Entrepreneurs are creative people, and frequently come up with new ways to do business. So many, in fact, that you need to choose wisely about which ones are worth your while to pursue. Making the right choice requires more than just determining profitability, although that’s a good place to start. You also need to make sure you choose lines of business that are right for the kind of person you are.
Here are some suggested approaches to evaluating your new business ideas:
Profitability: Assess not only how much money you need to earn from this idea, but how much money you want. Are you trying to build an empire or just make enough to live on? Project estimated sales, marketing expenses, and all other costs to implement your idea, and see how well the profit potential matches your financial goals. Please don’t leave this step out, even if you don’t consider yourself a “numbers person.” No business idea is so good that it’s worth doing without first checking to see if it can be done profitably.
Capability: For every business idea you implement, you have to wear three hats — managing the business, selling the product or service, and producing or delivering the product or service. If you’re light on business management skills, you’ll want to stick to simpler concepts, like personally delivering a service, rather than complex business models involving many people or detailed logistics. If you aren’t good at sales, you’ll want to consider ideas where less personal selling is required, such as products or services that can be successfully sold online. You can hire people to help with these areas, of course, but then you’ll need to include those costs in your profitability estimate.
In general, your new ideas will succeed more quickly when you choose to offer products and services you already know a great deal about. Having to learn on the job will slow you down, and take time and energy away from your ability to deal with the other challenges of launching a new line of business.
Interest Level: What do you want to be doing all day? Do you enjoy working alone with your computer, do you like talking on the phone, or do you prefer being with people in person? Choosing a business concept that conflicts with your natural preferences sets you up for failure. What kind of people do you enjoy spending time with? If your customers are people you like, doing business becomes much easier. What will hold your interest over the long haul? If your business idea is successful, you don’t want to get tired of it.
Lifestyle: Consider the daily or weekly schedule you want to work, the kind of clothes you like to wear, how much you want to travel, and the physical environment you want to spend your time in. If you like to stay up late and sleep in, you don’t want to be in a business that requires you to be on call early in the morning. If you don’t like being on the road, you’ll want to avoid businesses that require a lot of travel. Decisions like these may sound obvious, but many entrepreneurs forget to think about their lifestyle preferences in choosing how to work.
Goals: Make sure that this business idea will also further your personal goals. Financial goals are important, but so are others. What you would like to accomplish in your life? What kind of relationships do you want to have with the individuals and communities your business touches? When would you like to retire? Would you like to be able to sell this business at some point? What would you like to be known for? What contributions do you want to make to a particular cause or the world as a whole?
Before choosing your next business idea, stop to consider all of these factors. When your business goals and personal desires are a good match, you’ll find it much more possible to build a successful business and a rewarding life at the same time.
[guestpost]C.J. Hayden is the best selling author of Get Clients Now!TM: A 28-Day Marketing Program for Professionals, Consultants and Coaches. [/guestpost]