When it comes to picking the best business to start right now, you can either follow a current trend, or you can make sure your new business follow three simple rules for start-up success!
Over the past few years I have spent a lot of time at workforce centers doing a free seminar to dislocated workers on how to successfully start a small business. I have done this seminar over 40 times and in each session I get asked the question “What is the best business to start right now?” The meaning behind the question is clear. The person asking the question is looking for the perfect business based on trends and economic issues.
I answer this question two ways. I usually start by explaining that trends are happening in our society right now that provide opportunities for business startups—and in some cases recession-proof businesses. For example, businesses that provide services to help people live more independent lives as they get older are good because the target market is continuing to grow rapidly. Green businesses are very positively received right now. The problem with most “green” businesses is that they don’t have a sustainable business model and getting to cash flow requires a lot of capital, just look at Solyndra for example. Another seemingly recession-proof business is any venture that deals with pets. For some reason, people will continue to spend money on pets even when they are in financial trouble. Trends are great, but trends can change rapidly! My experience in the video rental business taught me that.
The second way I answer this question is by saying that any business is a good business to start right now if the business follows three simple rules. The first rule is that your new business has significant competitive advantages over the competition. Having a significant competitive advantage means you can separate yourself, and in many cases “one-up” the completion which is critical at the initial stage of any business.
The second rule is that the business owner has vast experience in the industry the new business is in. This is really important because there is no learning curve and the business owner already knows the ins and outs of the industry, and knows what to expect. In many cases his or her past reputation allows the business to gain traction, exposure, and new customers quickly.
The third rule is that business must get to positive cash flow quickly. Today, if you’re small business can’t get to positive cash flow in the first 3-6 months; it will be very difficult to obtain funding. Most investors and bankers want to see positive cash flow in at least the first year, but what they really want is positive cash flow in the first three to six months!
If you’re new business idea can follow the current trends AND you can follow the three rules, then that is a great business to start right now. To comment on this blog e-mail me at email@example.com.