What Kind of Business Should I Start?
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For some entrepreneurs, the types of businesses to start are obvious from the get-go. For others, a little more soul-searching might be in order. And finding the best answer to that question you keep asking yourself—”What kind of business should I start?”—certainly deserves a good bit of attention.
Because deciding what kind of business to start is such a weighty decision, it only makes sense to consider all the possibilities and to scrutinize multiple options. But don’t settle for some one-size-fits-all quiz to tell you what kind of business you should start. Deciding on what type of business to open will depend on your own unique experience and preferences.
To help, we’ve compiled a six-step guide based on the experience of entrepreneurs who have successfully answered, “What kind of business should I start?”
Here are your six questions to ask when deciding what kind of business you should start.
What kind of business should you start? Ask these 6 questions
Based on the experiences of entrepreneurs who have successfully decided what kind of business to start, we’ve come up with six crucial questions to ask yourself to determine the perfect small business idea to act on. So, to answer the ultimate question of what kind of business you should start, first tackle these questions. With these six answers, you’ll be able to localize the best business to start, based on your own individual goals and experiences:
1. What experience do I have?
Ashley Hill, founder and CEO of College Prep Ready, says she started her business because she had personal success financing her college dream.
“I researched the challenges that students and families are experiencing with paying for college to help me refine my core message and services,” she says.
From her experience and research, she learned that there was a market for the knowledge she had to offer. With Americans in trillions of dollars of student loan debt, Hill understood the pain points of students and parents when navigating the college application and financial aid process. She took this understanding and converted into a business that assuaged the difficulties she had witnessed.
Similarly, Victoria Garlick, CEO of event services matchmaking website Air Events Global, also believes in choosing a business based on experience and skill set. Hers is built off of a 20-year career in event planning.
“When deciding on what type of business to start, I looked at my personal and professional history and what I could contribute as an event director,” says Garlick.
2. What am I passionate about?
Another common recommendation entrepreneurs shared with us is to find and follow your passion. Nick Ehret, founder of Varieteas, is passionate about tea. So, he built a successful business by curating specialty teas for his monthly subscription boxes.
He’s a premium tea aficionado who knew he could transform his passion into a business. His advice to people when picking a business to start is to “[choose] something you are extremely passionate about because you will be working with it all day, every day.”
Brian Davis, CEO of Spark Rental, subscribes to a Japanese concept called ikigai. It means “reason for being.” In this context, Davis says, a truly good business idea is at the intersection of four things: what you love doing, what you’re good at, what you can be paid for, and what the world needs.
3. What problem can I solve?
We all know that necessity is the mother of invention, but applying that knowledge to the business world hasn’t always been the next step. An entrepreneur who converts that need to a business plan could swiftly become a successful business owner. As any consumer can tell you, problems and pain points abound in just about any industry. Finding out what these difficulties and inefficiencies are—and coming up with a business plan to fix them—is a sure-fire way to step out on the right business path.
Take the dog bed company Big Barker, for example. This company generated $4.75 million in revenue in 2016. Eric Shannon, founder and CEO, saw a glaring problem in the market for dog beds. “I started Big Barker because there was a huge problem that large dog owners had to deal with. They had to replace their dog beds once or twice a year because they weren’t made well enough to support the weight of a big dog.”
Shannon adjures would-be entrepreneurs to solve big problems: “The bigger problem you solve, the more potential your business has.”
4. What is my lifestyle preference?
Your business goal may or may not include revenues in the millions and employees in the thousands — and that’s OK. Perhaps what’s most important to you is choosing a business model that supports your ideal work-life balance.
Antonella Pisani was a VP of global ecommerce for Fossil and held leadership roles at JCPenney, Guitar Center, and ProFlowers. But her primary interests were in travel and photography. Because she knew she would prefer mobility in order to pursue these interests, Pisani knew she needed a flexible business model that wouldn’t require space or inventory.
This was the impetus for creating her websites, Official Coupon Code and FACT Goods. These flexible, web-based businesses have allowed her to work from Antarctica, the Arctic, Bhutan, Morocco, and other countries.
5. How much capital do I have access to?
The lean startup wasn’t a fad after all. In fact, the concept grew from one inevitable and enduring truth about starting a business — people don’t want to risk their life savings on a business idea they have yet to prove or make profitable.
A great example of this fact is Robert Lomax, who founded an educational services firm, RSL Educational, based on needs he saw in his day job as a teacher. Not only did his teaching experience help him see gaps in the educational books market, but it also gave him the ability to keep his job and develop new products. Because he had a steady income as he founded his firm, Lomax was able to avoid taking on debt and minimize risk while he grew his business.
And he wouldn’t have done it any other way. According to Lomax, his approach is ideal because it allows you to “take your time and explore your ideas properly.”
6. What ideas can I test easily?
Facebook CEO Mark Zuckerberg once said, “Move fast and break things. Unless you are breaking stuff, you are not moving fast enough.”
In other words, your business idea should be something you can prove (or disprove) early on. If you’ve got no experience in the trucking industry, starting a logistics company would be costly to test out. Instead, think about the lower hanging fruit in industries that interest you.
Marc Roche, co-founder at Annuities HQ, a Canadian online resource on retirement-planning products, suggests doing preliminary research with family and friends, and then move on to the Internet for some more digging.
“Don’t be afraid to try a have a few ideas in mind to ‘test drive’ before you choose a direction,” Roche says. “Do some basic research online and get a feel for what idea will be worth the time and effort of developing into a business.”
The article What Kind of Business Should I Start? originally appeared on NerdWallet.