Only a handful of entrepreneurs and start-up founders make it to entrepreneurial TV shows like Shark Tank or Dragon’s Den. That’s mainly a function of limited time and availability of strong start up ideas. If you can’t get onto the shows, what questions could you ask yourself about your small business idea?
You may be the main investor in your own start-up business and to increase your chances of success, it may be a good thing to ask yourself some of the hard-nosed questions that are asked on these shows. But you may also seek funding from crowdfunding organisations that are starting to grow all over the world. Just recently I saw that a coffee shop chain in China that is trying to raise US100 million. The experts say that equity crowdfunding, a growing fundraising model for entrepreneurial projects, is set to grow in China and could dwarf those of the United States or United Kingdom.
Whatever the source of funding whether private or public, your business start-up will still need to meet some sort of objective criteria required for any start-up business.
One of the first things that you need to be clear on its your customer value proposition. What is it that you are offering potential customers, is your product or service something that will be better, more simple, faster or cost less than other similar products on the market? If you are developing an entertainment product, say for the children’s market, will it be fun and entertaining and perhaps educational as well? Without a clear value proposition you not going to get very far.
Another crucial area to look at is your business model. Is your business model sustainable for the longer term and does it allow you to scale up once you have trialled and tested your initial product or service? A business that, for example, sells just sandwiches would be difficult to scale up because of the large labour component required. Even a children’s game for the iPad, is maybe difficult to scale up unless you have big resources.
How much money do you really need to start up your business idea? Some start-up founders come up with fantastic ideas for iPad games for children or blogs for working mothers but it requires deep financial pockets to get them off the ground. Some so-called entrepreneurs have sunk $50,000 into products with a retail selling price of only $1.99 on iTunes.
We could go into many other areas but the point is the more questions you ask about your start-up business idea, the more insights you will get to help you find out if what you doing will be profitable. Without profit, you don’t have a business. Sure, you may have a physical business but if it’s not making a profit it looks more like a hobby or rather expensive pastime. Make sure you have a business plan, marketing plan and think through options to readjust or pivot your business idea very quickly if it’s not working.
Entrepreneurial reality TV shows, small business competitions, crowdfunding sites and your own group of potential private investors are going to ask you hard questions about your business idea. Why not do a little homework and ask yourself some tough questions before you get into something that may bleed your bank balance dry.