When starting a business, there are lots of things that you must consider. Some of them are fun to think about and important, but not critical. However, there are a few questions that are absolutely critical if you want to put yourself on the path of growing a profitable business. Three of them are listed below, although there are definitely more than these:

1. What is the need that I am filling for my customer?

Yes, you want to have a compelling idea that is fresh and keeps you excited. However, your ultimate goal in business (as opposed to a hobby) is to have customers purchase your product or solution for a problem that they have. The idea must be compelling enough for them to part with their hard earned cash. The ability to articulate this need clearly and concisely is critical.


2. Who are my customers?

If your first response to this question is “everyone” or “anybody can use this,” then you don’t yet know who your real customers are. The natural instinct for most entrepreneurs is to get their product or service into the hands of as many people as possible. Unfortunately, not everyone is interested in, can afford, or can afford and wants what you are selling. Don’t take this personally, it’s just a fact.

What you need to do is to figure out who are the people that are most likely to purchase your product or service. The more you know about them, the easier it will be to target them and market your product or service. The easiest way to get started is by looking at basic demographic characteristics. These include: gender, race/ethnic background, age (and don’t say 25-75!), disposable income or household income, geographic location, educational background, etc.

Gathering this information will help you begin to craft a profile of your customer. This profile, when completed, should help you to create a clear picture in you mind of your target customer. For many businesses, you may have 2 or 3 target customers. In that case, you will go through these questions separately for each customer.

Once you have the basic demographic information, you can start thinking about the more interesting questions about your customers. What stores do they shop in (i.e. Safeway vs. Trader Joes vs. WholeFoods)? Are they pessimists or optimists? Do they care about what other people think of them? Are they savers or spenders? These types of questions get at your customers’ psychographic traits, which really influence how they see themselves and how they make purchasing decisions.

3. What is my Business Model?

For some product businesses, this can be a straightforward question. It costs me $7 to make each product and I can sell them for $45 at a retail store or online. If that is you, congratulations! You have a straightforward and clear business model. Now you have to think a lot about how to market that product and make customers aware that it even exists. You also need to figure out the distribution methods to get the product from where it's made to your customers. After that, you’ll want to think about how you can create additional products or add-on services to generate other revenue streams.

If I had posted this question 5 years ago, many people with service businesses and online businesses would have said “I have an advertising model.” Unfortunately, we have seen that the model of getting lots of traffic and then selling ads is not viable as your primary revenue stream. Can it supplement and add additional income?—Absolutely! However, if you don’t have any other ways of creating value that your customers are willing to pay for, then you don’t have a business.

Business models can be things like selling a subscription service to great content and expertise, billing for consulting hours, selling subscription to an online software service, and much more. A few weeks ago, I came across a great blog by Alex Osterwalder on business model innovation. If you are stuck or want to see some of the latest thoughts on how to create a viable and scalable business model, you should check it out.


Finally, answering these questions takes time and effort. They are so essential to creating a successful business that not being able to answer any one of them may stunt or completely eliminate your potential success.

Who? What? How?

I am participating in the ProBlogger 31 Day Build a Better Blog Challenge. Our first assignment is to write the elevator pitch for our blog.  I have gone through a few taglines and shorter explanations of why Gutsy Partners exists.   The challenge is great because it is forcing me to share that with my audience.  So, here goes:

The Gutsy Partners Blog exists to equip first-time entrepreneurs with the skills to execute and document their way to business success.

My job now is to target that group with relevant, practical advice and content that helps them build their leadership skills while they build their businesses.  Successful exectuion and clear documentation requires high-level understanding and vision combined with detail-focused tasks and procedures.  It's a challenging combination (like switching from 30,000 feet tp 5,000 feet within a few minutes), but one that many entrepreneurs struggle with.

Our elevator ride is over...want to learn more? Keep reading.

There are many "business" topics that I could write about tonight.  However, given the historic nature of tonight's election and my own personal excitement, I felt it would be fitting to congratulate Mr. Barack Obama, his family, and all of his campaign staff, supporters, and voters.

In his speech, Barack Obama reminded us that "only in America" could we experience what we have tonight. Regardless of your political leanings and beliefs, Mr. Obama's point is true for you. Only in America, do you have an opportunity to do any or all of the following (plus a whole lot more):

• To serve in your country's military voluntarily (Thank you John McCain and everyone who has ever served in our military)
• To start a business based on your own idea, to succeed wildly with that idea or fail miserably and be able to do it again
• To run for president as a woman, minority, or any other historically underrepresented group and be taken seriously (and WIN!)
• To speak out against injustice, protest, and work with others to bring about change without being silenced
• To worship God freely or not at all
• To travel freely, exploring our country and learning about all the people who live here
• To do anything else that you can dream

Tomorrow, our lives don't magically change because there is a new president.  Tomorrow, our lives have the potential to change when we see every opportunity as one that we must take advantage of because it only happens in America.

Goodnight and God Bless (and Congratulations, President Obama!)