You have read business magazines, reviewed business opportunity material, read success stories of others and now you are ready to get started with becoming your own boss. Your next step is to determine what type of business is best for you. This is the most important part of your research phase, because it will be one of the keys to a successful start. The more you know about yourself, your likes and dislikes the easier it will be to find a business idea that you can get passionate about and monetize.
While passion does not pay the bills, it is that part of your mindset that will keep you going during the challenging times. An easy way to get in touch with the “passionate you” is to start a business idea journal. This can be a spiral bound notebook or a 3- ring binder filled with paper to write on. Keep it with you at all times and whenever you find yourself having a thought of like or dislike about something, start thinking of business ideas that can relieve the pain, solve the problem, be the solution or serve the need.
When making your journal entries make sure you date each one and try to go into as much detail about your idea as much as possible. This includes who the possible customers would be, the need it would be filling, whether it could be operated from your home or if you would need a commercial location and how an income can be derived from it. Current businesses that seem to be thriving in this particular industry or niche.
It will be important to not just go with the first idea concept you discover or come up with. You should have at least 3 to 5 ideas that you truly think are viable before you make a decision on the final one.
Below are a list of questions that will help you to narrow down the type of business ideas/concepts you might be interested in:
1) What are my likes and dislikes? If you don’t like cooking or baking cakes or pies, starting a catering business wouldn’t be the best idea for you. However, if you like teaching children, reading to children and get very excited whenever you have the opportunity to work with children, starting a moms play group, children’s story time business, home or commercial daycare or children’s gym might be good business ideas for you.
Sometimes your dislikes can also help you to create a business that can make whatever it is you don’t like better. For example, if you visit a coffee shop that has good coffee, but is not pleasing to the eye, because the owner hasn’t given much care or concern about the décor and you find yourself constantly complaining about not being able to meet friends and associates there because of the way it looks, you might be able to create a coffee shop that customers would find attractive, warm and pleasant.
2) Do I want to operate my business full time or part time? If you are currently working a full time job, this question is also vital to a successful start-up. From the very beginning your business will have specific needs such as the amount of time required to run it, the best time to service customers, the best time to market to your target client/customer etc. Knowing the amount of time you have will help you to eliminate those businesses that don’t meet your time qualifications.
3) Do I want to transfer my work skills to a business of my own? There are many consultants and practitioners that are doing the same thing that they did for their previous employers. There are also others who feel that they can provide a service or provide better customer service than their employer. For example, a sales trainer might find that they have a better way of training sales employees and staff and have their own unique sales system that can be copyrighted. This person might decide that they don’t want to give up their ideas to their employer and decide to start their own sales training and development company. Another example would be a hair stylist that is working for a commercial salon and decides to open up her own hair salon.
4) Do I want to work from my home or start a commercial location? Certainly working from home is the easiest way to get started. Not only does it greatly decrease the amount of start-up capital needed, but it also allows you to keep more of your revenue by eliminating a monthly lease payment. If you automatically know working from home is for you then you’ll want to make sure you check with your local city and/or county license department about local zoning or home occupation ordinances. Each city/county has different rules about working from home and some are more “home business friendly” than others. Never go full speed ahead with operating a business from your home without being informed about your local zoning regulations first!
If you know that you prefer a commercial location, because you like being able to get up in the morning and go to a more structured setting, it’s important to know that this will greatly increase your start-up cost. If you have a service business such as a consulting practice and only need a small space there are many companies that now offer virtual office spaces. For a monthly fee you can have a certain number of hours each month and it normally includes use of an office and conference room, phone line, use of administrative services and more. This is a great option for individuals needing a space to see clients, but don’t plan on having employees.
By having a virtual office, you can have the best of both worlds because you can also work from home when you choose to. Larger commercial space such as in a strip mall or plaza, office building or stand alone building normally require a minimum 2-5 year lease with a deposit down and additional fees for parking, garbage disposal and maintenance. Also, some commercial spaces are just bare shells and require complete build out, which will require a general contractor. This can get very expensive and having a good cash flow analysis to determine startup cost will be extremely important. Most startup businesses such as franchises, restaurants, and retail shops require a commercial location.
