When a business liquidates or stops operating, the proprietor incurs debts—financial and moral. Study suggests that more than seventy percent of startups do not last the first five years. It’s a stunning figure and this is why an entrepreneur must be careful when deciding on the line of business to trade. Below are some tips that will help you choose the right business.
Passion is one the most important factors in any career and business choice—especially for start-ups. Investing your money—and other people’s money in a business you are not passionate about is unwise. A natural technician has a higher chance of succeeding if he invests into an idea related to the technicalities of technicians than when he invests in an idea that centers on food. When you are passionate, you work hard at your business even when you are not making a dime.
Production cost is an essential factor to consider when deciding on a business. Never take a loan to run an untested business idea. If your finance isn’t capable of running a business at a particular level, consider running another business or reducing the level to a lower-cost capacity. That is, an entrepreneur who dreams of owning his own school, but cannot due to financial inhibitions should consider running a daycare center—within his home, or offering home schooling service to earn enough income to finally have the school. This is a wiser decision than an attempt by the entrepreneur to take a loan, using his house as collateral to fund a business.
At times, the solution to finances isn’t business but skill. The concept is drawn from the ESBN concept. The ESBI concept defines the four kinds of income earners. E stands for employee—people who work for other people to earn salaries or wages. S stands for self-employed—people who render their skills to clients and earn income from the skills. B stands or business-owner—people who own and run their companies. I stands for investor—people who invest into businesses and business ideas, in order to generate or yield income from their investments. An entrepreneur trying to run a business might face financial problems from the inception of the business but a person—like financial advisors, marriage counselors, lawyers, singers, pianists, footballers, earn a lot of money with little overhead costs compared to the cost of starting a business. Your best move might be to bring your skill or value to the marketplace and trade such value for money—rather than a business.
When starting out, you may need to partner with people who have the relevant skill to make the business grow. Cost of production will dramatically increase if you have to pay everyone that puts his time into your business—experts only care about their money. A partnership is a great way to reduce cost and generate creativity. The good side of partnership is that if the business crumbles, you are not obligated to pay your partner his investment—both in time and cash. Core team members must be driven to make the business a success.
For more tips on choosing the right business and team join my free masterclass on How to Build Your Million Dollar Team. Click here to join my masterclass.