Do you continually worry about losing your job? Have you already had your hours (or pay rate) reduced, or your job taken away entirely? In the current economic climate, many have considered starting a business as a means to help their situation.
I would like to pass on some things that I have learned that can be useful to anyone who wants to start their own business and is not sure what kind of business to start. There are a number of books available, and a lot on the Internet, that can help you plan, start, and run all kinds of businesses. They will show you how to write a business plan, obtain a fictitious name statement, and discuss various modes of advertising.
Here, I would like to focus on several parameters that will help you select a business that is right for you. These are not covered in many of the current materials detailing how to start a business, so I think they will be helpful.
Four important criteria to consider.
one). What are the revenue expectations of this business?
Trying to figure out how much revenue a business should generate, and in what kind of time frame it will do so, can be hard to figure out. I think one of the most important things I’ve done to determine if a particular business is worth starting is to use an Excel spreadsheet to project all my costs, expected sales, etc. I can vary the numbers based on different scenarios and it will give me revenue expectations based on that scenario.
Doing that work of figuring out the numbers is critical before proceeding. You really have no idea what the income expectations are until you do this. I can’t tell you how many business ideas seemed “perfect” until I subjected them to the realities of a spreadsheet. It’s happened so many times that I’ve tried every conceivable way to build a business and just couldn’t come up with the numbers to justify doing it. I had the idea of buying or leasing an acre of land in Orange County, California with the intention of establishing an RV storage yard. As more baby boomers retire and buy RVs to tour the country, I think the demand for places to store RVs will increase. Set up with automatic doors and automatic check-in, it seemed like a great “low time consumption” business. However, with the cost of land in Orange County, the numbers didn’t make sense until the lot size increased to around 5-10 acres that he couldn’t afford. He could have gone a long way in developing this “perfect business” if he hadn’t done the numbers. Even if you hadn’t invested any money, you would have wasted an enormous amount of time and effort.
2). How reasonable is the time frame before initiation?
Some businesses look great, but require considerable setup time before you even get started. It is very important to take into account how much time you have. There may be physical things to set up, but there may also be a certain amount of learning that needs to happen before you can get started. When I set up my oyster mushroom farming business, I knew nothing on the subject and it took me quite a while to learn enough to get started. Time was also needed to set up the operation, time to develop some markets to start with, and time needed to test different production techniques. All of this had to happen before full production could begin. Also consider how long it will take once you are up and running to generate enough income to meet your business needs and your own.
3). What are the chances of success and your own risk tolerance?
If you have a steady job with a good income, but have always wanted to have a side business, you are in a much different position than someone who is “risking it all” and will have to make a living from this business. If you have a lot at stake to make this new business work or not, consider your chances of success. Figuring out the odds of success is difficult. We have our own level of enthusiasm that can really blind us to the important things we should be looking at. The best way to accurately estimate the chances of a business being successful is to make conservative estimates of terms, sales, profits, and any other relevant numbers. Then start a major research project. Learn as much as you can from books, the Internet, professional journals related to that business, go to trade shows, and find people who have been in the business a while. Find out what kinds of things can go wrong, how often they happen, and strategies to prevent that from happening or fix it once any of those things happen.
When I considered lobstering, I talked to several people. I was told my investment in traps would be around $10,000 and storms can blow them away, people can steal your lobster, you can have a bad year where you don’t catch many and other fishermen sometimes cut your trap. his buoy. This was a higher level of risk than I was willing to tolerate, so I decided to drop this “perfect trade” as well.
Look at the demand for your product or business. My family was interested in opening a daycare for children. Most daycare centers had waiting lists, and most of the newly opened ones filled up within months. When you see a lawsuit like that, the odds are definitely in your favor.
Consider buying established businesses that have a track record. I have a friend who is very successful in the laundry business. He never starts businesses, instead he prefers to buy existing ones. Reviewing the books gives you valuable information. Get a more experienced person to look over them if necessary, and beware of unscrupulous owners who have “stained the books.”
If you take all the things discussed into assessing your risk tolerance, you’ll be much further along in making a wise decision on a project that you’ll spend a lot of time and effort on.
4). How much will I have to invest in this business?
Other sources talk about ways one can raise financing to buy a business using family, friends, credit cards, home equity loans, silent partnerships, etc. Have a fairly accurate estimate of the money you have available and how much you will need. There’s nothing worse than getting halfway through your project and finding out you’re low on cash.
We hope that following these five criteria will help you find a business that is the best fit for your family. Save this article and check it out with every business you look at and it will save you time, money and headaches!