For new entrepreneurs, it can be challenging to decide which kind of business to start. This choice can determine the outcome of your future business’s success, and the right path can depend on multiple factors like budget, time, scalability and more.
Here are some important items to consider when choosing what business to start and how to determine the right one for you.
[Read: How to Research Your Business Idea]
Budget
It’s important to plan out your budget upfront to ensure you’re able to properly fund your business idea. Start by analyzing your current financial situation and how much money it will take to get the business started. Consider the actions you’ll take to raise additional funds, whether it’s attracting investors, applying for capital or fundraising.
Next, create a financial plan to map out exactly what it will cost to run your new business successfully. For example, if you’re opening up a brick-and-mortar store, consider the costs of furniture, rent and other expenses necessary to open and run your business.
Available time and resources
Consider the amount of time and resources you will need to get your business idea off the ground. Studies show it takes two to three years on average for a business to become profitable, and during that time you’ll be expending a lot of effort as you launch and maintain your business.
Take inventory of the resources you have available to you, including online assistance from websites such as the Small Business Association and the U.S. Chamber of Commerce. Additionally, contemplate the pros and cons of acquiring a business partner to assist with the resources and share the workload.
Studies show it takes two to three years on average for a business to become profitable, and during that time you’ll be expending a lot of effort as you launch and maintain your business.
Scalability
It’s important to consider a future business’s scalability. Here are a few questions to consider when thinking about whether your business idea can grow efficiently and sustainably:
- Does your business idea meet ongoing customer demand?
- Can you consistently duplicate the product or service multiple times?
- Will the idea meet customer needs and standards as the business grows?
- Does your idea have to be constantly reevaluated or adjusted over time?
If you answer “no” to these questions, this may be a sign your business idea won’t be easy to scale.
[Read: 13 Post-Pandemic Businesses You Can Start Now]
Market size and demand
Starting a business requires research into your target market or your business’s ideal audience and consumer base. Consider how your business can uniquely solve your customer’s problem. Ask yourself what they would do without your product or service.
This is also an ideal time to research your competition and learn why consumers are drawn to services other than yours. Additionally, examine if your business idea has enough demand to become profitable. It can be difficult to break into a market with more competition than demand.
Your industry expertise
It’s important to have a basic foundation of knowledge to start a business. It also helps to have a certain expertise in your business idea before launching. Start by researching business resources and the competition to see if your business idea is feasible in the current market.
Next, brush up on your knowledge of the industry your business idea is in. Brainstorm how you can contribute to this industry and how your unique viewpoint can impact the consumers in the industry. Additionally, make the time to take relevant courses and classes or hire a consultant to assist you in the business process. You can even obtain a degree or certificate in your target industry to add credibility.
Your passion and interest
Every great business idea comes from either an interest or a passion for that particular idea, service or product. Passion and persistence is crucial, as starting a business comes with late nights, fear of failure and multiple obstacles along the way. Ensure that the people you’re working with are in it for the long haul through a mutual desire to pursue this business idea. If you start your business with an idea you’re passionate about or interested in, it can sustain you through difficult times.
Ready to start your business? Check out our step-by-step guide to help you get it off the ground.
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