How to Choose a Business
Many will be disappointed but I must agree with a text message sent to me recently that passion is not enough: “Mr Anlacan hi cn u tell how do we choose a biz cos i know liking sumthn is nt enough 4 a bizns thnx rosalie buenaventura 24 pasig”
Doing what you like may be motivating but the main problem with this is that most people like the same things. The law of supply and demand then kicks into play, with the intense competition in the likable businesses making profits harder to find. The truth is, the least desirable ventures appear to have brighter chances for success. Funeral parlors and septic tank services are generally seen as profitable because few people would like to go into those lines.
There are many ways to go about selecting what is the best business for you. What is important to remember is that you should have a long-term perspective. Keep in mind that you will be investing a great deal of your capital and precious time in this venture. Be patient enough to carefully study your options while setting a reasonable deadline so that you would not miss opportunities.
Ideally, you should immerse yourself for a few months each in several different businesses to see for yourself what will best suit you. However, this may take too long, too expensive, or simply not possible. Below are some considerations to improve your selection:
- Your health. This is at the top of my list because it is the most valuable and yet the most neglected consideration. There are health conditions that would be aggravated by certain work environments. If you have asthma, for example, you should be careful so that you would not be exposed to allergens. If you are female and planning on having a child, it is very risky to work in an environment where there are chemicals or radiation that may possibly harm your unborn child. Many manufacturing work places would not be suitable.
- The assets you have. Consider first what possible ventures you can go into with your present assets. This may take many forms like having suitable land or property for use in the business or as collateral for a loan. For cash needed, as a very rough figure, you should double the amount of your original estimate to come up with the capitalization needed for your desired business. This is to have a cushion until you are operating profitably. Those new to business usually under estimate the capital needed. With a limited capital you generally will do better to focus on service type businesses since many of them do not need expensive special equipment nor large inventories.
- Your skills and experience. Having talent and experience in a particular industry would be highly advantageous to a startup. You may already have the contacts and the know-how to produce the product or service. The only problem with this is that often times you only have experience in one department of a large corporation. Maybe you know all about manufacturing the product but are clueless on how to market it. This is why working in a smaller company may be more educational to those who aspire to be entrepreneurs since you have broader responsibilities and can interact better with personnel from other functions.
- Degree of commitment. Businesses vary in the amount of attention you must give, but most of them will take up much of your time. Will you be working full time on this business or is this only secondary to your job? If you cannot give up your present job or you have other businesses to attend to then consider getting a franchise.
- Personality and Inclination. Most people decide on this basis, it would be ideal if what you are doing is compatible with your personality. There is no problem with this as long as it is feasible. Extroverts may be more effective than introverts if the type of business demands a lot of interaction with people move for you.
- Think long term. Do not jump into a venture solely because it is the current hottest business craze, chances are high that it will be short lived. Try picking a venture where you can probably still be earning even many years from now.
- Attend business start up seminars. After screening out the least appropriate businesses, you should be ready to invest some time and money in attending seminars on your choices. There you can get information from people who are actually operating or have operated the business you like and are willing to share their experience. You can know the actual capitalization needed, potential suppliers, and some of the critical problems you may encounter. It is even possible to get the resource speaker as a consultant.
Businesses are neither good nor bad (unless they are immoral or illegal!), they are just suitable or not depending on the person and her/his resources. You must just have a systematic way of selecting what business is best for your situation. Gone are the days of relying on gut feel or superficial observation. You have a great deal at stake, and so, do your best so that there will be no regrets.
Business Coach Column by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) from the Manila Bulletin. Re-posted with permission. Photo from pixelsandpills.com