Coming up with a business concept is fraught with challenges. In this chapter we’ll look at some basic guidelines, before providing an overview of global business trends. Here are our top ten things to consider when deciding on what business you should start.
1. How knowledgeable are you about the business you are considering opening? What
do you know about the products, services, and market? Look at businesses that you know very well, and not just from a technical perspective, but from a market standpoint.
2. Make sure you have all the necessary skills to run the business (e.g. not just those
required to manufacture the product, or deliver the service). Remember no matter what the business is, you will have to do some selling.
3. How much money do you have to invest? Businesses such as graphic design and
consulting require far less start-up capital, for instance, than opening a retail establishment. Buying a franchise can be a good idea, but do you have enough capital for both the purchase and the initial running costs?
4. Think about what you enjoy doing, and what you are passionate about. You are more likely to stay the course and be successful, if you enjoy what you do. However, be careful that your passion for your hobby doesn’t blind you to the business potential it has. You may be an excellent writer of poetry, but making a living from it is all but impossible.
5. Decide what type of selling might be involved. A retail store for instance allows you to be a little like a spider in its web, waiting for people to come along before interacting with them. Being a consultant on the other hand, means cold calling and attending business mixers. Remember selling is ALWAYS a major part of any business.
6. How competitive is the field you want to enter? You may have worked for many years
as a lube technician and feel that you have what it takes to launch your own business,
but how many other oil and lube businesses are there in your town, and is there enough
business for another? Analyze your market and see how saturated it is. Remember, you will be trying to take market share away from existing businesses, unless your business is the only one of its kind in the locale.
7. Look for where there is a gap in the market - where there is unfulfilled demand. If you are looking at the retail market, is there a product that people currently have to travel a long way to purchase? Consider the example of social media consultants; as the business world started to see the potential for marketing their products via Facebook, Twitter and other sites, there was no one around to tell them how to go about it. The gap was quickly filled by entrepreneurs who saw a need that was at that time unanswered.
8. Look at market trends and see what is becoming increasingly popular, and what
may be coming to the end of its popularity. For instance, now would not be the time to
open a video rental store, or one selling CD’s or DVD’s. If, however, you can develop apps (or perhaps be a reseller) for Smart phones then you’d be in a growing business. In 2010 the industry was worth around $1.7 billion, within the next three years it is predicted to grow to $3.8 billion. Now, that’s a business to get into. Later in the book, we’ll be taking a look at current business trends in more detail.
9. Be wary of going into any business where consumers make their buying decisions
based entirely, or primarily on price alone. As someone new in the market, your competition will have deeper pockets than you and you could watch your profit go down the drain as they undercut your prices. This is where service businesses have the edge, as people don’t choose who they work with solely on price.
10. Come up with several business concepts and test them out. The best thing you can
do to prevent yourself starting a business that simply doesn’t work for you, is to work in it for a while. If, for example, you are considering opening a coffee shop, go and work in one while you are writing your business plan. Experience the business first-hand and you will not only learn a great deal, but you’ll see if you enjoy the environment.
