You've made the decision to start a business. Now you're asking yourself, "What type of business should I start?"
You already know that there's a world of possibilities out there for anyone who wants to start a business. How can you possibly winnow them down to find the type of business that's right for you? The approach outlined in this article will help. Once you've worked your way through these five decisions, you will have a much better idea of exactly what type of business you want to start.
1) Retail or wholesale type of business?
Where do you want to be positioned on the supply chain? Retail businesses sell goods directly to consumers, usually in small quantities. Wholesalers buy goods (often in large quantities) from manufacturers or importers and then sell them to retailers and other distributors.
2) Franchise or independent type of business?
Many established companies offer franchises, which are basically copies of their companies. If you buy a franchise, you are buying the right to sell the parent company's goods and/or services in a specific area. Besides paying a franchise fee, you will also have to pay royalties and perhaps additional fees to the franchisor. You will also be expected to abide by the terms of the franchise agreement, which will often lay out exactly the way you will do business. Buying A Franchise explains the advantages and disadvantages of franchises and what to expect.
An independent business is one that you create and nurture on your own. Starting a independent business allows you the control and freedom that you won't get from a franchise operation.
3) Product or service (or mix of both) type of business?
If you are a trained professional, such as a dentist, accountant or realtor, your business is going to revolve around the professional services you can provide. But there are many professionals that also have the opportunity to offer related products, if they choose to do so. If you're a photographer, for example, you may decide to sell cameras, picture frames, and photo paper.
If you're not a trained professional, the key to deciding whether to focus on products or services when you're thinking about starting a business is determining where your true talents lie and what you most enjoy doing. Would you be happiest telling someone how to do something, doing something for them or offering them the products they would need to do the job themselves?
DO NOT base this decision on whether or not you enjoy selling or are good at it. No matter what type of business you start, you will be involved in sales.
Now you've made three decisions about the type of business that you actually want to start. There are two more decisions to make that will make choosing a business to start much easier. Continue on to the next page...