Eight Things to Consider When Choosing a Business

by Ed Martin on September 17, 2009

Once you’ve decided to take the plunge, the next step is to decide what kind of business you are going to have. There are thousands of choices. For some, the answer is simple, but others struggle to figure out what their startup is going to be. If you went through the lists I suggested in Ready to Take the Plunge? and Do You Have What It Takes to Be a Micropreneur? you’ll have some tools to use to help you decide. Then consider these eight points when choosing your business.

Follow Your Passion
Consider something you know and love, something that suits your strengths and personality. Do you want to stay in the industry you are in and already know, or are you looking to move into something new? Don’t get stuck starting a business you don’t really care about just because you are comfortable with it or know about that type of business. In the long run you won’t be happy. But understand that following your passion blindly does not guarantee success. Plenty of people love to do things that don’t translate into business success.

Pick something that matches your lifestyle. Don’t work at home if you need to be with other people. Don’t go into a people business if you want to stay in the Batcave. If you need a specific schedule because of family commitments, don’t go for a business that requires a 24/7 involvement.

Meet a Need
When you’ve got some ideas, consider if they meet a need. Think of things that could improve your life, or improve the way you work now. Successful businesses find a need and fill it. Sometimes the need is fleeting—gotta have that latest gadget! Here you aren’t looking for a long term commitment. Get in and get out before the novelty is gone, then move on to the next hottest thing. Its a tough racket, but some people thrive on it.

Another approach is to look for tried and true business ideas and steal, I mean adapt them. You don’t need to re-invent the wheel to succeed. Look for ways to do something better or differently. Find that need and fill it. By following a proven model where others have already succeeded you can avoid costly mistakes and make better informed decisions.

Consider the Competition
Are they out there? Do some serious checking of what the market has and what the competition is doing. Competition isn’t necessarily bad. It could indicate a thriving market. What you have to do is to differentiate yourself, find a way to be unique so your business is not not lost in the crowd. It is okay to copy good ideas. Look for ideas in one market you can use in another. Maybe your town doesn’t yet have the latest hot craze coffee shop or bike shop like the next town over, but it could use one.

Growing or Slowing
When you have an idea, take a look around to see how others in the same business are doing. Growth is good! Drop ideas where you see lots of businesses failing. You can see what those are just by observing what is around you and by doing some snooping on the Internet.

Money to Start
The kind of business you can start in large part depends on how much money you have to put into it. Most of us don’t have deep pockets (or at least deep full ones) so we have to reel in those grandiose schemes. Not many can go out and setup a factory, but we are talking microbusinesses here anyway right? Even a storefront is out of reach for many. The beauty of the Internet is you can open a store without all the startup costs for a real building. Get online for a fraction the cost of a bricks and mortar store.

What is your risk tolerance? You must have some if you are even considering starting a business. Especially if you are giving up a job to go out on your own. What are you willing to give up? Some risk is okay, and bigger rewards to usually require bigger risk, but be sensible. Don’t bet your house or health on a new business. If you want to cut down that queasy feeling in your stomach, think about following a proven path. Consider buying a business. It will take lots of homework to check it out and might cost more than starting on your own, but it is a known commodity. That is one of the appeals of buying a franchise.

Sanity check
Ask people if your idea makes sense. Check with friends and family, any entrepreneurs you know. Check out online communities that cover the market you are interested in. You don’t have to tell them what you are planning but you can see if there is an interest in what you want to do and a need you can meet. If everyone says your idea is crazy, at least you can go forward knowing that. It is wonderful to be passionate and follow what you love, but you’ll have a better chance of success if you mix in a good dose of reality testing along the way. Good Luck!

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