Three Pointers for Choosing a Business to Start
You've got a host of good business ideas. Now, how to figure out which one to start?
Q: I love kids and would like to start a service-orientedbusiness. My head hurts from trying to decide what todo...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 typesof businesses you'd like to own. Here are three steps you cantake to narrow down your choices.
1. Find your niche. Like many entrepreneurs in majorcities, you must decide which economic level and geographiccommunity you'll serve. For example, you may choose to provideafter-school care for low income children in one part of thecommunity, or open a high-tech fitness facility for youngsters in amore affluent area. Look for an underserved niche--one in whichthere's not a long list of entrenched competition--and then dosome research to determine if it represents a viable market foryou. If you encounter large numbers of competitors in every marketarea, it will be your job to position your business against themand create your own unique niche with an innovative businessconcept and list of services.
2. Follow your heart. Consider the role you plan to playin your new business. Do you enjoy being hands-on or isadministration more to your liking? Think about the structure ofeach type of business you might start. Running a summer camp andoverseeing counselors and student activities, for instance, mightcast you in more of an administrative role than would a smallhomebased daycare center.
3. Build a financial model. Each of the businessesyou're thinking about starting will have different capitalinvestment requirements, sales potential and profit margins. Howmuch do you plan to invest in your new business? Can you qualifyfor a business loan or other financial assistance? And what areyour personal financial goals? Build hypothetical financial modelsfor several of your business concepts and compare them. Take intoconsideration the difference in start-up costs between founding anexercise gym and providing after-school care, for example. Thenlook at the sales and net profit potential for each after expensesfor 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 theworld of possibilities meet.
Entrepreneur Editors' Picks
This Co-Founder Was Kicked Out of Retailers for Pitching a 'Taboo' Beauty Product. Now, Her Multi-Million-Dollar Company Sells It for More Than $20 an Ounce.
Have You Ever Obsessed Over 'What If'? According to Scientists, You Don't Actually Know What Would Have Fixed Everything.
After He Was Fired From the UFC, This Former Fighter Turned His Passion Into a Thriving Business
Most People Don't Know These 2 Things Are Resume Red Flags. A Career Expert Reveals How to Work Around Them.