How to Decide What Business to Start

Does the following sound like you?

You’re tired of being a replaceable cog in the corporate machine, of building someone else’s dream instead of pursuing your own. 

You want to start a business and be your own boss. 

There’s just one problem.

You don’t know what business to start. 

Thankfully, that’s exactly what this article is here to help with. 

Below, I’ll show you how to kickstart your journey towards becoming a business owner. 

Originally published on February 13th, 2017, this article was updated and republished on July 23rd, 2024.

What Are the First Things to Consider When Deciding to Start a Business?

I know firsthand that starting a business can feel incredibly daunting. You’re stepping out of your comfort zone, after all.

But spending too long thinking will stop you from actually doing.

With that in mind, here are a few essential tips that will stop analysis paralysis and spur you into action:

1. Start Moving Before You’re Ready

Coming up with online business ideas doesn’t happen in a vacuum, and it doesn’t happen when you are standing still. As you try out ideas, start things, shut things down, and pivot, you move closer to your new business idea.

Deciding what business to start is like jumping onto a merry-go-round — you don’t want to be standing still when you make the leap, or you could lose an arm.

You need to be in motion to get in on the fun. Coming up with your best business ideas is the same concept. Momentum breeds momentum, and motion is what will enable you to start your own business.

In the same way the kid in the playground runs beside the merry-go-round before jumping on with his friends, you need to be in motion first.

When you’re in motion, ideas and opportunities appear. When you’re standing still waiting for the perfect business idea, you get left behind and miss out on the action.

There is a reason why so many successful entrepreneurs start one business after another: their motion breeds ideas, relationships, and opportunities to start more and more businesses.

2. Choose a Niche Within a Big Market

A niche within a big market might sound like a misnomer.

So let me clarify.

The thing is, you want to avoid trying to start a business within a tiny market.

That’s because it’s way easier to build a well-defined business in a big market than it is to build one within a tiny niche market.

Think of it in terms of market size and not ‘how hard’ it might be for you to get started.

Would you rather have 1% of a $100,000,000 market or 87% of a $10,000 market?

The math doesn’t lie. You want the one percent stake in the larger market.

So, stop thinking of it as a choice between a small niche and a big market. 

Instead, aim to find your niche (or positioning) within an already existing big market, define who your audience is, and then stop. 

3. Avoid Unique Business Ideas

How many times have you had a brilliant idea for a new business or product, navigated to Google, only to find your idea already exists?

Your excitement immediately turns to dread. Followed by the voice in your head.

What if you don’t have any good business ideas? What if you aren’t cut out to be an entrepreneur?

The next time this happens, here’s a better question to ask yourself:

“Do I want a business idea that has never been successful or an idea that is already profitable?”

Deciding to start a business is hard enough, and the deck is already stacked against your success. Don’t make it harder on yourself.

Start your business where others have already had success. You’ll not only increase your chances of success, but you’ll have a proven roadmap to follow.

In 2015, Laura Roeder was educating people on how to effectively use social media in their small businesses. Then she had an idea to turn her social media scheduling processes into a piece of software.

At the time, there were two serious competitors in this market. In fact, one of them had monthly recurring revenues of $600,000 (now over $1 million).

The competition didn’t stop Laura from moving ahead and starting Edgar.

In fact, Laura believed a certain number of customers who already paid for a product in her market would pay for hers.

She was right.

Within 18 months, Laura had taken Edgar to $150,000 in monthly revenue and has continued to grow it since then.

This is a simple mindset shift you need to make. Think of competition as proof of concept, not as a barrier to entry.

When you can enter your market knowing that there are already people willing to pay to have a problem solved, you’re starting with an enormous advantage.

Starting a Business Vs. Making Money

Wait, aren’t these the same thing?

Yes and no.

Not all businesses are created equally. Some ideas will take longer than others to enter the marketplace, build an MVP, and become profitable — if profitability ever happens.

If you need to be profitable right now, then you need to think more about making money than you do about starting a business.

Hustle, get some cash flow and forward momentum going, then use your momentum to jump onto the merry-go-round and join in the fun.

The fastest way to do this is to become a freelancer.

I don’t care who you are — you have the skills required by other people. Skills that hold value.

Take your skills and find clients through personal connections, social media, or a freelance marketplace.

On the other hand, if you don’t need to create an income source immediately, then you’re ready to start a business.

How to Figure Out What Business to Start

Next up, we’re going to look at the business ideation process. Here’s how to decide exactly what kind of business you should start:

1. Self-Assess

You have a unique blend of personality traits, experiences, and skills that you can harness to create a thriving business. 

To hone in on these qualities, get a sheet of paper and write down your answers, first from a personal perspective and then from a professional perspective. 

• What are seven of my top strengths?
• What are seven things I’m interested in? 
• What are seven things I don’t like to do?
• What five products or services would enrich my life?

