Critical Questions to Ask Yourself Before Opening Your Small Business

Karleia Steiner

February 06, 2014

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When it comes to opening a small business, the best advice is to slow down. Indeed, before you type "where to open business in South Carolina", or something similar into Google, it's important that you pause and ask yourself some very important questions that will determine whether or not small business ownership is right for you. To help you avoid jumping in to quick and finding yourself in a disastrous financial situation, here are some critical questions to ask yourself before opening your small business.

What Do I Know About My Industry?

This might seem so obvious, but it's an important question that so many would-be business owners neglect to really ask themselves before embarking on their new venture. A good example would be the sea of boutique cupcake shops that have opened up across the US in the past ten years. While a few have withstood the test of time, many closed after only a year of being in business. This is because their owners, typically bakers or cake design professionals, believed that they knew the ins and outs of cupcake creation. What they didn't understand, however, were the ins and outs of selling cupcakes professionally. Being knowledgeable about your product isn't enough. Additionally, you need to be knowledgeable about your industry, specifically what works and what doesn't.

Where Am I Financially? Could I Afford a Loss?

No one should open a small business as a full-time venture unless they have the means to live for a year without any additional income. For many, this is extremely discouraging. However, many small businesses barely break even their first year. To depend on profits from a brand new business as a sole means of income is foolish and has led many to bankruptcy. Furthermore, new business owners should have additional funds ready in case they suffer a loss. An escape plan is crucial; you don't want to find yourself deep in the red with absolutely no way to survive.

Do I Have Leadership Skills?

There's much more to owning a business than understanding your industry and being financially ready. It's important to consider whether or not you believe that you could thrive in a leadership position. If your small business does well, you may very well find yourself in a position where you are the boss of a few employees. Hence, it's important to evaluate yourself and determine as to whether or not you have the leadership skills necessary to be the person that your employees look to for answers.