|
Thinking about starting
a business? Do you have access to plenty of capital,
or do you plan to start it on a shoestring budget? This
and many other questions will need to be answered in
carefully selecting your next business.
A business idea
may sound great in theory, yet flop in practice. Sometimes
it may, indeed, be a great idea—but you may not
have the skills or the resources to make it succeed.
To reduce the risk of that happening to you, create
a list of potential businesses in a table format to
directly compare strengths and weaknesses. On the left
list the business, and for that business have two more
columns, one which is for the benefits (income potential,
market size, etc.) and all other advantages you may
think of. In the next column to the right put all of
the obstacles - $100,000 start up cost, crowded with
competitors, etc. In this manner, list all of the potential
businesses under consideration.
Here are
some other questions you can ask yourself in the process
of selecting a business:
1) Would you pay
$10,000 to $100,000-plus to have the business specifics
laid out for you, cookie-cutter style? If so, consider
purchasing a franchise. Check out Entrepreneur magazine's
Franchise 500 listing for more information on the top
500 franchises as ranked by Entrepreneur. Just be sure
that before signing on the dotted line, you've thoroughly
investigated the opportunity, talked with at least a
half dozen franchisees who were not handpicked by the
franchiser, and understand that you'll be subject to
the rules and regulations of the franchise for the life
of the business.
2. Is there a
type of customer you'd find it easy to sell to? People
who: (Check all that apply).
- are in a particular
occupation or industry (specify).
- with a particular
hobby or recreational interest (specify).
- are in a certain
income bracket (specify).
- are of a specific
age, gender or background (specify).
For example, a
self-employed psychologist who works best with middle-aged
men might decide to market exclusively to them. That
can help him stand out from the zillions of other shrinks
hunting for clients.
3. Look at your
current work. What do your customers or colleagues complain
most about? Could you start a business that solves that
problem? A machinist for a large aviation firm heard
constant gripes from co-workers about the unavailability
of parts. He quit his job to start a home based parts
courier service and had just one customer: his former
employer.
4. Do you have
a hobby or personal interest that could be turned into
a home based business? For example, I know a lot about
breeding roses. I could run a business in which I teach
people a great new hobby—breeding roses. My target
audience would be senior citizens. They have money and
time for hobbies. And it's something you can do forever—many
of the world's leading rose breeders are over 80. I'd
conduct free seminars at senior centers to show people
the joys of rose breeding. Then individuals could hire
me to show them how to do it, just as people hire golf
instructors or piano teachers.
5. Do you believe
in a product or service that you might like to sell?
Consider the products or services you love to use. My
sister, Sandy, loves makeup and runs Let's Make Up,
a successful business in which she offers free makeovers.
The makeovers usually result in a $100-plus sale of
make-up because the customers like the result and want
to buy all the secret potions Sandy used to create that
perfect look.
Caveat: All things
being equal, service businesses are safer than product
businesses. There's no costly inventory, no theft problem,
no spoilage. Plus, service businesses are usually easier
to run from home. Perhaps Step One already generated
your perfect business, but more likely, it only helped
you identify key attributes of that business. Now it's
time to scan actual business ideas. Look for those that
match the factors you identified in Step One, but don't
be afraid to pick something that mainly just mainly
feels right. A good business choice usually appeals
to both head and heart.
Before deciding
to start a business, talk to 25 people in your target
market—catch them on the street, call people out
of the phone book, arrange a get-together of friends
of friends of friends, whatever. Describe your product
or service and ask them how likely they would be to
buy it. Beg them to be brutally honest—"Better
to know now than after I've opened the business."
Ask them what's the most they'd comfortably pay for
your product or service. How could you enhance the product
or service so they'd pay more?
Most important
of all is that most aspiring entrepreneurs put a lot
of effort into choosing their business. |