Once you’ve got your answers, analyze them to see if any patterns stand out. 

2. Generate Ideas

Now you’ve got a deeper understanding of your interests and pain points, it’s time to start brainstorming. 

No idea is a stupid idea. Write down as many absurd, bombastic, and mundane suggestions as possible. 

Usually, the more you write, the more creative you’ll become. And your ideas will get better and better.

Don’t feel like you have to go at it alone, either. The best business ideas can come about from talking with friends and family. 

Speaking with people you trust can also add a dash of realism to the process, helping you narrow down your options to ones that suit your personality, lifestyle, and goals. 

3. Research the Markets

Next, narrow down your list to three to five business ideas. These should be a mixture of ideas that appeal to you personally and ones that you think have the most potential commercially. 

Then, it’s time to validate your ideas through market research. 

When it comes to research, your first thought might be to look at competitor businesses. But before you do that, you’ll want to focus on the following:

• Who is your target customer? 
• What are their needs and pain points?
• What are their spending habits?
• How big is the industry you’re looking to get into?
• What regulations and laws should you be aware of in this industry? 
• What are the current trends and predictions for this marketplace? 

I want to emphasize that this step is extremely important. Don’t just click on an article on the first page of Google and call it a day. 

Look at social media, market reports, articles, industry publications, and more to build out comprehensive, data-backed answers to the above questions. 

4. Do a Competitive Analysis

You’re now ready to check out the competition. Look at other businesses selling products and services similar to your proposed ideas. 

Are customers getting everything they want from these competitors? What are customer reviews like? How successful are these companies year on year? 

Don’t forget to research things like product price, competitor suppliers, and the business’ operational structure, too. 

How do you find all this information? 

First off, company websites can be helpful. But that’s just the beginning. Places like LinkedIn, review sites, social media, and magazine interviews will all come in handy. 

Ultimately, your goal is to understand how your competitors position themselves and how well they’re performing. 

That will help you understand how you can stand out.

5. Create a Business Model

One business is standing out to you as the clear winner. You’re ready to create your business model. 

Even if you’re swaying between two or three concepts, your best bet is to choose one and take the plunge. Maintaining momentum is key, and you can always pivot as you learn more. 

Creating a business model can be just as overwhelming as it is exciting. But the good news is that you’ve already done the hard work by performing the market research above.

And if you’re wondering, do I really need to make one? The answer is a resounding yes. 

Think of your business model as your roadmap. It will guide you through each phase of starting your business and ensure you don’t accidentally forget anything vital. 

There’s no one way to format your business model, but it should always include the following: 

• Your ideal buyer: Their needs, demographics, desires, and challenges. 
• Your value proposition: What are you offering to your buyer? How is it different from other products or services out there? 
• Key channels: How will your products and services reach your audience? Think about the entire customer lifecycle here. That’s reach, acquisition, conversion, retention, and loyalty.
• Resources: This refers to what you’ll need to bring your company to life. If you want to get into the restaurant industry, for example, it’ll probably be employees, equipment, a physical location, and so on.
• Partners: Hand-in-hand with resources go partners. These are the suppliers who help you to deliver your products or services.
• Revenue streams: Answer how you plan to make income. What will your customer pay for, and how much? Will you explore any other forms of monetization?
• Cost structure: What are the estimated costs associated with running your business? How can you make sure it’s profitable?

6. Plan Your First Months

Your business model will help you understand what you need to do to get your business up and running. 

It’s wise to plan out the essential activities you need to perform over three to six months. This will prevent you from getting overwhelmed and give you a feeling of progress as you tick things off the list. 

Exactly what the first few months look like will vary widely depending on the industry you’re breaking into. For example, if you’re becoming a digital consultant, your focus will probably be on nailing your business name and branding, getting your website up, marketing on social media, and winning clients.

For more complex business structures where you need to source products, your first 90 days will likely center around sourcing suppliers, perfecting your product, and building your social media presence.

7. Execute

Congratulations! You’ve reached the final step. It’s time to launch your business and become your own boss. 

Remember that the best plans are often agile. Becoming an entrepreneur is a journey, so keep an ear to the ground and enhance your business model based on what you learn along the way.

The Best Business Ideas

Don’t sit around waiting for a brilliant idea to fall into your lap. That’s not how it works.

Just as we can create our own luck by putting ourselves in the way of opportunities, we can stop waiting and look around for business ideas and opportunities.

Every product or service you use on a daily basis can and should become a business opportunity for you to ponder.

Each and every problem or frustration you encounter is a potential business. It’s your job to become aware of them.

Want a helping hand getting started? My company, Digital Commerce Partners, helps new and established businesses supercharge organic targeted traffic to their websites. 

Contact us today to see if we can help you build a thriving business faster.

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