In my 30 plus years as a CPA and business consultant, I have been fortunate to be involved in the start-up of dozens of new businesses. I say fortunate because it is so energizing and inspiring to be a part of the process.

To be an entrepreneur and to take all that risk is so American and so admirable. Some succeeded and many failed, but they all taught me something.

It takes courage and luck to succeed. It also takes some more quantifiable things, and I have developed a checklist of seven questions I use to test whether a venture has a chance to succeed.

I believe a new business must have all seven (no exceptions) to have a chance. In today’s economy, many people who have been laid off or are at risk are thinking hard about starting their own business. These are some of the things they should be thinking hard about.

The checklist is no substitute for a sound business plan; in fact, it can be used to help generate a business plan. An effective business plan is a vital tool to decide whether to make the plunge.

Product
What are you selling? Is it a viable product or service? Will your customers want it and need it? This sounds so simple and most people get it right, but it does surprise me when otherwise intelligent people show up in my office with a product or service that solves a problem that doesn’t exist or provides a service few people would need.

For example; handmade organic doggy treats may be very interesting to you, but not too many other people would spend the extra money on it.

Ability to Produce
Can you manufacture or produce the product or service in sufficient quantity? An example is handmade art. An artist who takes two days to make a piece that sells for $60 will not produce enough pieces to make a living. One can increase productivity by making it faster or training others to make it.

Or, simply raise the price. Training people can create competitors which may not be a good idea in a small market setting. Increasing prices will meet resistance and change your marketing strategy.

Market
Is there a market segment interested in your product or service large enough to satisfy your business plan? In other words, if you can capture, say, 20 percent of the market, is that enough to generate the revenue you need? If you have a product for dentists in San Antonio, there is a large market. If you have a product for mathematicians in San Antonio, you had better count how many there are before you crank up production.

Marketing
Do you have the plan and capability to reach your market so you can capture that market share? How will you reach them? How you narrow your marketing to your market and how you get them to pay attention to you is the question. Marketing is expensive and a misfire can be brutal. An expensive newspaper or radio ad that brings no return is just money gone forever.

Management
Do you have sufficient business experience and financial skills to manage the business through the various stages of development and meet the challenges both in the beginning and down the road? A beginning entrepreneur has to wear many hats. This can be intimidating, especially the financial part. You probably have more of these skills than you realize, but you can employ consultants to tutor you and get you up to speed.

Profit
Is the profit margin on a sale sufficient to justify your overhead at the sales levels you project? If you achieve that level of sales, will you make enough net profit to justify all of the risks you are taking? A financial cash flow projection can give you answers here.

Capital
Do you have to have enough money to get you through the start-up phase (including equipment, deposits, inventory, legal and accounting etc)? You also have to have a reserve for the early months while revenue lags but expenses do not. You need a reserve for the mistakes that you will make in the first year or so.

And, you need enough personal reserve to live on while you are building your business. A financial cash flow projection is a must for this one. Even if you achieve your hoped for revenues, if they come in the wrong months you can be sunk.

I have a friend from college who started and sold several businesses, all great successes. I asked him about these questions. He liked them, and wanted to add one more. It isn’t really a question, but I will share it with you anyway. He said, “Make mistakes.” Mistakes are great if you only make them once. Fix that problem and never do it again. Soon, he says, you will not be making mistakes and you will win.

Having your own business and being your own boss has a nice ring to it. Obviously, it involves hard work and financial risk. Make a business plan and answer these questions in the affirmative. Then take a deep breath – and go for it.