5) Do I want a service business or product business? A service business is normally easier to start and usually requires less start-up capital. It is also more “people intensive”. This means that you’ll be dealing with a larger number of clients/customers on a daily basis. One of the biggest challenges for a service business is to ensure that prices are competitively set, but also meet the income needs of the owner and marketing needs of the business. Some service businesses also cross-sell products as well to increase its revenue.
A product business can be more challenging, because it often requires more research analysis and start-up capital. However, if you are particularly interested in sales you might want to also research some direct marketing companies that have products that have already been tested and have marketing plans and materials ready. These companies maintain their own warehouses and don’t require you to stock products in your own space. This means that you could potentially run a product business from your home.
If your idea is to develop your own product, you will need to thoroughly research the following questions:
- Is the product meeting a current need in your community or a national market?
- Are there similar products already on the market? If so, how are they doing in profit? How is your product better?
- Does your product idea have market appeal? Does your product serve a daily or frequent need?
- Would you have to in-depth education for people to use your product? How easy would it be to produce your product?
- How much would your product cost? How much do similar products cost?
- Can other products be derived from your original product idea? Will your product idea need approval from government agencies such as the FDA?
- What type of packaging will be required? Can you manufacturer your product or will you have to contract a manufacturer?
- What would the wholesale cost of manufacturing your product be? What is the shelf life of your product?
- How will I distribute the product? (Wholesale, retail distribution, commission reps etc.)
- What type of work space would you need? (Commercial office, building, warehouse etc.)
6) Do I want to develop a business from my current hobby? Are you already making a product or providing a service and selling it from time to time? Do you already have family, friends and associates asking you for more of your product or service? If this is the case you might consider expanding your hobby into a full time or part time business. This is one of the easiest ways to get started, because it’s a natural progression. Your customer base is already established and ready to build on. The important thing to remember is that it would no longer be just a hobby and you must determine if you can make a full time or part time income from it.
7) Am I interested in purchasing an existing business or franchise? Purchasing an existing business or franchise does have its advantages. An existing business that meets your requirements and has a customer/client base already can be a great advantage. It will be important to thoroughly analyze its books, bank statements and other important documents to determine its value. A business consultant or CPA can help you to do this.
Franchises have truly shaped the American economy. Go to any street corner, mall or shopping area and you’ll see a franchise. From burger restaurants to printing companies and all in between franchises are everywhere. They are a most attractive business concept, because all of the research and analysis, testing, marketing and business plan have already been completed for you. Buyers receive In-depth training, materials, marketing, building layout and design, signs, logos, and product(s). The cost of a franchise varies greatly and could range anywhere from $5,000 to $5 million.
If you are interested in learning more about franchising a great resource is Entrepreneur Magazine. They have hundreds of articles and resources on how to choose a franchise that’s right for you. As always, it is best to seek the advice of a franchise consultant and/or attorney before making a final decision on purchasing a franchise.
8) Am I willing to be committed? One of the most surprising things about starting a business is that the actual business product or service while important – isn’t the only thing you need to be successful. Strong management skills including leadership, forecasting, budgeting, and focus are required. As a matter of fact, the day-to-day operations of a business has nothing to do with the actual product or service you offer.
Commitment is also needed, because there might be times when you feel like giving up or maybe the business is growing too fast and you’re having a hard time keeping up and you’ll need that extra special something that causes you to “stay the course”.
The above questions are meant to get you to really think through why you want to start a business and what’s best for you. It’s important to thoroughly evaluate your thoughts, ideas and financial requirements of starting a business before you actually begin.
So many people jump right into starting a business just because they have a specific expertise or feel that their product is good and lack the business management skills to take it to the next level. Remember to take your time, don’t allow excitement to guide your decisions and you’ll find or develop the business idea that is right for you.