Starting a business is a huge undertaking. That’s why it’s important to figure out what type of business to start early on. No one wants to step out on the wrong foot and start something that will ultimately fail.
For some people, the type of business they’ll start is obvious. They are confident their dreams, skill set, and drive will lead them to the right business type for them.
For others, a little more soul searching is in order. Because so much is on the line, it only makes sense to consider all the possibilities and scrutinize many options to arrive at a business model that is best suited for an individual’s life goals.
How you ultimately arrive at this decision of what business to start should be based on a number of factors that you need to consider carefully. A few entrepreneurs took time to share some of the questions they answered to arrive at their business idea.
What Experience Do I Have?
Ashley Hill, founder and CEO of College Prep Ready, says she started her business because she had personal success financing her college dream. “I researched the challenges that students and families are experiencing with paying for college to help me refine my core message and services,” she says.
From her experience and research, she learned that there was a market for the knowledge she had to offer. With Americans in trillions of dollars of student loan debt, Hill understood the pain points of students and parents when navigating the college application and financial aid process.
Victoria Garlick, CEO of event services matchmaking website Air Events Global, also believes in choosing a business based on experience and skill set. Hers built off of a 20-year career in event planning. “When deciding on what type of business to start, I looked at my personal and professional history and what I could contribute as an event director,” says Garlick.
Action item: Think about the special experience or knowledge you possess that could convert to demand in the marketplace.
What Am I Passionate About?
Another common recommendation entrepreneurs shared with us is to find and follow your passion. Nick Ehret, founder of Varieteas, is passionate about tea. So, he built a successful business by curating specialty teas for his monthly subscription boxes.
He’s a premium tea aficionado who knew he could transform his passion into a business. His advice to people when picking a business to start is to “[choose] something you are extremely passionate about because you will be working with it all day, every day.”
Brian Davis, CEO of Spark Rental, subscribes to a Japanese concept called ikigai. It means “reason for being.” In this context, Davis says, a truly good business idea is at the intersection of four things: what you love doing, what you’re good at, what you can be paid for, and what the world needs.
Action item: Make a list of things you are passionate about. If you can formulate a service or product based on that passion and successfully market it, it could form the basis of a good business idea.
What Ideas Can I Test Easily?
Facebook CEO Mark Zuckerberg once said, “Move fast and break things. Unless you are breaking stuff, you are not moving fast enough.”
In other words, your business idea should be something you can prove (or disprove) early on. If you’ve got no experience in the trucking industry, starting a logistics company would be costly to test out. Instead, think about the lower hanging fruit in industries that interest you.
Marc Roche, co-founder at Annuities HQ, a Canadian online resource on retirement-planning products, suggests doing preliminary research with family and friends, and then move on to the internet for some more digging. “Don’t be afraid to try a have a few ideas in mind to ‘test drive’ before you choose a direction,” he says. “Do some basic research online and get a feel for what idea will be worth the time and effort of developing into a business.”
Action item: Test your idea with a soft launch. Communicate your nascent (but viable) offering to potential clients. Seek to gauge the interest levels and prove your assumptions with signups or purchases.
What Problem Can I Solve?
We all know that necessity is the mother of invention, but the person who exploits that need could become a successful business owner. If you’ve lived any amount of time, you know that problems and pain points abound in just about any industry or consumer experience
Take the dog bed company Big Barker, for example. This company generated $4.75 million in revenue in 2016. Eric Shannon, founder and CEO, saw a glaring problem in the market for dog beds. “I started Big Barker because there was a huge problem that large dog owners had to deal with. They had to replace their dog beds once or twice a year because they weren’t made well enough to support the weight of a big dog.”
Shannon adjures would-be entrepreneurs to solve big problems: “The bigger problem you solve, the more potential your business has.”
Action item: Think about problems that could be solved profitably. You don’t have to start from scratch here. Consider improving a product or service that already exists or fill a gap in an industry no one has addressed yet.
What Is My Lifestyle Preference?
Your business goal may or may not include revenues in the millions and employees in the thousands — and that’s OK. Perhaps what’s most important to you is choosing a business model that supports your ideal work-life balance.
Antonella Pisani was a VP of global ecommerce for Fossil and held leadership roles at JCPenney, Guitar Center, and ProFlowers. But her primary interests were in travel and photography. Pisani knew she needed a flexible business model that wouldn’t require space or inventory.
This was the impetus for creating her website, Official Coupon Code. This flexible, web-based business has allowed her to work from Antarctica, the Arctic, Bhutan, Morocco, and other countries.
Action item: Envision the life you’d like to be living five years from now. Take note of the amount of free time you’d have and how much income you’d want to earn. Use those parameters to flesh out an ideal business model.
How Much Capital Do I Have Access To?
The lean startup wasn’t a fad after all. It turns out people don’t want to risk their life savings on a business idea they have yet to prove or make profitable.
Robert Lomax founded an educational services firm, RSL Educational, based on needs he saw in his day job as a teacher. Not only did his teaching experience help him see gaps in the educational books market, it also gave him the ability to keep his job and develop new products. This let him avoid taking on debt and minimize risk while he grew his business.
Lomax says this approach is ideal because you can “take your time and explore your ideas properly. “
Choosing a business to start is a decision that will have a huge impact on your personal and business life, so it’s best to think it through with ample research and testing of the waters.
Start by answering some of the same questions these entrepreneurs answered and you’re bound to find a business idea that’s just right for you!
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from Fundera Ledger https://www.fundera.com/blog/what-business-should-i-start