Nowadays, many people are fed up with traditional nine-to-five jobs and having to put up with a nagging boss. By comparison, the idea that they can work for themselves seems extremely appealing, both in terms of having a more proactive role in their career development and fully enjoying the results of their hard work and long hours. But, there’s a number of challenges that prospective entrepreneurs have to overcome before they can start growing their business. One of the most important decisions that they have to make is what business or what type of company they should start. Here are some ideas to make things easier when it comes to choosing the best business idea.
Follow your passion
Do what you love, and you’ll never work a day in your life. This quote has been repeated by motivational speakers on numerous occasions. And although it might seem like a romantic notion from an Instagrammed reality, following your passion is actually something that you should take into consideration when making a decision about your business. It’s only logical that something you’re interested in, that fits your temperament, and that you’ve got skills and strengths for can pan out exactly as you like. Moreover, if you really believe in a product or service that you’re about to market, you’ll be more likely to actually sell it. Even when you go through a rough patch, it will be easier for you to fight and persevere if you genuinely love what you do. For example, PayPal was voted one of the 10 worst business ideas of 1999, and that didn’t prevent Elon Musk and his business partners from pursuing their idea and creating a multibillion-dollar company.
However, before you make your final decision, it’s essential to do your research properly and see whether your brainchild has the chance of succeeding. The first step is determining product/market fit, that is, whether your product or service satisfies a strong market demand. In other words, no matter how passionate you are about a concept, it will fall flat if nobody else shares your enthusiasm. This is why you need to establish the following:
Is there a demand for your product or service?
Is there someone who thought of it first? Of course, it’s very hard to find a niche in which your idea will bring something revolutionary, but you need to understand what you’re up against. If the existing company is better funded and has more resources, then it can be hard to compete for your market share.
How competitive a is particular market? It’s great if there’s a strong demand for your product or service, but it can be pretty stressful and tiring if you constantly have to outperform a number of fierce competitors.
Have you thought everything through? Sometimes prospective entrepreneurs bite off more than they can chew, mainly because they fail to analyze everything. Many have fallen victims to the surprising costs or the underestimated amount of time and energy required to build a solid foundation for their business.
Still, if you want to remove at least a small portion of risk from your entrepreneurial efforts, it’s good to know that franchising offers some of the best business ideas out there.
Can it make a profit?
Last but not least, it’s money that makes the world go round and if the business that you’re eyeing can’t help you improve your finances, then it isn’t worth all the efforts that you’re willing to put into it. To make sure that your company will be profitable, take the following into consideration:
Pick a product or service which has the potential for a repeat buy. In other words, the best businesses are those which allow you to build long-term relationships with your customers. If we bear in mind that 80% of your future profit comes from your existing 20% of customers, it’s clear that loyalty pays off, and that repeat purchases should be the cornerstone of your business.
Having a high profit margin is a must if your working capital flow isn’t high because that’s the only way to operate while your business is still growing. Basically, this will allow you to self-finance your growth without having to apply for expensive loans. Many inexperienced business owners fall into the trap of trying to develop their company by selling affordable products, thus jeopardizing their cash flow.
You need a team of reliable people to support your business idea right from the start. Hire enthusiastic and driven employees who are eager to contribute to the growth of your company. Don’t rely only on your friends and family who promised to lend you a hand until you can stand on your two feet. You need fully dedicated people ready to work extra hours.
These three factors are crucial if you want to start a successful business and thrive.