Business startups take planning, use this as a guide.

Hello all!

I’m Mike from MikedUp Blog. First off, I want to issue a big “Thank You!” to Brad for the opportunity to share this post with you – I’m thrilled to be here!

MikedUp Blog is all about helping you find a better version of yourself through improvements in fitness, finance, and family. My posts share actionable details about the wins and losses in my life and those around me – and all that we learn along the way! I’d love it if you’d click above and stop by to check out the site!

Starting a business has been one of the most exciting, terrifying, exhilarating, nausea-inducing, and at the same time – joyful experiences I’ve ever had.

No – it’s not all roses and sugar plums. But, there are a few key things you can do on the front end to produce more roses than thorns.

Here are the 10 questions you need to answer before starting a business:

1- What are you selling and WHY?

This is as basic as it gets. What are you planning to sell – a good, product, service, etc? But I’d argue, more important than the what is the why. Why have you resolved to go into business for yourself and do this thing? Why are you driven to do this and why are people going to care?

There’s a great book that distills the importance of Why (Start With Why: How Great Leaders Inspire Everyone to Take Action – by Simon Sinek), but it essentially boils down to this: businesses that are based on an integral purpose. Those that make all of their choices and design all of their actions in support of their ethos – their Why – are the ones that inspire their customers and their employees to follow suit. So I’ll ask again: what is your Why and will people care?

2- Who are your customers?

Who are you going to sell this thing (good, product, service, etc.) to and how are you going to get your business in front of these people? Having a clearly defined Why is great and all, but if no one knows that you’re in business – the most worthwhile purpose in the world could lead to an irrelevant and failed business.

Make sure you have an idea of who your tribe is and where you’ll find them. Seth Godin has a great book to help you get started – Tribes: We Need You to Lead Us

3- Are you for profit and (if so) how will you make money?

The first part of this question should be pretty easy to answer. The second part could serve more difficult. Making money (or a profit) is tied into many of the categories above and below, but for now let’s just focus on the nuts and bolts.

How are you going to set your prices and have you done the necessary research to know what your product is worth? Are you providing significant value to your customer and if so, how can that value be measured and assigned a dollar amount? There are many ways to test-launch products, perhaps this is something you should tackle?

Now, once you know what to charge your customers, how are you going to collect their payments? You need a system that A) allows you to get paid and B) helps you keep track of sales – which helps for forecasting and tax purposes (see #6 below).

4- What is your competitive edge?

Are you the only person in your coastal town planning to sell beach balls, for example? Likely not. So what makes you think that your ability to sell beach balls is far superior than your three competitors along the coast?

Maybe your beach balls are of better quality or are more visually appealing. Perhaps your beach ball store is open longer than your competitors. Or maybe you could give away something when a customer enters your shop. Are you great at training a top-notch sales staff?

Whatever your competitive edge is – know it and use it. While you’re at it, go ahead and identify your weaknesses, too. Then make improvements.

5- Are you going to have employees and what are you looking for in an employee?

Don’t just skip this question if you’re going it solo.

If that’s the case, you’re both the boss and the employee. You set your own hours, define your own goals, and decide how much to pay yourself. You’re also being managed by those expectations that you’ve set… for yourself. If you’re not careful when deciding how to measure the business’ success or failure, you may indeed become a terrible employee.

If you are hiring additional team members, I’d argue there are few greater financial and impactful mistakes than hiring the wrong person. There are 10 vital categories in this post, but if you don’t do this one right – the rest may not matter. I’ve always found that hiring based on someone’s drive, desire, and attitude are paramount to technical knowledge.

You can train someone to make widgets, but it’s damn hard to make them want to make widgets.

6- What are you doing about taxes?

LLC, C-corp, S-corp, deductions, section 179, … Are you lost yet? I know I was when we first got started. This is why we hired professional help when it came to taxes. Unlike most personal tax situations, where it is passable to wait until January-April, file your return, and move on with life… Taxes can have far more intricate implications when it comes to businesses.

