How To Decide Which Business To Start: Benefits and Steps

If you're one of those with an entrepreneurial mindset, you probably have multiple business ideas bouncing around in your mind. How to decide what business to start? Let’s break this complexity one idea at a time.

29 May,2024 05:33 IST 24
How To Decide Which Business To Start: Benefits and Steps

Starting a small business today, whether through an Etsy shop, drop-shipping site, or coaching venture, is more achievable than ever. Running your own business brings tangible economic and lifestyle advantages, from independence as a boss to the flexibility of setting your own schedule. Many people aspire to own small businesses, especially at a time when India is one of the fastest-growing economies, offering a wealth of opportunities.

However, one of the biggest challenges in starting a small business is selecting a viable idea. If you're one of those with an entrepreneurial mindset, you probably have multiple business ideas bouncing around in your mind. How to decide what business to start? Let’s break this complexity one idea at a time. But first, why do you need to pick one specific idea?

Why not approach multiple ideas?

Suppose you're working on a startup and see a demand for another product or service. In that case, you might think you can offer a better, more profitable solution, losing interest in your current business. Entrepreneurs often experience FOMO (Fear Of Missing Out), desiring involvement everywhere. While this competitive spirit defines them, juggling several startups simultaneously is counterproductive for most entrepreneurs, adding chaos and uncertainty during the critical early stages. Focusing on one business reduces stress, disorganization, overwhelm, and burnout, allowing total energy and attention for better product or service quality. The challenge remains: how to decide on a business to start? 

5 steps to decide which best business to start:

1. Define your expertise:

Many startups are inspired by the founder's skills and experiences. For instance, after working 20+ years in marketing, someone might start a marketing agency. Similarly, a plumber could start their own business after years in the trade, learning customer service and industry details. In both cases, the experience and reputation gained provide a strong foundation for success. To assess your potential:

  • Consider what business matches your skills.
  • Think about what product or service you could offer.

2. Read the market:

Without market demand, sustaining a business can be challenging. Understand what people want and what they're willing to pay for. Identify current consumer needs and position yourself as the problem solver to see business growth over time. For example, if you enjoy marketing and notice local businesses struggle with digital marketing, offer your expertise to help them grow.

3. Look to solve a problem you experienced:

If you're unsure what business to start, consider "scratching your own itch." This means creating a solution for a problem you've faced. You must have seen the popular show ‘Shark Tank,’ where entrepreneurs often pitched products inspired by personal challenges. For instance, someone struggling to find skincare products with natural ingredients creates a brand offering all natural products. Solving your own problem is a smart way to refine a product before launching it. Plus, your personal story adds appeal to investors and retail partners.

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4. Own business, buying a business or franchise? 

After narrowing down on the type of business to start, you must choose between buying an existing business, investing in a franchise, or starting from scratch. Each choice comes with pros and cons. 

  • Buying a business:

Buying an established, profitable business is the least risky path for new owners. You avoid the uncertainties of starting from scratch and gain existing customers, systems, trained staff, and reputation. However, you also inherit existing problems like outdated processes, staffing issues, and unpredictable reactions from staff and customers. Despite being the safest option, buying an existing business is usually costly. The purchase price varies based on factors like earnings. A simple estimate is to multiply annual profit by a particular factor. For instance, a business earning Rs.20,00,000 annually might sell for four to six times its profit, totaling around Rs.120,00,000.

  • Franchise:

Buying a franchise means acquiring a recognized brand, business processes, and a designated area. These are often costlier than starting from scratch but can be less than buying an already running business. You'll pay a one-time fee and ongoing royalty fee (usually at least 4% of profits). A drawback here is the lack of freedom to run the business independently. You will be expected to follow the corporate brand, website, and software. You also need to consider factors like-

  • Limited decision-making power
  • Challenges with website, CRM systems, software, equipment, and marketing
  • Uncertainty of renewal, even with successful operation  
  •     Building a business:

Starting a business from scratch gives you complete control over decisions like location, employees, branding, software, business systems, and scaling strategies. The challenge lies in managing all these aspects while developing a desirable product or service. Usually, starting from scratch is cheaper than buying an existing business or franchise. DIY tasks like logo and website creation can save money. However, the main drawback is the high risk of failure. Beyond creating the offering, you must navigate sales complexities, learn new software, craft contracts, and develop sales strategies. Building a reputation, relationships, and customer base takes time and effort unless you're well-known in your industry. Like any business, success isn't guaranteed, and risk can't be eliminated.

5. Fundings:

Starting a business requires initial capital, which is essential for launching. Despite being focused on creative ideas, securing funds is vital for your business's survival. Explore various investment avenues like angel investors, crowdfunding, venture capital, and business lenders to fund the business. Long-term loans from banks are also viable, although interest rates may be high. So, when deciding which is the best business to start in India, analyze the business costs and then narrow down the funding options. The business costs here include the cost of machinery, if any, insurance costs, location or premises costs, marketing costs, compliance costs, and employee costs. 

Benefits of starting a business:

  • Unlimited Earning Potential: Unlike being an employee with a fixed salary, your income isn't restricted as an entrepreneur. You earn based on the value you provide customers rather than the number of hours worked.
  • Decoupling Income from Time and Effort: Your earnings are tied to time, whether you're salaried or a freelancer paid by the hour or task. But with a successful business, income isn't limited by hours worked; it's driven by customer demand.
  • Learning and Personal Growth: Running your own business accelerates your understanding of branding, product development, marketing, customer service, and management. It offers a fast track to personal and professional growth.

Conclusion:

Answering ‘How to choose which business to start?’ takes time and effort. Your future business will need all your effort and attention. So, pick the one that excites you the most and promises good returns. Don't spread yourself too thin or risk financial strain and burnout. If you cannot choose, seek advice from fellow entrepreneurs or a business coach. 

FAQs:

Q1. How do you check the scalability of a business idea?

Ans. When planning for a future business, thinking about scalability is imperative. Here are key questions to assess if your business idea can expand effectively and enduringly:

  • Does your idea cater to continuous customer demand?
  • Can you reliably replicate your product or service numerous times?
  • Will your idea meet evolving customer needs and standards as the business expands?
  • Does your concept require frequent reassessment or adjustments over time?

If you find yourself answering "no" to these questions, it could indicate that your business idea might face challenges in scaling up easily.

Q2. What other aspects should you consider when deciding on the product or service chosen?

Ans. When starting a business, there are other factors to think about. First, decide whether to make and ship a product or offer a service. If you choose a product, consider how you'll ship it and the costs involved. You might need to buy specific equipment like pest control machines or salon gear if it's a service. Also, keep up with your business bookkeeping right from the start to avoid accounting issues.

Q3. What government schemes have been implemented to promote startups in India?

Ans. Some of the start-up-friendly schemes introduced by the government include-

  • Startup India Seed Fund Scheme (SISFS)
  • Credit Guarantee Scheme for startups
  • Atal Innovation Mission
  • Pradhan Mantri Mudra Yojana
  • Ebiz portal
  • Market Access Promotion scheme

Q4. Which business is good to start in india?

Ans. Businesses like food parlours, mobile payment wallet businesses, biometric sensor businesses, last-mile delivery services, affiliate marketing, data analyst consultancy, cloud kitchens, and drop shipping can be successfully established in the Indian market. 

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