| Choosing the right business is the first | | | | side 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 66.0 | | | | business with fewer competitors. This is |
| percent of small businesses survive its | | | | the idea behind the strategy of focusing |
| first two years, and survival rate | | | | on a market niche, which has proven to |
| lowers to 39.5 percent in at least 6 | | | | be apt, even a lifesaver, for many small |
| years. In 2000, it is estimated that | | | | and home-based businesses. Niche entails |
| 550,000 small businesses closed, and | | | | offering unique products or services to |
| business failure for one-person | | | | a few concentrated markets. |
| businesses is about 38.2 percent. | | | | 5. Rapid Growth. You may also want to |
| Your goal, therefore, as an entrepreneur | | | | start a business that has enjoyed fast |
| is to find a business that stands a | | | | growth in the past years. A rapidly |
| greater chance at success. You will need | | | | growing business sector, where many new |
| to determine what you can and cannot do, | | | | businesses continue to operate, shows |
| research on the potential market and how | | | | that there is great demand for the |
| other similar businesses are doing, and | | | | product; the market can absorb new |
| what works well in your area or selected | | | | entrants; and if by looking at the size |
| business medium. | | | | of businesses operating, the market may |
| 1. Less Money Out. The first school of | | | | be profitable even for one-person |
| thought focuses on the amount of | | | | businesses. |
| resources that you have. The kind of | | | | Using data from the Bureau of Census, |
| business that you start depends on the | | | | you will find that the sectors that |
| amount of capital you can raise. If you | | | | enjoyed the most rapid growth from 1972 |
| have deep pockets, you can go all out | | | | to 1987 include the following: Gift, |
| with your business - getting first-rate | | | | novelty and souvenir stores (up 216%); |
| equipment and furnishings, hiring | | | | Hobby, toy and game shops (up 180%); |
| employees, launching the business in | | | | book stores (up 137%); Sporting good |
| grand style, and buying loads of | | | | stores and bicycle shops (up 127%); and |
| inventory. However, if you have little | | | | florists (up by 108%). |
| capital, all you can do is to stretch | | | | The sectors that saw a decrease include: |
| what you have and start the business on | | | | Drinking places (down 17%); Household |
| a much smaller scale. | | | | appliance stores (down 15%); and variety |
| You may have a wonderful concept for a | | | | stores (down 5%). The reasons for the |
| children's bookstore with play and | | | | shrinking number of businesses in these |
| storytelling sections for kids, and a | | | | sectors include overcrowding and |
| coffee shop for the adults. That kind of | | | | declining customer interest and demand. |
| vision requires vast amounts of capital | | | | 6. Failure Rate Method. You may check |
| - from inventory, lease, furnishings and | | | | the businesses with the greatest number |
| store docor. If you cannot finance your | | | | of 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 start | | | | Business 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 site | | | | represent complete tallies of business |
| where you will not have to pay for | | | | failures. D&B defines business failures |
| furnishings, expensive rent and other | | | | as those that "ceased operations |
| overhead that a retail store will need. | | | | following assignment or bankruptcy; |
| 2. Novelty and Excitement. Another | | | | ceased operations with losses to |
| strategy for selecting a business is to | | | | creditors after such actions as |
| start one that is currently hot, hip and | | | | foreclosure or attachment; voluntarily |
| new. In the Philippines, for example, | | | | withdrew leaving unpaid debts; were |
| pearl shakes - an innovative cool | | | | involved in court actions such as |
| beverage drink in natural flavors mixed | | | | receivership, reorganization or |
| with "pearls," or dark, spherical, chewy | | | | arrangement; or voluntarily compromised |
| balls made from yam and tapioca -- | | | | with creditors." In 1997, the businesses |
| became the hottest craze in town. Mom | | | | with the lowest failure rates (per 1,000 |
| and pop stalls and cafes offering this | | | | listed concerns) include drug and |
| new drink popped up all over the | | | | proprietary 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 itself | | | | liquor 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-up | | | | warehousing (208); fishing, hunting and |
| strategy on prior demand--demand already | | | | trapping (273) are the businesses with |
| created by others. What if the business | | | | the highest failure records. |
| runs out of steam, and the novelty and | | | | 7. Biggest Payoff. Another logical |
| excitement that pushed it initially | | | | choice for choosing a business is to |
| wears thin? You may be faced with | | | | look for those that yields the best |
| cutthroat competition, with | | | | return-on-investment. This approach |
| price-cutting as the ultimate marketing | | | | involves "checking through the operating |
| weapon of choice. | | | | results for different business types to |
| 3. Safety in Numbers. As a new | | | | find those with high percentages of |
| entrepreneur, you may also consider a | | | | operating profit." The best source of |
| business that has already proven | | | | data that would allow you to determine |
| popular, dependable with consistent | | | | an 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, gift | | | | This report offers financial statement |
| and novelty stores. If these businesses | | | | ratios of small and medium-sized |
| have staying power and are frequently | | | | businesses on about 600 industries. The |
| found, then they must be profitable, | | | | book costs $145 for non-members, but |
| right? Well, not always. There is such | | | | check with your local library if they |
| thing called "market over saturation." A | | | | carry the publication. |
| small town may be able to accommodate | | | | Whatever business you decide to start, |
| only one gift shop. Add another one and | | | | the key is to put up an enterprise that |
| you may be stretching the market too | | | | fills 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 | | | | |