Contents
Should You Start a Business?
Types of Businesses
How to Write a Business Plan
How to Get Funding for Your Business
First Steps: Incorporation and More
How to Get Your Business
Off the Ground
How to Market Your Business
How to Manage Your Business’s Money
How to Grow Your Business
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Types of Businesses
Your success in starting a business will likely depend upon:
- Your level of personal expertise in the business sector you choose
- The product or service you intend to offer
- The competition
Evaluate Your Expertise and Passions
Often the best way to identify which type of business to start is to examine where your expertise and passions intersect. Expertise is your level of knowledge and familiarity with a specific subject. Passions are the pursuits that you find personally inspiring or enriching. Starting a business that combines your expertise and passions is a good idea because:
- You’ll have insight into the needs of a market you know well
- You’ll be personally—not just financially—invested in the success of the venture
To help identify where your passions and expertise intersect, consider these factors:
- Hobbies and interests: What do you do for fun? What activities inspire you?
- Past experience: Which of your jobs or volunteering experiences have you enjoyed the most? What specific aspects of those jobs did you love?
- Knowledge and education: What subjects do you think you excel in? What do you have a degree in?
Decide What You’ll Offer
All businesses tend to offer at least one of three things: products, services, or consulting.
- Products: Businesses that sell products—tangible goods, ranging from eggs to automobiles—make money by manufacturing products or buying them readymade from a wholesaler (a go-between who connects manufacturers and resellers) and then reselling them to customers for a profit. Such sales can be made via a retail storefront, by wholesalers to other retailers, or online. You also can manufacture products yourself and let others sell them. One advantage of selling products is that you can sell large quantities in a short amount of time. If there’s a particular type of product you know a lot about or take interest in, product sales may be for you.
- Services: Service-oriented businesses offer customers a service—such as housecleaning or massage therapy—rather than a product. Service-oriented businesses are the most popular type of startup because they typically require less money to establish, as there is no inventory to stock. But the amount you earn is often directly proportional to the amount of time you invest. With today’s consumers spending more for services in order to free up their own time—paying for grocery delivery, professional organizing, and laundry services, for example—services are a growing area. If you have a particular skill that you enjoy using, a service business could be for you.
- Consulting: Consulting businesses provide other businesses and consumers with information and advice, generally billed on an hourly basis. Consultants are expected to be experts in their field and to use their experience to help clients do something better, whether it’s designing landscaping in their backyard or hiring a high-level executive. Unlike service businesses, consultants typically sell their advice or recommendations, not their assistance, in completing the work. If you enjoy helping others solve particular types of problems, such as resolving computer malfunctions or planning events, consulting could be a good fit.
Research Your Market
Every business serves a group of people with a specific need; together, those people make up the market for that business. No matter what else you do, you need to be sure you have a large enough market, meaning enough potential customers, to support your company. To determine whether that’s the case, study your customers by asking yourself the following questions:
- How old are your target customers (the people most likely to buy from you)?
- Are they individuals, families, or businesses?
- Are they lower-, middle-, or upper-income?
- What are they used to paying for products or services similar to what you offer?
- Why will they buy from you instead of your competition?
- How many of your target customers are there? (Check under “mailing services” or “mailing lists” in the phone book for companies that can answer that question.)
Once you’ve answered these questions, multiply the number of potential customers you estimate you have by the amount of money you expect them to spend on a monthly basis. Then multiply that by 12 months. How does that number look to you as the most you could ever make in a year?
Survey the Competition
Your competitors are the businesses that are currently serving your potential customers. They’re selling either exactly what you plan to sell or an alternative. Either way, to be successful, you’ll have to tackle the challenging task of convincing their current customers to do business with you instead. Knowing more about the way your competitors do business can help ensure your company’s success. Studying competitors carefully can help you strengthen your business and determine how to persuade their customers to become your customers. Learn important information about competitors by answering the following questions:
- What do each competitor’s customers like most about doing business with them?
- What do their customers like least, and what would they change?
- How does your competition’s pricing compare with yours? If theirs is lower, how will you overcome customers’ resistance to paying more to do business with you?
- Have your competitors tried anything, such as a new product or service, that failed?
- How much business do your competitors do in a day? How about in a week?
- How customer service–oriented are your competitors?
- How strong is their marketing?
- What percent of the total market (the total number of customers buying your product or service) does each competitor have?
- What percent of the market can you capture realistically? Is that enough for your business to succeed?
| Acknowledgments & Disclaimer |
