The type of business you start can make the difference in your success, especially in the first months. But how do you know what type of business to start?
Why not choose a fun business?
If you love yoga, start a yoga club. Get all the certifications available. Or maybe you love to cook? Start a restaurant. But be sure to get licensing. Or maybe you love to give advice? Start a coaching business. Teach your coaching clients how to coach their own clients. Andrew Dagys, Margaret Kerr, Joanne Kurtz, et al say, “try to aim toward something you’ll enjoy doing” (2020, 31%).
Make sure it’s desirable.
“Next, look for something people want … as opposed to something they don’t want, or that they’ll have to be carefully educated to want. It should also be something they’ll want tomorrow and next week as well as today — in other words, don’t base your business on a product or service that’s going out of use or out of style” (Dagys, Kerr, Kurtz, et al, 2020, 43%).
Selling vintage records may not be the wisest long-term strategy. Same with vintage typewriters. Same with high-rise jeans. That’s because they might go out of style. But if you’re happy with a niche client base, and you don’t have dreams of going global, maybe a vintage shop is all you need.
Who sells mittens in Hawaii? Not us!
“Especially in Canada, consider offering a product or service that isn’t completely seasonal like skate sharpening or outdoor ice cream stands” (Dagys, Kerr, Kurtz, et al, 2020, 43%).
Have you ever seen an outdoor hotdogs stand in a thirty below storm? But I bet you’ve seen a coffee shop in all kinds of weather. A year-round sunglasses store in Canada might not haul in a big cash flow in the wintertime. Similarly, suntan oil won’t sell like crazy in December.
You’ll make more with a massage than with a ballpoint pen.
“Look for a business with a high profit margin …. (The service industry lends itself to robust profit margins; manufacturing and corner grocery stores do not.)” (Dagys, Kerr, Kurtz, et al, 2020, 44%).
I saw an article about a guy who sold cheap glow items: $2 a sale, or something like that. When he started selling more expensive items, he needed only ten sales instead of 1,000 to make any money.
But even better, you can sell your services, such as a professional massage, with very little expense. Or you could sell your design services with minimal costs to you as the owner.
Service Businesses Come with Fewer Start-up Costs.
“If you have almost nothing to invest and realistically don’t expect anyone else will want to invest a lot in you and your business, choose a business that requires almost no initial investment (that’s usually service)” (Dagys, Kerr, Kurtz, et al, 2020, 45%).
Are you bitten by the social media bug, where you post pictures of you and your boyfriend eating hotdogs in bed? Well then, consider starting a social media agency. The start-up costs can be low, especially if you master free digital editing software like GIMP.
Service businesses can cost pennies to start.
Go Where You’ve Got an Edge.
“Look for a niche where you have a competitive advantage (say, because you have a lot of natural talent or you’ve acquired great skills and experience; or because you have exclusive manufacturing or distribution rights)” (Dagys, Kerr, Kurtz, et al, 2020, 44%).
If you’re doing a math major at AU, why not start a tutoring business? Come on, you’ve got the skills! You can charge thirty-five an hour. And you can hire a contractor, from whom you can pocket fifteen dollars per hour. Sweet!
Or maybe you’ve been dancing since you were able to walk. Why not start a dance club? Rent some space and get people moving.
If you’ve got talent, flaunt it, but also, sell it. Why not?
If it’s Covered in Red Tape, Stay Away.
“You also don’t want a business that will be overwhelmed by regulation — by the federal, provincial, or municipal government — or by the governing body of a professional or skilled trade” (Dagys, Kerr, Kurtz, et al, 2020, 44%).
Restaurants are heavily regulated. Events can be regulated, too. When I held an event, I had to get SOCAN licensing for the music. I said no to the alcohol bar for it required a license. I believe the hotel covered the licensing on the food.
You need a license to own a cat, too, now. Remember the days kitties roamed free? Oh, how I miss petting those furry beasts. That brings to mind another point: be on top of changes in regulation that impact your business.
“Food and drug manufacturing are heavily regulated by the federal government, as are telecommunications and commercial aviation. Medical, dental, and many other professional services industries are likewise heavily regulated by provincial and federal bodies” (Dagys, Kerr, Kurtz, et al, 44%).
If Insurance Costs More than your Groceries, Think Some More.
Just as regulations are a grind, insurance can be a burden, too.
“You might prefer to avoid a business that will require expensive insurance from the start (this describes most of the professions, and the manufacture of products that are potentially harmful)” (Dagys, Kerr, Kurtz, et al, 2020, 44%).
When I held an event, I couldn’t get insurance from the charity I represented. And there was no way I could afford insurance on my own. So, I ventured on without insurance. One guy thought threatening lawsuits was a clever route to getting his wishes met. So, he must’ve threatened me with over ten lawsuits. Another guy’s ten-dollar art frame broke, and he threatened me with a lawsuit, too.
If your profession puts people at risk of injury, don’t hesitate to get insurance. Insurance is not all bad. In fact, insurance policies can be very beneficial. You can get insurance to cover most anything your business may need.
Do you Love Paperwork? Hire Employees.
Andrew Dagys, Margaret Kerr, Joanne Kurtz, et al say, “You’ll probably also want to steer clear of a business with immediate high labour needs. Paying employees isn’t just a matter of cash flow (although that’s pretty important). As an employer, you’ll also have to deal with a lot of regulations and paperwork — such as income tax, Employment Insurance, Canada or Quebec Pension Plan, provincial workers’ compensation, and occupational health and safety rules — and you may already have enough on your plate” (2020, 45%).
But if you’ve got stars in your eyes, and dreams about going big-time, employees may be perfect for you. Keep in mind that one full-time employee can cost upwards of thirty thousand dollars. Make sure your employees bring in more revenue than you pay them.
A social media agency would work well with hiring employees. Assign a social media employee to multiple clients—and cash in big time.
Now that you know what types of businesses are best, consider which types are best for you. One way to figure this out is by doing a free personality test: https://www.16personalities.com/free-personality-test.
Once you figure out your personality type, enter it in Google along with the words “best careers.” Once you do that, look up the careers in Indeed.com to see their pay scale, demand, and educational requirements. Surely, one or more of those careers may make the perfect start-up for you.
Reference
Dagys, Andrew, Kerr, Margaret, Kurtz, Joanne, et al. (2020). Starting & Running a Small Business for Canadians All-in-One for Dummies®, 2nd Edition. NJ: John Wiley & Sons. (Amazon Kindle). Retrieved from Amazon.ca.
