There’s no doubt that entrepreneurship comes with challenges. It requires quite a bit of thought before you take the leap into starting your own business. Last Wednesday at Entrepreneurship 101, Nathan Monk, senior strategist for MaRS ICT Venture Services, provided four questions early-stage entrepreneurs should consider before jumping into the world of entrepreneurship. By addressing the questions before you start, you can help reduce the risk of failure down the road, as well as strengthen your business model to make it repeatable, scalable and competitive.

1. Where do I start digging for ideas and resources to get going?

Before you start a business, think about which existing resources you can leverage and your own readiness for the journey:

  • Your knowledge base and career experience
  • Your network, including who you know and in what industries
  • Your access to early-stage financing
  • Your reputation, including what you (and your partners) are well known for
  • Inefficiencies and pain points that exist in your previous job
  • Market(s) you are passionate about
  • The time and effort you are willing commit

2. Why do startups fail?

The reasons are many and are often focused in the following areas:

  • Customer: Lack of segmentation, getting trapped in vanity metrics.
  • Product: Execution on things irrelevant to target market, poor minimum viable product (MVP) and little to no conversion.
  • Team: Hiring too many too early, not hiring doers, no accountability.
  • Business Model: Over planning, not adapting to the market, more costs than revenue.
  • Financials: Raising too much too soon, deploying capital incorrectly.
  • Misnomer attributes: Over-emphasis on market size, tools used to track metrics.

3. What are the methodologies around entrepreneurial management?

According to Nate, your business model is surrounded by threats. However, there are several thought leaders in the entrepreneurial space (for example, Steve Blank, Eric Reiss and Ash Maurya) that have developed methodologies to better equip you to beat the odds. The models that are important to keep in mind are:

4. Do you have a scalable, competitive business model?

Companies no longer compete on a product or service, but a repeatable, scalable business model. There are several factors to think about as you seek to develop a solid business model:

  • Is the idea scalable?
  • Are you protected from competition (for example, through differentiation)?
  • Does your business have a game-changing cost structure?
  • Is there a switching cost attached to your product or service?
  • Can you get customers and third parties to create the value for you?
  • Are you making sure you earn before you spend?
  • How much potential is there for recurring revenue?

There are many more questions to consider before you start a business and you can watch the <video> of Nathan’s lecture for more insights. Then ask yourself: are you ready to take the jump?

Register for Entrepreneurship 101: The next lecture is on Wednesday, October 22, 2014.

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Gina Leslie

Gina was the interim manager of MaRS’ Entrepreneurship & Innovation Series. Prior to joining MaRS, Gina worked in the small business and startup space in a variety of roles, with a focus on business development, project management and communications. She recently completed her MBA at the Rotman School of Management. See more…