IDENTIFY THE RIGHT BUSINESS FOR YOU
Identifying the right business for you might be an easy thing to do if you already have an idea. If, like most, you don’t have an idea then it can be very difficult to really home in on an idea that you truly believe in. Who are you? Who you are is very important in deciding which type of business you want to get in to. You are the only person responsible for running your business. I have come up with three methods that should direct you away from certain businesses and, more importantly, direct you to a business that suits you and will result in success.
The three methods I have created are:
- Elimination & Choice Method
- Disection Method
- Supply Chain Method
The key to finding your true vocation is to use all three methods. You are looking for prompts, hints and ‘light bulb moments’ to trigger an idea that will inspire you enough to leave the rat race.
Elimination & Choice Method
So how do you identify the right business for you. Well its a two stage process. It’s the process of:
Look at the diagram below. You will see that you have to home in on the business that is suitable for you by eliminating certain businesses and then choosing from the rest.
So how do we eliminate and then choose? Well, lets look at these two processes in more detail.
The following factors are key in eliminating certain businesses from the equation:
|Your ability||It’s no point trying to start a business that you are not actually able to do. Now there are obvious examples such as trying to set up your own solicitor practice when you’re not a solicitor! But there are subtler examples such as trying to set up your own PR agency when you hate speaking on the phone.Think about your weaknesses. Are there businesses you would like to set up but after some careful thought realise that you weren’t able to run the business in the first place? Are there certain skills that you simply don’t have and are unlikely to acquire? Do you have any disabilities which will prevent you from doing certain things?On the flipside think about your strengths. Do you have personal attributes that seem well suited to certain businesses? Do you have certain qualifications that put you at an advantage? If so then keep these businesses in!|
|Is it feasible?||You might have an idea that has never been tested before. So the key question you have to ask yourself is – is it feasible? To answer this question you have to really think through the idea. What are the costs involved? What’s the likely demand for your product or service? Will this idea make enough money for me to live on? You can get closer to the answers to these questions by drawing up forecasts, talking to people and if possible test marketing your idea.If your preliminary research proves that it seems feasible then keep the idea in – if not then throw it out!|
|Location||If you have to live in a particular area because of family, friends or simply because you love living there then there will be a restriction on the businesses you can do simply by the location. So if you want to open up a bar or nightclub within your catchment area but there is a glut of these type of businesses then this idea has to be eliminated. All the businesses outside of this catchment area also have to be eliminated.|
|Is it realistic?||The ideas that you can consider have to be realistic. If you are thinking of opening up a chain of supermarkets but you only have £1,000 to start up with then your idea is very unrealistic. If you have £1m then your idea suddenly becomes realistic.Think about whether or not you have realistic expectations of what business you can do based on your starting capital.|
So you’ve eliminated most business ideas but not all. Out of the remaining business ideas you have to choose one. The following factors should be considered when choosing:
|Your interests||This reason alone can make or break your business. You have to be interested in what you are considering to get in to – any successful businessman will tell you that. Do you believe in the proposed product or service? Is the business you are considering something that your mind naturally wanders to?There is no point in getting in to something that you think will bore you. Remember, you are trying to leave the rat race not join another one!|
|Strategic fit||This takes in to consideration your existing network of people you have around you. You will be surprised what skills, information and expertise they have if you spend the time to really think about it.Do you have a friend or family member that is in a job or business that is complimentary to your business idea? Can you obtain vital information or secure preferential terms from them that will help the business?So for example you’re considering starting a plumbing business and your uncle owns a portfolio of properties then you can approach him offering your services. As he’s your uncle he’ll probably take you up on your proposition – I hope!|
This is a simple case of dissecting the market in to two and deciding which side you want to be in. If you continually dissect and decide which side you wish to be in then you eventually home in to the market you wish to be in. However, there are infinite ways of dissecting the market. Here are the key dissections to get you started:
|Retail v Trade||Retail is directly selling to the public, known as B2C, Business to Consumer, where the customer is the eventual end user of your product. Trade is directly selling to another business, known as B2B, Business to Business, where your product forms part of the final product eventually sold to the consumer. The common differences are:· B2C has many customers, B2B doesn’t· B2C needs a more sophisticated after sales customer care, B2B doesn’t· B2C requires more marketing, B2B doesn’t|
· B2C requires a shop floor, B2B doesn’t
If you want to be in retail then you must be willing to accept the mantra – ‘the customer is always right’. If you don’t then you could find yourself on the latest episode of BBC Watchdog and out of business very quickly! If you want to be in trade then you must be very cost efficient as your business customers will be very cost focused.
