Making the decision to set up shop as a new small business can be one of the most exhilarating, and yet also one of the most challenging for most people to make. Here are three suggestions to reduce some of the challenge associated with starting a new business venture:
- Choose businesses with lasting demand, whenever possible
- Choose businesses in superior locations
- Choose businesses which are in high-growth industries
A new business based on a short-term fad can work for a little while. However, a lasting business should be based on trends which are more likely to be continuous, since fads will come and go. Even if the demand should change, a business based on an ongoing trends will be able to adapt more easily than one which is based upon only temporary events. Carefully consider customer characteristics (demographics, psychographics, etc.) to improve the selection of a business which has customers with lasting demand(s) for the products and services that you offer.
Some geographic areas will naturally be better locations for target customer markets. All else being equal, customers tend to prefer closer locations to those which are far away, unless your product or service is capable of being provided remotely, at little or no cost. Locating near customers who have established patterns of buying from your type of business is ideal, and most likely to result in better business results overall. Look for indicators (new housing developments, apartment complexes, etc.) which will closely match the target customer characteristics, and market segments you seek to win over.
All things considered, it is best to pick a business in an industry which is experiencing high growth, as it is much better to get some of an available market, as opposed to having complete dominance of a market where there are nearly no customers left to serve profitably. Entering high-growth markets can also lead to profitably specializing in sub-segments of that market, as your firm develops more expertise. However, also realize that every industry eventually experiences a slowdown as well, so be certain your business plan includes preparation for surviving the inevitable slowdown, once it does occur. Your business should be somewhat diversified by then, to reduce your risks of depending entirely on one market.
In summary, it is best to choose a business based on lasting trends, which is in a superior location, and which is in a high-growth industry. By doing so, you maximize the odds that your business will succeed, and last well into the future.
Copyright 2010, by Marc Mays