Are you one of the thousands that are ready to take the entrepreneurial plunge and pursue the great entrepreneurial dream? Before rushing into something, there's a lot to consider. This is a major life decision, so take the time and effort to carefully consider your options and choose the right path.
Your Passion
First, choose a business that suits your passion and true skills. As a business, owner, you'll log more hours then you ever dreamed, so if you do something you love, you'll have a much better chance of success.
Lifestyle does matter. Do you want to work out of home? Consider an e-commerce business. Do you want flexibility in your hours? Consider "project-oriented" businesses where keeping specific hours is not critical. If you enjoy community activities and interacting with people, a retail operation might be for you.
Don't let your life plan get put on hold for a business plan, or your dream business could quickly become a nightmare. Many entrepreneurs end up with a business they are all too happy to exit from because they did not clearly think through the role of the business in their life.
There is more then one way to "start" a business. Options include starting a business from scratch, opening a franchise or buying an existing independent business or franchise.
Buy or Build Form Scratch
There is quite an upside argument for purchasing an existing business. It can be much less risky, and you may see a profit sooner than if you start a new company. Existing businesses generally have an established customer base, a name or brand, relationships with venders, experienced employees and proven systems.
Buying an existing business may or may not be for you. Purchasing a business is has some risks too. Your success depends on how well you analyze the business you ultimately buy. As you search for a business to buy, use multiple approaches in your search. Call a business broker, your attorney, your accountant, your banker, your friends and neighbors to come up with the perfect match.
The advantage of starting a new business is that most of the time you don't have the problems with reputation that an existing business may have developed. The disadvantage may be on financing.
Risk Tolerance
Be aware of your tolerance for risk. If you create a truly revolutionary concept, the upside of your business could be tremendous. But with the potential for success, the risk involved also goes up. There are usually fewer risks involved in replicating a business idea that's already in the marketplace and just needs a little tweaking for differentiation. When you purchase a franchise, the risk-reward scenario is perfectly illustrated. This is one of the lower risk approaches to sowing your entrepreneurial oats, but the potential reward also may be capped.
Financing
Carefully consider your business financing requirements. Some businesses are much less capital intensive to start than others. For example, with many consulting businesses, all you need is a business card and some basic marketing materials to support your qualifications. You're likely to need more funding up front if you're purchasing an existing company rather than starting up your own.
However, if you need outside financing, getting money for an existing business is generally easier than financing a start-up, due to the fact that the business has a proven track record. Starting businesses that offer the promise of accelerated upside potential, such as high-tech companies, are an option. But remember, these fast-growing companies also require significant amounts of outside capital in the early stages.
Market
Before you even think about starting your business you must find out if there is market for your business idea. Because finding out if you have customers who are willing to pay for your products and services will lower your risks.
If you don't understand your market first, you can easily open the doors of your new business and have no customers. But if you know there is a market your less likely to run into this problem.
So let me wrap this up. In order to pick the right business for you, you should think of your passion; decide if you want to buy an existing business or if you want to start from scratch; determine your risk tolerance; your financial status; and lastly find out if there is a market for your product or service.
When all these five pieces fit together, it's like magic.
