To Choose The Right Type of Business

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.

Winnowing through business opportunities and finding the right business to start becomes much easier when you know exactly what you're looking for. The previous page of this article led you through three decisions to narrow down your choices. Two more decisions you need to make to determine what type of business is the most suitable for you are:


4) Storefront or non-storefront type of business operation?

If you have decided to start a business selling products, you need a storefront of some kind, whether bricks-and-mortar, such as a retail store, or virtual, such as an e-commerce site. Many successful businesses have both, expanding their customers beyond their locale. Others "borrow" a storefront, so to speak, by getting their products distributed by other businesses, selling their products through markets and fairs, or by using available e-commerce venues.

Posted in Labels: Posted by Rohit Shah

4 comments:

  1. Anonymous Says:

    Great questions to ask when starting a business. I'm looking to buy one, and I've been checking out the Internet for one. I was checking out this site called BizTrader.com, and they have a good selection. I was able to limit my search by asking the questions posted here.

  2. Unknown Says:

    @Kate-- haha, so funny you should mention that site! I was just on there looking at businesses. It's like a global marketplace for small business. Great stuff. Great way to find an small business on the Internet.

  3. Unknown Says:

    Great suggestion guys. I'm browsing biztrader.com right now, and I really like what I see. I like the great diversity it has to offer.

  4. Anonymous Says:

    You guys might want to try BizAg.com as well. Good Luck.

 
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