Which business should I start?

Choosing the right business can mean the difference between success and failure. Enterprise choice is a key determinant of entrepreneurial success. 

There are millions of opportunities to choose from. The following key principles can help to identify the right venture for you.

  1. Availability of customers. Your business idea should have some ready customers who are willing to pay cash for your product or service. Without customers your business is just a hobby.
  2. Product/service availability. You should be able to provide the product or service you intend to sell. You can’t start a law firm if you are not a registered lawyer. If you are doing manufacturing you need to have a reliable supply of raw materials.
  3. Uniqueness of venture. Unique ideas tend to be harder to pull off though they can potentially make it big. You need to have the ability to execute your unique ideas.
  4. Your experience. It’s generally easier to start something in your line of experience. If you are an engineer with the electricity utility you can set up your own electrical engineering firm. Going out of your circle of competence will require you to educate yourself in this new trade. You can also choose to partner with other people who have competence in a certain field.
  5. Risk levels. Some ventures are generally more risky than others. Agriculture is quite risky even though it attracts so many people. You should choose ventures which match your risk tolerance.
  6. Payback. How long are you willing to wait to get back your money. Capital intensive ventures like rentals generally take a long time to pay back. Simple ideas like retail outlets tend to pay back faster.
  7. Investment requirement. Some ideas are simply out of reach if you can’t mobilize the resources. You need millions of dollars to set up a big shopping mall. You only need a few shillings to start an online store on Facebook.
  8. Nature of competition. Some ventures like car dealerships have too much competition which eats away the margins. It might be better to enter a niche market and dominate it. For instance we used to sell our ketchup in school canteens where we could dominate. The same product struggled in supermarkets where there is too much competition. 
  9. Growth rate. Some ventures like technology startups have rapid growth potential. Normal businesses usually have linear growth. The higher the growth potential the better.
  10. Complexity. Some ideas are just too complex for a normal person. For instance inventing new drugs and technologies. Unless you’re an expert in those fields just stay away. Stick to simple ideas you can understand.
  11. Legal + regulatory issues. Some ventures have many legal and regulatory barriers. You can’t just wake up and build a power dam or a hospital.
  12. Availability. Do you have the time and energy to see your venture through. It is difficult to run a start up if you are not there. You can’t just rely on an employee to execute your dream. Some ideas are more suited to people who have the time.
  13. Profitability. Some ventures are more profitable than others. New unique ideas tend to have good profit margins. When people see others making money in a certain area they all rush there and the profits reduce. There are certain advantages to being the first in a business line. Just make sure you are not the last to join.
  14. Entrepreneurial credibility. Some people are able to mobilize the resources to pull off certain projects. You must be honest with yourself. Do you have the credibility to pull this off?
  15. Your ambition. Some people are happy with a small shop which gives them a daily wage. Some people enjoy the rush of taking bigger risks. Some people want peace of mind. Don’t start a chicken project if you want peace of mind. You need to know what you want.
  16. Social trends. A good business idea generally follows the social, economic and technological trends. Ventures like Tik-Tok have taken off because they understood the needs of the young generation for short fun shareable videos. Video calling apps like Zoom have prospered because they anticipated remote working and connection.
  17. Market size. You can choose to be a big fish in a small pond or a small fish in a big pond. It’s much easier to be a big fish in a small pond.
  18. Can you start small? In some businesses you can’t start small. However in many ventures you can figure out how to start small and gradually build the business.
  19. Distribution. Some businesses like manufacturing require a large distribution network. You have to invest in trucks if you’re distributing eggs across the country.
  20. Passion. Is this something you would enjoy doing everyday? At some point things are going to get tough and only your love for the business will get you through.

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