When you begin mulling the idea of starting your own business, you’ll have so many questions that it’s easy to get analysis paralysis and end up not doing anything. Here are some answers to some of the most common questions that can hang you up and delay your entry into the world of entrepreneurship. These answers and more are in Start a Successful Business: Expert Advice to Take Your Startup From Idea to Empire, by Colleen DeBaise, to be published in February by Inc. Media and Amacom, a division of the American Management Association.
Before you jump in, ask, “What’s in the pond?”
Almost 40 years ago, famed Harvard economist Michael E. Porter identified these five questions as crucial to determining your company’s strengths and weaknesses in your industry.
How big is the threat of new entrants?
If it was easy for you to get into the industry, it’ll be easy for your competitors as well.
How big is the threat of substitute products or services?
Beware of cheaper, faster, or more entrenched substitutes for what you make.
How much bargaining power do your customers have on price?
The bigger they are, the more they can squeeze you on price, or even force you to give away product as a “loss leader” to get in the door.
How much bargaining power do your suppliers have on price?
The fewer the suppliers of what you need, the more you’ll pay.
How many powerful competitors operate in your space?
Are they civil or warlike? The more vicious the competitors, the more money it will cost to compete.
From the Winter 2017/2018 issue of Inc. Magazine