The idea of being an entrepreneur can stem from anything. I have worked with people who knew from way-back-when, that all they ever wanted to do was have a specific type of company or product. Their business grew from a specific idea or concept.
“I want to invent something that solves world hunger.” Or “I want my own real estate company.”
But the majority of people I’ve worked with start with the idea of wanting to be their own boss. Of wanting the freedom of entrepreneurship – of being responsible for the type of work they put out into the world. There isn’t always a business “kind” attached with the entrepreneurship dream.
And that’s ok – entrepreneurship isn’t only for people who know exactly what they want to do forever and ever.
I often brushed aside my dreams of being my own boss, several times throughout my corporate career because I didn’t have a passion for a specific product or service – my excitement was simply tied to creating something on my own. But it didn’t seem enough. Or real. Or money generating (I mean bills still have to be paid, right?).
For me, there wasn’t a single “aha – that’s my passion” and the business followed moment. Instead it was trying on a few ideas. Sometimes just thinking about them for a while. Poking holes and morphing into something real. Then changing. Then growing. Until I figured out where my skills and the market demand intersected. And then, I could launch.
6 Steps to Determine What Type of Business to Start
Before I walk you through some business-finding ideas, I want to reassure you that it is absolutely ok that you have no idea what type of business you want to start. Many people start here – and it will help you go deeper to figure out what the best fit for you, truly is.
Along the way, as you answer each question and walk further on the path of determining the best business for you, you will find some ideas will expand and others will be crossed off the list. Refer back to this checklist until you land on the one that makes your heart sing.
1. Fully Understand the “WHY” Behind Wanting to be an Entrepreneur
Knowing fully what is driving you on this path will be critical as you examine some of the business ideas you have running around in your head. And it will also come in handy when you hit a dip or a slower month when you’re out on your own.
What driving factor has made it imperative for you to start your own business? What are you running from and what are you running towards?
Part of understanding why is to also understand what motivates you as a person. What helps you get out of bed in the morning? What keeps you moving forward when times get rough?
Your WHY should be specific – wanting to be your own boss isn’t enough. Why do you want to be the boss? What about that is enticing and even sexy to you? What are you not getting in your current working situation that you think “being the boss” would solve?
Be critical and specific. Create your WHY before doing anything else.
2. Inventory Your Skills
During a traditional job interview, you have probably been asked what your strengths are – and you were able to list off several things that you know you do better than others. But that’s just scratching the surface.
If you want to be the boss, you need to know before you start your business what you are great at and what you either need to improve in or get experts to assist you with. There is no way around this (trust me, I’ve tried). You cannot do everything, nor should you – there are experts out there for a reason.
Write down all of the skills that you possess. Don’t worry about crossing things off that you hate doing – simply focus on the toolbox of skills you bring to the table. Make a comprehensive list so you can start seeing any themes or gaps that come up.
3. What Business Ideas Are You Considering?
Something I’ve noticed consistently across the board for aspiring entrepreneurs, is that there was something that sparked their interest. Usually it was seeing someone else having their own business or delivering a service or product. Maybe it started from a bad experience you had which made you think that you could do it better.
There are ruminations in the back of your mind driving this quest – what types of businesses interest you?
Don’t cop out here and say “I want to be a coach.” That’s not a business idea. It’s absolutely a component of a potential business, but that isn’t clear enough. If you’re stuck here, ask yourself this question: In what way do I want to service/help others PLUS is there something I can sell here?
It’s probably not an easy question to answer – and that’s ok. But think back to the spark above – what about that situation made you think it was possible for you?
You don’t have to choose one yet, but list all of the different businesses that interest you.
4. Determine the “Type” of Business
Creating a business to sell it in a few years, is very different than creating say, a solopreneurship that you hope to do the rest of your life – and of course everything in between. Online or a brick and mortar store? Going the VC route or self-funding?
Don’t fool yourself here – as it will be a critical component in making the ultimate business decision. If your driving factor is to make a lot of money through selling a company, you will need to create a different type of company than if you want to work at something on your own because you are passionate about it. The kind of business you start will need to fit your driving type.
For example, if you wanted to “be a coach” and at the center of your business – you’re specifically selling you and a specific skill set, it would be extremely difficult to grow your business then sell it to a third party who isn’t you. Think of Tony Robbins selling his business to John Smith – how would that work?
However, using the same example, if your business was more about the specific skill set or guidance you provide through tools, products and services and you weren’t a component – the knowledge you deliver is what makes money, then a third party could potentially still earn money from the product with you out of the picture.
So be clear about what your desired end game here is – not that you can’t shift it in the future, but if you are stuck at deciding what type of business to start, knowing this component will help shape the possibilities and eliminate some that don’t fit.
5. Is There a Demand for What You Want to Sell?
Yep, it’s the necessary evil – you have to be able to earn income in some way. Can you generate income with your idea? Are there other people earning a living in the same or similar space as your idea? Can you sell something – a product, a service?
Note that this question is very different than saying, “But someone else is already doing it.” If you eliminated possible business ideas because someone else is doing it, you would be left with very few options. Let’s fall back to our trusty old “I want to be a coach” example. There are thousands of “coaches” out there – some earn a living, and others don’t. It’s a feasible business – but what makes each coach different, is the determining factor of success. What they sell or how they sell it, is what’s key.
The easiest way to figure out if people would be willing to buy what you want to sell, is to ask! Do some research on potential competitor sites, see what’s available and how it’s positioned. Then you can ask potential clients – start with friends and family if that’s easier. Use an anonymous survey tool like Survey Monkey or Google Docs to test your ideas. Make sure you sample a decent size (two people doesn’t count), to see if there’s any interest at all from the people.
Interest combined with a researched “demand” or perceived gap in the market, usually equates to potential income earning.
6. Can You See Yourself Excited About Doing That Every Single Day?
As an entrepreneur, you are going to have to hustle. And hustle does not come with a 9-5, weekdays only, timeframe.
Will you be excited to get out of bed and live and breathe your business idea for the next year, for 10+ hours a day? Can you see yourself forgoing events and parties because you are so focused on improving your idea or business, that you simply miss the engagement without resenting the heck out of it?
Are you that committed to your business idea?