your customers pay?
Why do people pay for Vanish twice more than in the unlicensed bleach? The upper limit of the price the buyer is willing to pay for the goods, whether it be an iPhone or a bottle of bleach - then get one of the most powerful levers for profits. Consultants get paid big money for help in determining the correct price.
9) What power have your buyers?
What happens if I sell rubber scrapers the only company in town, washing windows? If the buyer will require large discount for your business come to an end. It is better to advance to expand its customer base.
10) What power have your suppliers?
The less you have suppliers, the greater their power. Manufacture of watches from antique knotty pine may seem like a great idea, but what if you have only one source of knotty wood? Answer: you have to pay. On the other hand, beware of hungry vendors willing to work exactly cheap - they often do not monitor the quality.
11) How to sell the product?
Dell Computer sells its computers directly. General Motors and Coca-Cola relied on distributors. Clothing company, such as Ralph Lauren, using both internal and external distribution channels. And Apple opens branded stores. Whichever method of sale you choose, make sure it is consistent with the overall strategy for your business.
12) How should promote your product?
Tell everyone about your company and not go broke - not an easy task. In mid-1990's America Online spent so much money on the spread of demos of its software, which then had to hide these costs in the balance sheet. Later this accounting method was banned, and millions of your profits are gone.
13) What is the threat of new entrants in the market?
If your market sector can make money, the competition will be like. If not a direct competitor (remember that Microsoft did with Netscape), then the other technology can knock you out of the ground under their feet (look at what has done with Kodak digital photo).
Long before this happens, build barriers to new entrants - make patent until you get a long term lease, create a loyal customer base.
14) How do you protect your intellectual property?
A small addendum to the previous item. Let's say you invented a machine that can reach speeds of up to 240 km / h on a single solar energy. After a few months, five savvy competitors pulled down your model and is now bringing to market its own version. Before you show samples of the public, make a temporary patent. It will protect your idea for a year until you finalize the details.
15) What is the initial capital you need?
Any investor who invests in companies at early stages, and any consultant to small businesses say that most startups failing because of insufficient capital. While there are no hard rules, double its initial estimate of capital required, "- said Jim Peck, the head developer of software for dentists Curve Dental.
16) How will you finance your business?
Do you have a choice: a rich aunt, credit cards (dangerous), a business angel, venture capital (if you have a serious business), a bank loan (good luck in the search) and the most expensive way - the issue of shares.
Be careful: the sale of shares leads to erosion of capital, loss of control and difficulties in management. In general, improve your business if you can. And finally, do not forget to relate the timing of receipt of money from your assets and terms of payment of obligations. Inconsistency can be painful.
17) How much money do you need to survive the first few years?
For those who slept the previous item: Follow the money. Entrepreneurs set boasts the financial projections of growth, but their pockets are empty even before the good times on the horizon zabrezzhat.
(Remember the bankrupt dot-com?) Be patient with Aeron chairs and computers, Mac, while not going to get more than you spend.
18) What are your financial projections?
Movement is impossible if you do not have a destination. Two important milestones: 1) operating return - when your business gets more money than it spends over a certain period, and 2) the investment return, when you finally whacks their initial investment (including inflation).
Financial projections should be justified. Draw too optimistic a picture - and experienced investors will flee from you. Have you run out of money.
19) How to bring happiness to your assistants?
What kind of American Idol without Simon Cowell? Soon we all know, but many think that the show would no longer what it used to. If you happen to find great talent, try to restrain him. Salary - just part of the equation.
20) What is your ultimate goal?
Want to lose your business to the first comer man with the money? So did the owners of MySpace, but Facebook. Different goals require different strategies. Always remember, what you want.