It may be that you already know which type of business you want to start. If so, pass Go and collect $200. Other people have a general idea about what sort of business they may want to start, but many have no idea at all – they just know they want to be off on their own.
So how do you go about picking the right business? There are many ways. Some people look to something they know well, and that’s usually a fine idea. The main consideration for others is that their business have a high profit margin; again, not a bad idea at all. And still others want a business that is on the cusp of a wave, for instance, a business catering to the now-retiring Baby Boom generation.
But it takes more than just a nifty idea to become a successful entrepreneur headed down the right path. Let me suggest that anyone who wants to start a business should ask themselves the following five questions. These will be much more helpful than any list of hot businesses:
1. What is something that you do well that you like to do? As in the rest of life, we tend to succeed and do well when we are engaged in something that we really enjoy. Your business should be no different. Richard Branson started Virgin Music, not because he thought music would be hot but because he loved it. Bill Gates started Microsoft because he loved working with computers. As the book says, “do what you love, the money will follow.”
2. Is there a market for that business? Let’s say that your answer to question Number 1 is that you love gardening. Well, there are no shortage of businesses that you could start that revolve around that concept; nurseries and landscaping to name just two. Now, what if your answer is that what you love most is 19th century Danish architecture? However interesting that may be to you, if there are not people willing to pay you for your expertise, you don’t have a business. So you have to be realistic — there must be a market willing to buy what you want to offer.
3. Can you afford to start this business? Some businesses are very inexpensive to start, most notably, home-based businesses. But others can be quite expensive. A nursery can easily cost $75,000 to create and stock. Buying into a well-known franchise can cost over $1 million. So, in addition to picking a business that you like and have a market for, you must make sure that whatever business you decide upon is one you can afford to start.
4. What will distinguish your business? Your business must offer something unique if you are to attract customers. After all, they already shop somewhere else. Why will they choose to buy from you? You must offer better quality, cheaper prices, a more convenient location, better service, a unique product — something that makes you stand out from the crowd.
5. Can you make a profit? Whatever business you start, whatever product or service you sell, you have to be able to sell it at a price high enough to make a profit, but low enough that people will buy it. It is not always an easy task. Why do so many stores in expensive malls go out of business? Because, even if they have a great concept, their overhead is often too high. So before jumping into a business, crunch some numbers.
Although all of these issues are important, they should hopefully lead in one direction, namely, towards something you love. This business is going to become your baby. You will care for it, nurse it along, and obsess over it. You will also be putting an extraordinary number of hours into it. Unless you love it, unless you are passionate about it, working so hard will be difficult.