When making the decision to start a business, it’s quite possible that you are faced with two or more choices of possible businesses to start.
Take for example this guy who posted a question on Yahoo Answers about his wife’s dilemma in choosing a business to start:
My wife wants to make extra money but she doesn’t know which would make more money. What would make more money? Being a florist for a wedding? Or making hair accessories?
If you are attracted to the potential of various businesses, it is tough to make the decision as to which business to start. Some factors to help you make the decision:
1 – Sufficient Market Demand.
The common rule of thumb in business is to sell products with high demand and low competition. When the demand for the product is higher, it means that there are more people likely to buy the product. In short, there is a bigger market for the product.
However, if you plan on concentrating on niche markets, be sure to find a niche where demand is still strong enough to ensure the profitability of your business. You don’t want to be in too small of a market that there is no way for you to make money anymore.
2 – Responsiveness of the market to the products.
Big businesses are likely to send out an army of market researchers to give them hard numbers on the potential demand for their new products. As a home business owner, you may not have the resources needed to hire a market research agency.
So what can you do? Observe. Zero in on your target customers, and look closely at their behaviors, what they like and what they don’t like.
For the man whose wife wants to do hair accessories, he and his wife can go out and look at how many women actually wear hair accessories. They can sit for an hour in a busy mall, and observe what percentage of women that they see actually wear hair accessories. What type of hair accessories do they use — e.g. headbands, headwraps, clips? What age group of women actually wear hair accessories more often — e.g. young girls, or women in their 20s or women in their 40s? This may not be a scientific approach, but it will give them a sense as to what the target market wants.
3. Profitability of the products.
Determine which of the businesses you are considering is likely to earn a bigger percentage of profits per sale. The higher the margins, the better for your business. So it is important to get a sense of profit potential of your business choices.
4. Availability of resources.
When choosing a business, how much and what you can afford needs to factor into the decision. One business may have very good profit margins, enjoys strong demand, but if you cannot afford it, then tough luck.
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This is a mini feasibility study if I might add
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Thanks for sharing! A very helpful post indeed. This kind of topic is a big help for people who are aiming to start their own business and make it grow. 🙂
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