There are several factors to consider when contemplating a new business venture. Here is some useful advice to assist you in choosing the business idea most optimal for you. Keep in mind that this article envisages a business in which you expect to play an active role (as opposed to one in which you’re merely making a passive investment).
What Ignites Your Passion?
First thing’s first—what are you passionate about? What kinds of activities or hobbies could you spend the whole day engaged in, without getting paid (or coerced) to do so? The importance of your answer to that question isn’t purely ideological or fanciful—it’s also practical. In all aspects of life, passion is the most dynamic motivator. In turn, enthusiasm generates productivity, and productivity is one of the primary engines of a successful business. Embarking on an entrepreneurial endeavour can demand tremendous effort and focus; as such, if your dedication level is enhanced by motivators other than financial gain (such as enjoyment), then your new venture will already have a distinct advantage.
Monetizing Your Passion
Generating income from something you enjoy can sometimes be a fairly obvious task. However, certain passions require a bit more creativity in order to monetize them.
For example, if you’ve spent years learning and mastering the art of yoga, and you would like to convert that talent into a business as an instructor, then there would be a number of options for doing so. After obtaining the proper license and certifications, you could open your own studio, travel to clients’ homes to teach them your craft, or some combination of both. You could also manage a yoga studio where you allow other instructors to teach classes on a contract basis.
Moreover, the Internet and social media offer significant opportunities to think outside the box when it comes to commercially exploiting whatever stimulates you. Using the yoga instructor example above, you could use your website or social media (Facebook, Instagram, or YouTube, for example) to promote your services, your brand, and yourself. If you’re able to galvanize a significant online following, you could further supplement your income by having YouTube or corporate sponsors pay for ads on your pages. These are just a few examples of how you can use a little creativity to turn your passion into a viable going concern. It is at that moment that your business idea is born.
What Skill Sets Can I Exploit?
But honing in on your passion is only the beginning. As an author, TED speaker, and professional poker player Greg Dinkin would undoubtedly agree, it is also critical for you to take inventory of the skills you possess that can enhance your business’ chances for success. As such, the next question you should ask yourself is, “What are the core competencies that I can lend to my new company?” You should also identify the people in your network who might have particular talents that would be useful to your venture. These could be former colleagues, friends, mentors, or anyone else you feel could contribute their know-how to your endeavour. Always be mindful that you don’t necessarily need to make someone a formal “co-owner” of your company in order to bring them into the fold. Equity ownership in your business is the last thing that you ever want to give away, from both a profit and control standpoint. You can use several alternatives to incentivize others to support your cause, including (among other things) making them an independent contractor, consultant, or employee, or paying them for a service that they already provide to others.
Let’s be clear—you can always start a business based on whatever captivates you. But, you’re almost guaranteed to fail if your business lacks the relevant expertise to operate efficiently and profitably. An ideal starting point for your business is to find a way to combine passion with proficiency. Recruit whatever resources you need (and can afford) to properly run your business. Your company shouldn’t have any gaps in expertise.
How Much Capital Will My Business Need?
Almost all new businesses require some form of initial investment. The most efficient way to calculate your estimated start-up capital is to create a detailed budget or a business plan. Business plans are typically more appropriate in cases when you are trying to obtain capital from an outside investor or a financial institution. This requires more work because a business plan must include not only your proposed initial budget, but also budget forecasts, a description of the business, management details, a market analysis, barriers to entry, risk factors, and a plethora of other information that a savvy investor would want to review. To be 100% clear,
whether or not your situation compels you to develop a formal business plan, you should always research all of the aforementioned considerations before starting your business venture.
On the other hand, if you’re able to self-fund your new business, then preparing a comprehensive budget for yourself is the best way to assess your potential financial exposure. Remember that the budget should include any existing assets that you can contribute to the business because they will lessen your start-up costs. Before spending a dime on your new business, you should have your budget reviewed by an accountant, venture capitalist, entrepreneur, or any other person who can give you competent and honest feedback on the robustness of your calculations, particularly if that person has industry-specific knowledge.
For additional guidance on choosing a business type and starting a small business (including how to prepare a business plan), see Start the Right New Business for You.