One of the scarier moments in an entrepreneur's life occurs when he or she chooses what business to go into. It can feel like Let's Make a Deal: "If I choose Door #1, it could be a fabulous fortune or a pile of dung, and until the curtain is pulled, there's no telling which."
Fortunately, choosing a business doesn't have to be that random. Here's a three-step plan for avoiding the dung piles and finding a good business that's right for you. Because when choosing a business, one size definitely doesn't fit all.
Step One: Answer These Questions
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 franchisor, 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
- with a particular hobby or recreational interest
- 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 homebased 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 homebased 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.