It’s usually better to be a follower. Remember, the person or company who first invents a new product or service spends a lot of time and money figuring it all out. They work out the kinks, find suppliers, build a market. You can take advantage of their experience by coming in after them, especially if you offer improvements. Of course, in order to operate legally, outright copying cannot be done. You’ll find it much easier and cheaper to get established if there’s already an “infrastructure”—such as suppliers, distributors, and trade organizations.
Of course, a really bad idea is deadly. Who thought up the idea of selling furniture over the Internet? Don’t people want to see and feel the furniture they’re purchasing? No matter how well you run a business, you can’t make money selling something people don’t want to buy. (But, then again, green ketchup is a big hit. Go figure.)
There’s an old saying, “Success is 90% perspiration and only 10% inspiration.” I’d say that’s giving inspiration too much credit. By the way, does anyone want to buy a stack of old business cards that say: “Rhonda Abrams, Charitable Giving Consultant”?
Choosing the Right Business
Many people dream about starting a business one day but haven’t yet taken the plunge. One thing holding them back is that they don’t know how to decide if a business is right for them. If you’re one of those people, read on.
Over the years, you may have had hundreds of ideas for businesses—or perhaps you’ve had very few.
Sure, you know there are plenty of possible businesses you could start. After all, family and friends keep suggesting ideas: your sister says you should sell real estate, your exercise partner wants you to open a gym, and your neighbor swears you can make a fortune selling herbal supplements.
But now that you’re actually going to put your toe in the entrepreneurial waters, you’re stymied. How do you evaluate whether it’s a good idea or just so-so? How do you know if it will make money?
Some people think choosing a business is just a matter of trusting gut instinct. But that’s not always the best way to judge. After all, you’ve got a lot at stake. This is a big decision—a much bigger decision than accepting a job. After all, if you take the wrong job, you can always quit and look for another. But starting a business is a huge commitment—it takes a lot of time and determination, and you risk your own money.
Consider these five criteria when evaluating a business idea.
1. Can succeed as a business. You probably enjoy doing many things. They might suit your talents and interests; they might even give you a great sense of satisfaction and accomplishment. But if you can’t make money doing them, there’s a word for these kinds of activities—hobbies. In fact, the Internal Revenue Service refers to businesses that consistently fail to make money as “hobby businesses.” (And you don’t get to deduct expenses with a hobby business, so watch out!)
2. Can meet your financial needs and goals. Different people have different financial situations. One would-be entrepreneur may need to support a family, while another would be happy to make some extra money to supplement existing income. Keep your financial needs in mind when choosing a business regardless of your area of interest.
3. Can meet your personal needs and goals. Just as different people have very different financial needs, they also have different personal requirements. One person may be raising children and need a flexible work schedule; another may be able and ready to work twenty-four hours a day, seven days a week to make their dreams a reality. When considering a business, examine how much time you will need to put in to be successful in that endeavor, and make certain it fits with the other demands in your life.
How do you evaluate whether your business idea is a good one? How do you know if it will make money?
4. Fits your interests and abilities. What interests you? Animals, accounting, art, architecture? Naturally, you want to find a business that holds your interest. Of course, it’s not enough to just be interested in something, you also have to have the skills to be successful. Just be sure to keep your ideas and expectations realistic. I like driving fast, and I’m a good driver, but that doesn’t mean I can become a professional race car driver.
5. You can get started on it. When I say “get started,” I don’t necessarily mean you should go out and get your first customer or ship your first product tomorrow. I’m talking about taking some real steps to put the process of starting your business in motion. This might mean taking some classes to learn essential skills, getting a job in a related business so you can learn about the industry, or starting to develop your business plan. It means doing something with all those thoughts and ideas swirling around in your head.
Remember, millions of Americans own their own businesses. If you’re dreaming of one day joining them, take heart in knowing there’s a business concept out there that’s right for you.
Follow Your Passion?
Ever dream about starting a business where you could pursue your hobby all day? You’re not alone. Many books urge career-seekers to “Do What You Love and the Money Will Follow” or “Follow Your Bliss.” While this may (or may not) be good advice for people looking for a job, is it a sound idea if you’re starting a business?
I don’t need to tell you that running a business is different than being an employee. When you own a business, you can never quite escape its problems, payroll, and accounts payable. Do you want to turn your passion into the source of those problems?
Of course, it makes sense to start a business that interests you. No one wants to spend all day doing something completely boring. I’m not advocating for anyone to start a business they dislike. This question is different: should you turn something you already love—fishing, gardening, antique shopping—into a full-time enterprise?
First, examine the pros and cons of turning your hobby into a business:
Advantages
Disadvantages