Sure, there are the end of your fiscal year filings, but there can also be quarterly estimates, issues with employees living and working in different jurisdictions, and have you heard recent news about changes to the federal tax law? On top of that, you need to have a plan for payroll taxes.

The point here is that it doesn’t take long to get yourself into a significant DIY tax bind. So if you aren’t hiring professional tax help, it may be wise to pay for a professional consultation to make sure you’re at least on the right path.

7- Are you in need of legal or administrative help?

When some business owners think of lawyers the only thing they can see are dollar signs – as in money leaving your bank account. Although expensive at times, hiring legal help to oversee a lease signing, for example, could save you multiples in the long run.

Keeping with the lease example, landlords are in the business of making money from their tenants. They do this every day to make a living. If you go into a lease negotiation unprepared, it’s not too inconceivable to come away from the signing in a compromised position. Lawyers trained in these fields can be your best advocates. And the best lawyers can earn their fees by best protecting you – and ultimately saving you more money.

I have also included administrative help here, especially when it comes to employee handbooks, contracts, position description, interviewing, and hiring – just to name a few. A mistake in any of these categories can dwarf a professional’s fee quickly.

8- How are you going to get your customers in the door?

Are you going grass-roots or are you going all out? Will you have someone on staff to handle marketing and PR or is that all on you? If you’re like most small businesses – especially startups – it’s likely all on you. In this case, it’s best to have an affordable and effective strategy.

In the modern economy, there are few things more valuable than A) word of mouth and B) positive reviews (bonus points if they’re combined). People ask their friends and family for recommendations and then verify via Google as they scan your reviews.

It doesn’t cost money to treat your customers with the best possible service, make a significant positive impression, and then ask for an honest review. You won’t see massive growth with this strategy right away, but give it a few months and this snowball can start rolling in your direction pretty quickly.

On the other hand, if you have space in your budget for some marketing help, there are many more intricate and effective strategies to put in use.

9- How much money do you need to get this idea off the ground and where is that money coming from?

This category, if not handled superbly on the front end, can yield the most stress during an acquisition or startup phase. I would advocate for you to determine how much money you’ll need, estimate that figure liberally, then plan to need an additional 25%. There’s one thing that’s sure to kill a young business quickly – a lack of cashflow.

The good news is that there are options available, with various bank loans, personal loans, private investors, venture capital firms, etc. There’s money to be had. Now the questions you need to ask yourself are:

How much money do I need
What am I willing to pay for that money
Will I give up equity
Will the payments on this debt drain my bank account over the coming months
Are my personal finances in order so that I am an attractive borrower to the banks
Will my business earn revenue from Day 1 or will I need to account for month(s) without income.

Once you know your current situation and your cash plan moving forward, now it’s time to start making progress. Nothing quite lights an entrepreneurial fire like a 5-6 figure interest-accruing loan.

10- Are you willing to make major sacrifices for the success of this business?

This is maybe the most telling of the 10 questions. Hey, if you’re in a great a financial situation before starting your business, then the sacrifices you make can be fewer and less impactful. Alternatively, if cashflow is an issue – these are some realities you may have to confront while getting started in your business:

Living on rice and beans – sure, it sounds glamorous now but give it a few months… There’s only so much hot sauce in the world.
Missing holidays, family gatherings, kid’s sporting events, or other important activities. You may be starting this business to ensure that you never have to miss one of these functions again – but it could take some serious sacrifice on the front end.
Bankruptcy is within the range of outcomes. “It won’t happen to me…” You’re probably right – the statistics show that only 8% of businesses file.
Not contributing toward your retirement accounts for a while.

It’s not healthy to only look at the potential negative consequences

What if something ridiculous happens? What if you build this fledgling little business into something impactful? Someday you may change someone’s life for the better! Why stop there? Someday you could change the world!

So – make sure that you’re prepared to start this business before you get started. By thinking about and eventually answering these 10 questions, you’re putting yourself in a great position to make a significant positive impact!

…Now all that’s left is to get started.