Star your own bussiness today


Choosing a profitable bussiness

Choosing the right business is the firstside of the spectrum from those who
step to entrepreneurial success.believe in safety in numbers are those
According to studies made by the U.S.who think that they are better off in a
Small Business Administration, only 66.0business with fewer competitors. This is
percent of small businesses survive itsthe idea behind the strategy of focusing
first two years, and survival rateon a market niche, which has proven to
lowers to 39.5 percent in at least 6be apt, even a lifesaver, for many small
years. In 2000, it is estimated thatand home-based businesses. Niche entails
550,000 small businesses closed, andoffering unique products or services to
business failure for one-persona few concentrated markets.
businesses is about 38.2 percent.5. Rapid Growth. You may also want to
Your goal, therefore, as an entrepreneurstart a business that has enjoyed fast
is to find a business that stands agrowth in the past years. A rapidly
greater chance at success. You will needgrowing business sector, where many new
to determine what you can and cannot do,businesses continue to operate, shows
research on the potential market and howthat there is great demand for the
other similar businesses are doing, andproduct; the market can absorb new
what works well in your area or selectedentrants; and if by looking at the size
business medium.of businesses operating, the market may
1. Less Money Out. The first school ofbe profitable even for one-person
thought focuses on the amount ofbusinesses.
resources that you have. The kind ofUsing data from the Bureau of Census,
business that you start depends on theyou will find that the sectors that
amount of capital you can raise. If youenjoyed the most rapid growth from 1972
have deep pockets, you can go all outto 1987 include the following: Gift,
with your business - getting first-ratenovelty and souvenir stores (up 216%);
equipment and furnishings, hiringHobby, toy and game shops (up 180%);
employees, launching the business inbook stores (up 137%); Sporting good
grand style, and buying loads ofstores and bicycle shops (up 127%); and
inventory. However, if you have littleflorists (up by 108%).
capital, all you can do is to stretchThe sectors that saw a decrease include:
what you have and start the business onDrinking places (down 17%); Household
a much smaller scale.appliance stores (down 15%); and variety
You may have a wonderful concept for astores (down 5%). The reasons for the
children's bookstore with play andshrinking number of businesses in these
storytelling sections for kids, and asectors include overcrowding and
coffee shop for the adults. That kind ofdeclining customer interest and demand.
vision requires vast amounts of capital6. Failure Rate Method. You may check
- from inventory, lease, furnishings andthe businesses with the greatest number
store docor. If you cannot finance yourof failure record. Dun and Bradstreet
vision, you may need to downscale your(http://www.dnb.com) publishes a yearly
business and instead find ways to startBusiness Failure Record report. This
on this route but without the expense.report is not merely an estimate; but
One way is to start an e-commerce siterepresent complete tallies of business
where you will not have to pay forfailures. D&B defines business failures
furnishings, expensive rent and otheras those that "ceased operations
overhead that a retail store will need.following assignment or bankruptcy;
2. Novelty and Excitement. Anotherceased operations with losses to
strategy for selecting a business is tocreditors after such actions as
start one that is currently hot, hip andforeclosure or attachment; voluntarily
new. In the Philippines, for example,withdrew leaving unpaid debts; were
pearl shakes - an innovative coolinvolved in court actions such as
beverage drink in natural flavors mixedreceivership, reorganization or
with "pearls," or dark, spherical, chewyarrangement; or voluntarily compromised
balls made from yam and tapioca --with creditors." In 1997, the businesses
became the hottest craze in town. Momwith the lowest failure rates (per 1,000
and pop stalls and cafes offering thislisted concerns) include drug and
new drink popped up all over theproprietary stores (33); fuel dealers
metropolitan Manila.(37); sewing, needlework and piece goods
You can join in the fray, and start a(41), used merchandise stores (47); and
business that has already proven itselfliquor store (52). On the other hand,
to be a moneymaker for others. However,non-store retailers (216); trucking and
there is danger in adopting a start-upwarehousing (208); fishing, hunting and
strategy on prior demand--demand alreadytrapping (273) are the businesses with
created by others. What if the businessthe highest failure records.
runs out of steam, and the novelty and7. Biggest Payoff. Another logical
excitement that pushed it initiallychoice for choosing a business is to
wears thin? You may be faced withlook for those that yields the best
cutthroat competition, withreturn-on-investment. This approach
price-cutting as the ultimate marketinginvolves "checking through the operating
weapon of choice.results for different business types to
3. Safety in Numbers. As a newfind those with high percentages of
entrepreneur, you may also consider aoperating profit." The best source of
business that has already provendata that would allow you to determine
popular, dependable with consistentan industry's operating profit is the
demand, and can be found everywhere.Risk Management Association's http:/
Common businesses include eating places,www.rmahq.org Annual Statement Studies.
groceries, used merchandise stores, giftThis report offers financial statement
and novelty stores. If these businessesratios of small and medium-sized
have staying power and are frequentlybusinesses on about 600 industries. The
found, then they must be profitable,book costs $145 for non-members, but
right? Well, not always. There is suchcheck with your local library if they
thing called "market over saturation." Acarry the publication.
small town may be able to accommodateWhatever business you decide to start,
only one gift shop. Add another one andthe key is to put up an enterprise that
you may be stretching the market toofills an unmet need of the market and to
thin, and end up in the dustbin.look for new niches to dominate.
4. The Fewer, the Better. On the other



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