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Choosing the Right Business


There are literally thousands of types of businesses you could choose to operate. Making the choice can be very difficult. You don't want to make a major commitment of time and money to something that is not something you will love, or that is not financially viable.

One way to start is to look at lists information about different types of businesses to help explore possibilities; however, all lists have limitations. They are nice to scan, through -- and great if they describe precisely the business you want to start, but even lists with hundreds of possibilities barely scratch the surface. I have put together a resources on a variety of businesses. It is far from comprehensive, but is an information resource that I am constantly building on.

Certainly, the most common advice is that any business you operate should be something you love. Even if you are certain about what you love and/or want to do, finding the right business that best utilizes your skills and interests needs to be considered carefully. For instance, someone who loves art can be an artist, run an art gallery, do restoration, or teach art. Each requires different skills, but all fit with loving art. Part of knowing yourself is finding the right fit for what you find fun to do.

For those of us have do not have a clearcut passion, deciding what is the "right" business is often a major stumbling block in taking the big step. Most of us have an assortment of skills and interests that are not focused towards one particular field of endeavor. In some ways we are blessed because a wide variety of things can make us happy, but it can also provide confusion when there are so many different directions one could go. How do you make the choice?

It is not uncommon to get pulled into scams because of this indecision. Potential entrepreneurs know they want to take the big leap, but can't decide. Along comes a friend or an ad with promises of making riches overnight using their program. If the deal seems too good to be true, it is. No one is making money overnight. A successful business is built slowly based on a well-designed business plan.

So, how do you know what kind of business to start? You need to start with writing down what you personal goals are for the business as a start. Are you seeking certain income level? Do you want to grow into a major company or will something small be sufficient? Is this a means of making money so you can do other things or are you seeking a business that is fun in-and-of itself? Describe the ideal business as thoroughly as you can.

You next step involves using a technique common in strategic planning -- SWOT analysis. What you should have at the end of this assessment is a clear set of attributes a business must have to be "right" for you. The next step is to consider how to choose the right one.

This is where you need to get creative. Hopefully, by this point you have some sense of the general area you would like to work in, be it sports, computers, or any of the other hundreds of possible industries. Take the SWOT analysis developed earlier and apply it to the industry of interest. What businesses in this industry are best considering your strengths and weaknesses? What businesses are best for the opportunities and threats that are confronting you?

While brainstorming with a friend is useful at the preliminary stages to identify possibilities, this is where you really need to make your own decisions. You are the one who has to live with this business day-after-day for years to come. It is a major life decision. It is, of course, always possible to close or sell a business, but if you are going to put a positive effort into it, it needs to be something you are comfortable with committing to for a significant period of time.

To make the decision, write down your SWOT analysis, your long-term goals, and your preferences from the choices listed above. Take a moment to peruse my list of business characteristics that may be an additional factor in your decision. All this information you have compiled should give you a relatively detailed overview of the qualities you need for a business to have for it to be satisfying.

All these decisions can be overwhelming. For people who hate to make decisions, it is a near impossibility. But decisiveness is a necessity in entrepreneurship. If that is one of your weaknesses, perhaps you need to team up with someone else for this venture -- or reconsider entrepreneurship.

If you know what you want to do, but are concerned about the financial aspects, write a simple business plan. While time consuming, it will give you all the information you need (given that you are realistic in your planning) to tell you what your financial obligations will be. If the financing looks like it will be a problem, visit my financing information to see what options may be available to you.

If you feel that you are ready to go, move on starting a business. And, remember to have fun!



Business Plan

Ask any business expert for advice on what is most important for the success of a business and the vast majority will cite writing and using a business plan as a critical component for success. Almost every lender will require some type of plan before lending any money to a business. However, ask most new entrepreneurs if they have written a business plan and a common answer will be "no." Why is this advice, noted prominently in all startup literature, not being heeded?

Many small business owners run their businesses without a written plan. Would you ever consider going on a journey without determining what supplies you might need, the mode of transportation or how to take care of things at home while you're away? Of course you wouldn't. Why then would you set off on one of your most important adventures, starting or managing your business, without a clear picture of what's ahead and what resources you will need to get there?

Most entrepreneurs will blame not having a plan on the time, knowledge, and research needed to put it together. Yet business plan writing advice is abundant, almost too abundant. Certainly, sorting through all the advice, some of it contradictory, can be quite intimidating. If a plan is written, it usually is in response to a financial institution's request and is formatted to fit the financial institution's needs. Once the funding is obtained, the plan is shelved until the next round of funding is needed. This is a mistake.

A well-written business plan is the story of how you are going to run your business. It is your opportunity to chart the path for where you want to go. Starting a business without a plan is like going on a trip without a map or a destination in mind. It might be a fun trip. Then, again, it might not. And, running a business is not a simple jaunt. You need that map and destination already in mind if you are to stay in business. However, writing that map and destination for your business does not need to be a complicated process.

Let's take a look at what a good business plan should include. As I mentioned in my feature on general planning, "a business plan is used when one is starting a new business or a new process or product within a business. It includes not only a description of the new business, process or product, but also a discussion of how one plans on managing the marketing, development, production, and financing of this new venture."

Your business plan establishes your checkpoints and goals along with setting a timeline for accomplishing certain objectives. Knowing who the plan is written for will help in making it a better plan. For yourself, you may be able to be more succinct and goal-oriented. For a lender, you will want to be bottom-line about how you are going to generate a profit. However, all have certain essential components.

The essential components of a business plan are:

Executive Summary

A concise overview of the entire plan along with a history of your company.

Marketing Analysis

Illustrates your knowledge about the particular industry your business is in, and presents general highlights and conclusions of any marketing research data you have collected.

Company Description

How all of the different elements of your business fit together.

Organization and Management

Your company's organizational structure; details about the ownership of your company; profiles of your management team; and the qualifications of your board of directors.

Marketing and Sales Strategies

How you are going to attract and service customers.

Service or Product Line

What are you selling?

Funding Request

The amount of funding you will need to start or expand your business.

Financials

The critical financial statements to include in your business plan packet.

Appendix

Additional supporting information.

Once you have gathered the information for the essential components, you can reformat it to fit a variety of needs. Much of this information comes from you, the business owner. That is why having someone else write your business plan is so often ineffective. What gives the plan "life" is you telling the story of your dream and how you are going to make it a reality.



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