Five Questions Every Startup Should be Asking Before Starting a New Business

By: John Tomblin, Senior Solutions Architect
Data Titan, a division of Sofvue, LLC
Printed with permission of Sofvue, LLC and the author.

Starting a new business, whether online or offline, is a combination of both exhilaration and utter terror, often experienced at the exact same moment, repeatedly, daily and for the first few years.  And while there is no secret sauce to success, you can definitely take time-proven steps to increase the odds of beating the competition, growing your brand and producing that ever-elusive recurring revenue stream that everyone is searching for today.

For start-ups, it begins with asking the right questions even before you start your business, so let's start there.  Over the past two decades, working as a custom software and mobile app development company, we have had our share of both success and failure, so with many lessons now in our bucket of experience, and to ensure your start-up business is optimized for success, there are five key questions that budding entrepreneurs should be asking before venturing off into the great abyss of small business.  Here they are.

1- Who Are the Leaders in My Industry and How Did They Do It?

It is crucial to identify market leaders you can learn from and competitors to watch. This will help you understand what they’re doing right -- and wrong.  I’ve said for decades that you shouldn’t model your business on what the competition is doing, and that’s still true, but you still need to watch what they do, and why they are doing it.   

Also, let's dispel a common myth.  Market leaders are not your competitors because they’ve already captured a significant market share and own their niche. Conversely, your competitors are those who have started their business in the last three to five years and have yet to capture a significant market share. 

Further, you need to focus on both direct and indirect competitors. Direct competitors are those who sell the same product or service as you, while indirect competitors, although not selling the same products or services, might be able to “pierce” the market share veil that might, as a result, take away from your pool of customers. This is especially true for businesses already in or entering the D2c space.

As an example, if you are opening an Italian restaurant, another Italian restaurant in the neighborhood would be your direct competitor, but if a Thai restaurant opened up in the same neighborhood, they would be an indirect competitor. 

By conducting an in-depth competitor analysis, you’ll have a better idea of what to do and what not to do, optimizing your chances of success. 

2- How Is My Product Different from My Competitors?

Even burgeoning markets like the ride-share companies from the mid 2015’s have a ceiling.  That said, how will your product or service differentiate itself from the array of other products in your same space?  One of the most successful projects we ever developed, way back in 2009, was in the logistics industry, and without getting into the details, gave independent truckers the ability to load empty trailers on their “return home” journeys using a waybill distribution acquisition process allowing them to make money traveling “both ways”.  It was novel.  It was profitable.  It had no competition.  It was different, and there was nothing else like it in the marketplace.  

Here’s another example.  Google (as of Jan 2023) owns 85.55% of the market share in the search engine market, while the second-place company, Bing, only has 7.61% share, but to be clear, I’ll take 7.61% of a trillion-dollar market any day of the week.

Making your product or service stand out from the competition is essential, but apart from features and service, you must also differentiate yourself in how you provide customer service.   Case in point.  Data Titan began experiencing hosting issues with a company who had been servicing our clients beautifully for over a decade – and they had been great.  Unfortunately, they kept raising their package prices, while simultaneously reducing their customer support.  In the end, we ended up switching to a different provider. What’s interesting is that the new company’s hosting plans are about 30% higher than the previous provider, but their service was stellar, setting them apart from their competition. That said, we decided it was worth absorbing the higher costs because we recognized the value of being able to talk to a real – live – breathing human being, who could help us resolve issues faster than any text based or AI chatbot support system.

3- From What Channels or Platforms Will I Sell My Products?

The next big question: From where will my customers buy products and services? Will they have to visit an offline store?  Does your business require that you set up an Amazon store, or maybe a Wix site?  Can your customers buy directly from your website or mobile app, or are you selling services like surveying or accounting?  

Depending on your answer, you’ll have to create solutions that make sense and make it easy for customers to find you, search your products or services, and then make a decision.  For example, if you want your customers to have the ability to purchase socks directly from your website (or) your mobile apps, you have to make the check-out process EASY, FAST and SEAMLESS.  Additionally, you must incorporate multiple shipping and payment options (including mobile wallets) to eliminate barriers.  Also, as part of this process, and to answer these questions, you must partner with a reliable mobile app development company in Arizona who can tailor the app and/or web-based application so your customers receive the best possible experience from the first moment of launch.

4- How Will I Market My Business?

Once you’ve decided on your distribution channels or interfaces, marketing begins.  The scope of marketing your web application or mobile app is beyond the scope of this article but consider the following.

Building it doesn’t mean they will come.  If no one knows your business exists, you’ll never stand a chance.  It is essential to create a robust marketing strategy, often times running parallel to the development of your web application or mobile apps, but to create a good marketing strategy, you will need to define your customers or, even better, create your buyer’s persona. This will help you target a specific group of people, increasing your chances of conversion.   Case in point.  We have one project currently underway where the client is sending out 15,000 emails this coming week (first week of June 2022) to identify their interest, identify price points and establish who, from the survey, might be interested in becoming a BETA tester at launch.  This is a brilliant approach to marketing because it allows the customer to tell the business owner what they want, how much they want it, and what they are willing to pay for it.   

5- When and How Do I Become Profitable?

The numbers are dismal.  The NFIB has reported for years that over 90% of start-ups fail within the first two years, and of the 10% that make it, another 90% fail over the next three. Those are not good odds.  What’s the moral of this statistic?  The bottom line of every business is revenue, and revenue comes first from marketing, then sales, then service and then, and only then, profitability.  Whether you’re bootstrapping from savings, taking the “Friends and Family” approach or obtaining grants or investor capital, you need to be profitable as soon as possible to avoid becoming one of the scary statistics mentioned above.

Conclusion

Becoming your own boss and starting your own business is one of the most exhilarating moments of becoming an entrepreneur.  I can speak from experience as I’ve owned over a dozen companies in my lifetime, including a restaurant and bar, a real estate brokerage firm, an appraisal firm, a publishing company, and since 2004, Data Titan.  That said, being your own boss also requires taking care of your business, making the right choices and always looking out for your employees, customers and vendors, in that order.

Ready to get started?  Give us a call and let’s have a discussion about your project or visit our YouTube or LinkedIn channels.  Oh, and be sure to ask us why we have a 96% go-to-market success rate while the rest of the industry is only 17%.  623-845-2747.  

CITATIONS:

Source:  National Federation of Independent Businesses
Link:  https://www.nfib.com/

Source:  YouTube Data Titan Channel
Link:  https://www.youtube.com/watch?v=XoLXSjyJ5wg

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