3 Pointers for Choosing a Business to Start
Q: I love kids and would like to start a service-oriented business. My head hurts from trying to decide what to do...children's day care, after-school care, exercise gym, summer camp. Could you give me some advice?
A: You've made a great start by identifying the types of businesses you'd like to own. Here are three steps you can take to narrow down your choices.
1. Find your niche. Like many entrepreneurs in major cities, you must decide which economic level and geographic community you'll serve. For example, you may choose to provide after-school care for low income children in one part of the community, or open a high-tech fitness facility for youngsters in a more affluent area. Look for an underserved niche--one in which there's not a long list of entrenched competition--and then do some research to determine if it represents a viable market for you. If you encounter large numbers of competitors in every market area, it will be your job to position your business against them and create your own unique niche with an innovative business concept and list of services.
2. Follow your heart. Consider the role you plan to play in your new business. Do you enjoy being hands-on or is administration more to your liking? Think about the structure of each type of business you might start. Running a summer camp and overseeing counselors and student activities, for instance, might cast you in more of an administrative role than would a small homebased daycare center.
3. Build a financial model. Each of the businesses you're thinking about starting will have different capital investment requirements, sales potential and profit margins. How much do you plan to invest in your new business? Can you qualify for a business loan or other financial assistance? And what are your personal financial goals? Build hypothetical financial models for several of your business concepts and compare them. Take into consideration the difference in start-up costs between founding an exercise gym and providing after-school care, for example. Then look at the sales and net profit potential for each after expenses for the facilities, staff and equipment are factored in.
By following your heart and your head in this way, you'll find that sweet spot where what you truly want and the world of possibilities meet.