Introduction
Making the right choice when deciding which small business to start is crucial because it is one of the most important decisions you will ever make. That is because starting a business will have an impact on your personal time and finances. You will need to do a thorough evaluation that calls for in-depth understanding of things like market, the industry you want to enter and the goods and services you want to provide. Here are five things you need to consider when deciding the business to start.
The business idea
Finding a solid business concept that can be implemented successfully should be your first step. It’s easy to become excited about your business idea and start to build castles in the air.Thus,you need to to make an effort to be as impartial as you can.Remember that in order for people to part with their money for your business concept, it needs to be transformed into a product or service that they value. Your business idea must address a need in the market. It must be something consumers require. An offer so special that it will force people to give up their hard-earned cash in exchange for your product or service. Money is abundant in this world, Finding a way to channel some of that money towards you is the key.
Profit potential
There is no sense in starting a business, no matter how excited you are about the idea, if it will not enable you to generate enough income for yourself. One reason we go into business for ourselves is a chance to make money. Regardless of the product or service you decide to sell, you have to be able to sell at a price that is high enough to make a profit but low enough that people will afford to buy it.So work out whether you can make sufficient profit from the business to keep it running and support yourself.
Product or service
At the end of the day your business will offer products or services to customers. A service business is typically less expensive to start since there is no inventory to purchase or merchandise to stock. You can even start a service business from your home. Service businesses are mostly about selling your time and knowledge.
In contrast, the goal of a retail business is to turn a profit through the resale of certain products which may involve a large inventory. If on the other hand you decide to manufacture a product, you may need expensive machinery or equipment.Therefore,your choice of a business to start will depend in part on your ability to raise capital and your skills set.
Source of capital
Making a decision about how you will finance your business is another thing to consider.Dertermine the funding strategy for your business idea. What is your existing financial status? How much capital will you need to start the business? How are you going to raise the money? Will you find an investor or obtain a bank loan? For a startup, you want to raise money from friends or family. Banks do not usually give loans to startups with no track record. Select a business that you can finance with less hazardous capital such as your own savings.
Market size and demand
It is always wise to conduct consumer and target market research before starting a business. Is there enough market for your business idea to be profitable? What is the customer base and where are they? How well are similar businesses doing? Consider how many competitors are already in the market both locally and nationally. Entering a market where there is more competition than there is demand might be challenging.
Conclusion
Being a business owner comes with challenges, and there are no assurances that your new business will succeed. You will however have a better chance of success and reliable revenue flow if you do an initial analysis of your business idea and how viable it is in the market. Every business has a certain potential for success which is realized when the various components are thought through.Therefore,be as objective about your business idea as possible and do some background work before you commit.