5 Things to Consider Before Choosing What Business to Start
October 9, 2021
1. What Makes You Want to Start a Business?
There are so many good reasons to start a business: to be your own boss, for the freedom, the autonomy, the (potential) money. Some people are driven to entrepreneurship by their passion. You might be an artist or creator looking to create as a full-time career. Your business could be a vehicle for making important social or environmental change in the world. Or it could be more personal...
A former coaching client of mine confided that his personal motivation was to show the people he could be successful despite not finishing high school. He is now the CEO of a successful software development company and is helping to grow a number of other promising tech startups. (Some of the biggest entrepreneurs in the world didn't finish high school either, btw.)
Tapping into the deeper purpose fueling your entrepreneurial aspirations will not only guide your choice of business, but will keep you going in the face of unexpected (yet inevitable) challenges.
2. What Is Your Vision for The Future?
Picture yourself five years into the future, your business got off the ground and things are running smoothly. What does that look like? Imagine your morning routine, what time you start work, what you're spending your day doing. Is most of your time spent on the phone or computer, or face-to-face with colleagues, employees, or clients? Picture then end of your day, your weekends. How do you dream you are spending your spare time and with how?
While this vision of the future may or may not come to pass, this exercise will tell you a lot about the kind of lifestyle you are working towards, and that can play a large role in helping you decide what kind of business to get into.
3. What Kind of Resources Can You Invest?
Having a clear picture of the personal resources you bring to the table is critical to a successful start. We're talking about your time, skills, knowledge, and of course money. Regardless of whether you want to start a modest side hustle or build the next big tech startup, you will need to invest your own time and money in the beginning.
Consider whether you will start building your company while working a full- or part-time job. Or do you have the means and will to fully commit to a start-up right away? Obviously, your personal and financial situation will play a huge part in determining what kind of jump you make. And while external investment might be an option at some point, it will likely take some time before that happens.
4. How Adventurous Are You?
In other words, how much risk are you prepared for? Starting a business is like a long trek through the wilderness. You can train and prepare a much as you'd like, but there will always be unexpected hurdles, it will always be more difficult and take longer than you imagined.
There's absolutely nothing wrong with being risk-averse. In fact, the more steps you take to reduce uncertainty for whatever business you choose to start, the more likely you are to be successful. Having said that, different types of business involve different levels of risk. Purchasing an existing, successful, running business is clearly less risky than trying to build something that has never been seen before.
And no matter how much research, validation, and preparation you do, it's possible that your new venture doesn't work out in the end. Having said that, 97% of people who choose self-employment say they'll never return to traditional work (FreshBooks). So chances are good you won't regret choosing entrepreneurship.
5. Are You 110% Confident?
That was a trick question! Overconfidence can spell death for a startup long before the doors open or the first product launches.
The number one reason new businesses fail is the lack of demand for their product of service (CBInsights). How does this happen? Why would anyone start a business if there was no market opportunity. I don't believe anyone does it knowingly. Entrepreneurs with an idea are often VERY excited about that idea! They have come up with a unique idea and they truly believe it will be a success. That unwavering belief and confidence is part of what makes them so tenacious in the pursuit of their entrepreneurial dream.
A version of the Ikea effect is at play here, where the entrepreneur values an idea they created and worked on far more than any objective observer would. Add confirmation bias to that — the well-documented tendency to only pay attention to information that supports our current beliefs — and you start to see how an enthusiastic entrepreneur might overlook or ignore important information about market potential. Being aware of these pitfalls is the first step in avoiding this kind of mistake.
The most successful entrepreneurs aren't afraid to be wrong! Starting a new business isn't about ego, it's about finding a way to succeed. And to set yourself up for success you need to question, to experiment, to test, and to learn.
Entrepreneurship can be exciting and rewarding, but it can also be scary and difficult. Spending time on the kind of personal reflection described here can provide a strong sense of perspective and motivation, and set you up to make good decisions about the kind of business you want to get into.
You've decided you want to be an entrepreneur. Amazing! I speak from experience when I say that starting a business is one of the most exciting and rewarding things you can do. And more than 72% of Canadians agree that entrepreneurship is a desirable career choice (BDC).
However, before you register a domain name, incorporate a limited liability company, or start designing logos, there are a few things you might want to consider. These questions are about making sure you have a good mindset, a clear perspective, and strategic criteria to help you make a thoughtful, well-considered, and business-savvy decision about what kind of business you want to start.