I personally like being in the trade sector as the public can be very fickle. You can stumble across a customer that causes so many problems they end up taking a significant number of man hours. However, if you really understand the public in your targeted market then the rewards can be very high.
|Passive v Active||Passive businesses earn income from the making of investments. This could be property, intellectual property, royalties, stocks, bonds or anything else that does not require your effort. You acquire these investments by investing your own cash, the bank’s cash or by having a financial partner. This concept is where you use money (or borrowed money) to make money – true capitalism!Active businesses earn income from your direct labour effort. This could be a solicitor, plumber, mechanic, consultant or any other business that requires you to provide a service or product.If you’re looking to free up time to spend with your family or friends or you’re simply lazy then passive businesses are most suitable. If you’re someone who gets bored easily when you have free time or unwilling to borrow too heavily then active businesses are most suitable.|
|Services v Manufacturing||The services sector is where there is no tangible product produced. This sector is involved in providing man power to either businesses or consumers to achieve certain goals. Typical businesses are broking, agencies and repair businesses.The manufacturing sector is where there is a tangible product produced. This sector is involved in providing a tangible product to a consumer or business. Examples being a computer, clothing or craft.Do you get great pleasure out of creating a product? Or do you get greater pleasure out of providing your time and effort resulting in a service?|
|Trading v Investing||A trader will buy something and sell it on within a year. An investor will buy something and hold on to it for longer than a year. A typical trader would be a business like a supermarket, car dealer or market trader. They simply buy and then sell. A typical investor would be a business like the rental of properties or the investing of stocks and shares. They buy and then hold for a continual stream of income.However, it is possible to do both. You can buy properties or stocks to hold and trade but usually people tend to one direction.I personally consider myself an investor. When you invest you can be assured of a continual stream of income for the time you hold on to the investment. I invest because I am then not always on the look out for the next deal. With trading you have to ensure that you can always find a good supplier supplying goods at an attractive price.|
|Low v High Capital Requirement||This is an important dissection. The threshold for high and low is subjective. Assuming its £10,000 then you can dissect all the businesses that require less than £10,000 to start and more than £10,000 to start. Based on your starting capital you can raise will determine which sector you can be in.If all you can raise is £1,000 then there is no point thinking of opening up your own pub unless you are willing to take on a financial partner. If you have £50,000 then opening up your pub could be a reality.|
|Inventive v Existing||Do you want to run your own restaurant or do you want to write an inventive piece of software?If you are a creative person then you may wish to operate a business that pushes the boundaries. These businesses are higher risk, usually fail but if you get it right the rewards are massive. If you are more conventional and prefer to tread a tried and tested route then the existing sector may be more suitable. There are still opportunities to be creative within the existing sector.|
|Outside v Inside||Do you like the outdoors or do you like staying indoors? Is the thought of being in an office too much to bear and being out on a building site seem more natural? Whatever your preference you can decide your environment as it is your business!|
|Old v New Economy||There was a big hype over the internet businesses (New Economy) and how it would dwarf the traditional businesses (Old Economy). This led to frantic investing in half baked internet ideas with barely a business plan. Lots of investors got their fingers burnt and now internet business ideas always carry a stigma. However, there are many good ideas that can be implemented with little cash and man power.Do you fear computers or do you only ever imagine working with computers? Depending on your preference you can decide how hi-tech you want to go. No matter what people say you can still run a business without having to go near a computer – its your choice.|
This is not a complete list. Think about other ways to dissect the market and consider which side you wish to be in. Based on your preferences on the dissections above you can build up a profile. A typical profile might look like this:
|Retail v Trade||Retail|
|Passive v Active||Active|
|Services v Manufacturing||Services|
|Trading v Investing||Trading|
|Low v High Capital Requirement||Low|
|Inventive v Existing||Existing|
|Outside v Inside||Inside|
|Old v New Economy||Old|
With this profile you can think about what businesses spring to mind. In this example possible businesses you could do are:
- Mortgage Broker
- Mobile Motor Mechanic
- Freelance Caterer
Supply Chain Method
This final method involves choosing an industry that you are interested in and then thinking of all the products and services that surround it to make up that industry. After considering these products and services you can decide if anything takes your interest. This is best explained by the following example.
Dave loves to skateboard. The following industries surround the skateboarding industry:
- Magazines – Dave could consider whether he would like to be a freelance writer, photographer or researcher for an existing magazine. He could think a little more broader and start his own magazine. There may be a gap in the market where there are no UK produced magazines only magazines imported from the US. Or there is a niche in the magazine market that hasn’t been tapped such as a dedicated speed skating magazine.
- Board – All skateboarders need a skateboard! One of the key parts of a skateboard is the board itself. Dave could consider designing artwork for the boards themselves. Or he could set up a skateboard shop which sold many different designed boards including his own.
- Wheels – As well as needing a board you need the wheels. Again he could set up as a retailer of specialised wheels. He could get involved in the research, design and testing for the ultimate frictionless wheel if he had the experience and qualifications.
- Skate Park – You need somewhere to skate! There are skateparks all over the country and Dave could get involved in the design, construction, fund raising and promotion of the park on a freelance basis.
- Music – Skaters have very definitive music. Dave could become a DJ of this type of music at certain venues dedicated for skaters. He could get involved with the production of the music and set up his own record label. He could run his own skater nights at nightclubs and at skateparks.
- Clothing – Skaters have very definitive clothing. Dave could get involved in the retailing of this clothing. He could also consider making these garments or designing these garments depending on his skills.
So as you can see lots of ideas can be generated from one industry if you think of the other industries that surround it. I must stress that when you think of the one industry choose one that you are interested in! Then it will be more likely that you will come up with an idea in a related industry that you are interested, but more importantly, believe in.