Successful entrepreneurs ask themselves these questionsÂ so they can keep their startup on track and hit their goals.
Editorâ€™s Note: This post was submitted by guest blogger, Roxy James. Enjoy!
The U.S. is a good place to launch a startup topping all countries in the Global Entrepreneur Index (GEI) with a score of 83.6. The GEI takes into account a variety of factors in determining whether or not a country’s business climate is conducive to entrepreneurs, and with the U.S. in the top spot this underscores why those launching a startup here have a good chance of success.
But that’s not to say success is guaranteed. If you are starting out or looking to scale your business there are key questions you have to be asking yourself in order to move forward. Here are five:
1. Are we gaining traction?
Gaining traction simply means making progress, and it can be gauged in a variety of ways. Richard Harroch from Al Business lists the following as among the signs of early traction, and recognizing them in your startup is certainly a good sign you are moving forward:
- Having a viable product
- Getting initial customers
- Forging strategic partnerships
- Receiving customer testimonials
- Being admitted to accelerators or incubators
2. Do we have the right legal structure?
Entrepreneur details how choosing your businessâ€™s legal structure is critical, as it will dictate, among other things, the amount of taxes you will have to pay, your ability to raise money, the paperwork youâ€™ll be required to submit, and the personal liability you might face. These legal structures include a sole proprietorship, a partnership, a corporation, and a limited liability company (LLC).
According to the National Small Business Association (NSBA), the most popular legal structure among startups is the LLC. An LLC is a popular choice because it protects business owners from personal liability, thereby ensuring that their personal assets will not be at risk due to bankruptcy or lawsuits. Thereâ€™s potentially more income to distribute in an LLC too, as taxes are computed based on the personal income tax of the owners.
If you think this route is whatâ€™s best for your startup, note that the guidelines around creating an LLC differ depending on where you are, though they all follow similar steps. The steps to forming an LLC listed by ZenBusiness start with giving it a name, followed by the appointment of a registered agent who will receive all paperwork on behalf of your startup. Next is the filing of the Articles of Organization (information about your LLC) and the application for an employer identification number. An LLC is ideal for startups as it gives owners flexibility in how they run the operations. If you try to become a corporation too quickly you could find your ability to adapt hindered by increased oversight from outside investors.
3. Do we have the right team?
Central to the success of any startup is the team you have. You need to take stock of the people you’re working with and make sure that everyone is knowledgeable about the business, and that they are passionate and persistent. It’s advisable too, that you put off hiring part-time workers and outsourced consultants; instead, opt for a team that will commit to the business full time. In this way, you will be able to create a strong company culture from the beginning that will prove useful once you scale and bring more people in.
4. What are the possibilities moving forward?
If you’ve got a committed team, have gained some traction, and have decided on the right legal structure, the likelihood is that your startup is ready to take that next step to expand. In other words, think of what it can become in the months and even years ahead.
Thinking ahead must be accompanied by careful and creative planning. And as you plan ahead, make sure to keep in mind the tips on building customer loyalty. If you donâ€™t bring your current customers with you, and focus only on new ones, your business will lose its foundation and falter as it seeks to grow.
5. Do we need outside funding?
At some point a successful business will need to consider outside funding. And while it’s tempting to say yes right away, it would be wise to think things through first. As we mentioned above, one thing to consider is that funding always comes with strings attached â€” it can be a portion of your profits, a stake in it in the future, or some other trade-off. If you are prepared to accept this then additional funding will allow you to scale quickly and reach a much wider market. This will turn your brand from a startup into a fully formed business.
These questions need to be continuously asked every year. A startup that doesnâ€™t keep moving forward will quickly fall behind.