So, you’re thinking about starting your own business.

Before you dive in, take a moment to go through these eight key questions about business fundamentals. This will help you anticipate and possibly reduce some of the stress and challenges that come with starting a business.

I’ve experienced the excitement of a new idea, the joy of gaining independence, and the tough realization that sometimes an idea won’t work out. While failure teaches valuable lessons, my hope is that this guide helps increase your chances of success with your first business.

So, bear with me and use this as a final checklist before getting started.

What is a Business?

Before we begin, let’s put aside the romanticized versions of startups that the media often portrays. Instead, let’s take a practical approach.

At its core, a business can be summed up in one simple sentence:

A business is a system that consistently transforms time and effort into value for others and generates money.

This definition highlights four key elements that make a business function:

1. The system (or structure) in place
2. The time and effort invested by people
3. The value provided to others
4. The revenue it generates

If even one of these elements is missing, you may have created something—but it’s not a business. A sustainable business exists when all four come together.

Now, let’s break these concepts down further.

Part 1: The System (or Machine)

Question 1: What system are you building?

Think of your business as a machine. Just as you wouldn’t build a house without planning its layout, you shouldn’t start a business without a clear structure.

Not every business needs an elaborate business plan, but every founder should understand:

• What work needs to be done for the business to succeed
• How the business provides value
• How it generates revenue

Writing these down on a single sheet of paper can give you a simple but effective business plan. From there, you can refine it by developing a minimum viable product (MVP) or even building in public. But at the very least, you should have a clear plan before starting.

Question 2: Do you have all the necessary components?

Once you know what system you’re building, assess whether you have all the necessary skills and resources. If not, where can you get them?

Common ways to acquire missing resources include:

• Finding a co-founder (e.g., Wozniak & Jobs)
• Hiring employees
• Partnering with vendors (e.g., using Canva for design needs)
• Leveraging tools (e.g., no-code platforms)

Once you have what you need, you can officially begin putting in the time and effort to build your system.

Question 3: Are you using any strategies to improve efficiency?

While not necessary at the start, understanding different methods for improving efficiency can be beneficial. Some strategies include:

• Building in public
• Minimum viable product (MVP) development
• Lean development
• Agile development
• Design thinking

I’ll be covering these topics in future discussions, but feel free to research them further.

Part 2: Time and Effort

Question 4: How efficient is your system?

Different businesses have different levels of efficiency in converting time and effort into revenue. For example, a well-paying corporate job can be an efficient system for generating income, while a startup may take time to reach that level.

Since you have a limited amount of time and effort, improving your business’s efficiency is crucial. Over time, you can scale by either:

• Hiring others to contribute their time and effort
• Optimizing the efficiency of your business operations

Choosing the right business model is key to long-term success.

Part 3: Value for Others

Question 5: Who benefits from your business?

Your business exists to solve a problem for someone. Identifying your target audience is crucial.

Your first customers will likely be people facing the same problem you’ve encountered. If they aren’t excited about your idea, keep refining it until you find an audience that needs what you’re offering.

Additionally, think about how these people will learn about your business and how they will receive value from it. It’s not enough to have a great product—you need a way to reach your potential customers.

Question 6: What value are you providing?

Clearly define the value your business offers. Instead of just listing features, focus on how your product or service improves people’s lives.

Example: The iPod in 2004

• Too vague: Brighten up your day with music.
• Just right: 10,000 songs in your pocket.
• Too technical: Music player with over 20GB of storage.

Your goal is to create a clear, memorable statement that highlights the impact of your product or service.

Part 4: Money

Question 7: How quickly can your business generate money?

Ask yourself: How soon can I prove that my business can make money?

Even if immediate revenue isn’t possible, you should have a clear plan for when and how you’ll start generating income. Your priority should be confirming that people are willing to pay for your value.

Even in business models like advertising, you need to secure paying advertisers early on. Having 500-1,000 free users can be enough to start proving your monetization strategy.

If you can’t charge money immediately, look at comparable businesses to estimate potential revenue.

Question 8: What existing businesses can you compare yours to?

Regardless of how unique you think your business is, there are always similar models in the market. Even industries like space travel and brain-computer interfaces have competitors.

Research businesses that are slightly ahead of you. Look at their pricing, target customers, and revenue sources. Also, consider similar business models in parallel industries to gain insights.

Future Topics:

• Different business efficiencies
• When to grow vs. when to refine your business
• What scaling means for different industries
• Monetization strategies
• Accounting fundamentals and profit & loss statements
• Social enterprises and the triple bottom line

Conclusion

This checklist is a starting point for understanding business fundamentals. New business models and strategies will continue to emerge, but the core principles remain the same.

If you’re taking the step to start your own business—whether by building something now or simply learning and planning—congratulations! It’s the first step toward something great.