A regular job or your own small business?
This questions pops into everyone’s mind, at least every once in a while. Some are content with their job and the security of a monthly check, while others try to find new ways to earn their money on the side as self-employed professionals.
Here are the 4 questions you need to ask yourself before moving into self-employment:
What am I good at?
I know people who are not web savvy and yet run successful web development companies or people who can’t really cook that well, but who earn a truckload of money with their restaurants. Even doctors who are average in their profession, but are killing it as medical practice owners.
While this can happen, these are merely exceptions to the rule. In order to become successful as a business owner, you should be good in that industry.
Maybe you are not the best content writer or handyman in the world, but a good deal of knowledge will help your potential clients see you as an expert in your field and someone they’d want to do business with.
You can start an electrical company for instance, even if you are like me, mostly oblivious about how electricity works, but it’s better to start a business in an industry you are already experienced in.
I started my medical web design company because I’m good at web design and also love reading about medical stuff.
This allows me to understand the healthcare industry well and provide solid medical design and content services.
Find your sweet spot and turn your knowledge and passion into a lucrative business.
Who needs my services or products?
I see so many companies, especially in the IT area who provide all kinds of gimmicky services I can’t find a use for. It’s cool to just release some new stuff and see if, maybe, there’s someone who needs your services.
Before you release yet another useless app for instance, try and see if there’s a real demand for it.
A friend of mine is doing really well selling veal and poultry from a local farmer to the ladies and gents in the city we live in. It’s a real demand for organic meat and she found the solution for these people.
As you can guess, she’s making a killing with this, connecting the farmers who provide the meat and the city people who need it.
During holidays she’s earning money baking for special events. Her cookies are absolutely delicious, made with the best ingredients and, as soon as she announces her services are available, she’s already swamped with orders.
Look around yourself and see if there’s any real need for your idea. If you find people who need your product/services, you are golden.
How do I price my services / products?
Sell cheaply and you’ll always compete on price, which is not the best idea, if you want a sustainable business. Sell too expensively and you’ll have no more clients.
Try to get some pricing ideas from your competition and build on that. If possible, you can slowly increase prices, until you are satisfied with your profits.
Price is not really everything, there are many people who are willing to pay top dollar for something remarkable and for excellent service.
My friend doesn’t sell the meat cheaply at all, but we have no issues with the price, because the quality is outstanding and she’s also delivering the merchandise.
The same for her cookies, which are pretty expensive (similar to store bought cookies, sometimes even more). But the cookies are absolutely divine, we know the ingredients are natural and fresh, so there’s no problem with paying more for an excellent product.
Don’t be scared to ask for bigger prices, if you take care well of your customers and your services / products are top notch.
What business formation should I choose?
Ideally you have a good understanding of your product and pricing. You probably tested your idea as well, finding few clients to see if the business idea is worth moving forward.
So now you should think about a business formation for yourself.
There are many options to choose from. You can choose to be a Sole Proprietor or create a Partnership, if you have someone you trust to work with you.
A Limited Liability Company is also a great idea for most entrepreneurs and something I have personally chosen for my web design business.
These are the 4 main questions to ask yourself before starting your small business. Get these right and you are on your way to success.