How To Determe The Right Kind Of Business For You

Your business should have a solid chance at profitability – but it should also suit your particular interests, skills and strengths.

If you want to work for yourself, but don’t have a particular business in mind, you’re probably wondering what kind of business you should start. Fortunately, the answer is always the same: Pick a venture you know intimately, and then research it some more.

Know the Ins and Outs of the Business

Don’t fall into the trap of starting a particular business just because someone tells you, “It’s a sure thing.” Potential customers will part with their hard-earned money only if you convince them that they’re getting value, so you’ll need to know what you’re doing, no matter what the task.

Choosing a Business You Know

Starting a business in which you already have experience has many advantages: You can use your knowledge about the industry, your training and skills, and your network of contacts that might help you find financing, suppliers, and customers.

For Example:

For ten years Mark worked for several different construction companies - first as a journeyman carpenter and then as a project manager. When he got the itch to start his own business, it made perfect sense for him to start a small contracting business specializing in home-improvement. He knew the industry well, including the best places to buy supplies and what he could charge for services, and he had the required skills, such as how to estimate and bid jobs -- and it didn't hurt that he knew how to pound nails as well.

The contacts he had developed over the years were glad to talk to him about running a small contracting business, and many customers he had worked with in the past told him they'd be willing to hire him if he were working on his own.

If you’re interested in turning something you know and love into a business, talk to people you’ve worked with about what it takes to run that kind of business. Learn all you can about start-up costs, overhead and expenses, and how much revenue you can expect to make.

If you have several interests, but aren’t sure which would make the best business, consider how you can translate your strengths, education, and skills into business opportunities, and research the marketplace to see which types of business are presently needed in your area or niche.

Starting a Business in an Unfamiliar Industry

Unfortunately, the lure of quick profits convinces many people to start businesses in areas they know little or nothing about. This is a sure recipe for failure.

For example…

Kelvin opened an upscale nursery and garden supply outfit at a time when, seemingly, such a business "couldn't miss." Kelvin knew a good deal about running a small business, had a personality well suited for it, and could borrow enough money to begin. However, the business never took off, and it cost him two years and $20,000 to get rid of it. 

Why? In his hurry to make a profit, Kelvin overlooked several crucial facts. The most important was that Kelvin was certainly no ‘green fingers’ and knew virtually nothing about plants and didn’t really want to learn. Not only was Kelvin unable to chat with customers about what types of flowers grow well in partial shade or how to get rid of various garden pests, but he didn’t even know enough about nurseries to properly hire and supervise the right salespeople.

In short, Kelvin made a classic mistake – he started a business in a “hot” field because someone was foolish enough to lend him the money.

If you don’t know much about the business you want to start, but are set on it, be prepared to spend enough time learning it before you begin.