In today’s sluggish economy, where corporations are downsizing and sending jobs overseas, recent college graduates and disaffected workers are looking for ways to live a comfortable life outside of going the traditional employee route. This is why starting a small business has become increasingly popular over the past few years. People from all over the country are starting their own online companies, or are taking out a small business loan to purchase square footage for a shop, restaurant, or salon.
Unfortunately, starting a small business is much more complicated than going to your nearest financial institution to secure a small business loan for your shop or website. The life of a small business owner is fraught with challenges, constraints, and limitations. The following 10 questions will help you overcome some of these challenges before you pursue a small business loan.
Why do I want to start this business?
Perhaps the most important question to ask yourself before getting your small business loan is asking yourself why you want to start this business in the first place? Are you particularly passionate about your business idea, or are you chasing a trend? Have you dreamt about owning a shop for your whole life, or are you trying to start a small business for another reason? Identifying your main motivation for starting your small business is an important first step in ensuring long-term success.
Who am I selling to?
For small business owners, it all boils down to sales. Who will you be selling to after you get your small business loan? Are you providing a product or a service to your customers? Figuring out where you fit on this spectrum is important, because your customer will help provide revenue that will allow you to continue growing your business.
Where will my small business be based?
If you are creating an online business, your start-up costs could be quite low. Alternatively, if you are in need of a retail space in the trendy part of the city to make your small business dreams a reality, a different amount of planning and capital will be necessary to make your dreams a reality.
Who am I competing against?
Before securing your small business loan, your financial institution will want to know more about your competitors. Does your small business help fill a need in your community, or are you attempting to operate a restaurant in an already-competitive city full of great places to eat?
How will I attract customers?
Advertising is another extremely important component of any small business. Figuring out how you are going to attract customers to the product or service you plan on offering is the quickest way to grow your company.
Other crucial questions to consider before you get a small business loan include: How many employees will I need to operate my business? How will I manage my company’s finances? Will I need to find suppliers to provide me with raw materials for the products I want to make? How much will my product or service cost? And, finally, how much time do I have to start turning a profit?