Finding the Best Business to Start Right Now!
Over the past few years I have spent a lot of time at workforce centers holding free seminars for dislocated workers on how to successfully start a small business. I have done this seminar more than 50 times, and in each session I invariably get asked the same question: "What is the best business to start right now?"
The meaning behind this question is clear. The person asking the question is looking for the perfect business based on current growth trends and economic issues.
Looking for Recession-Proof Trends
I answer this question two ways. I usually start by explaining that various social or cultural trends can provide opportunites for business startups and even "recession-proof" businesses. For example, businesses that provide services to help aging seniors live more independant lives are a smart bet because the target market is growiing rapidly.
Similarly, "green" businesses are being positively received right now. (The problem with "green" businesses is that many don't have a sustainable business model and can require a lot of start-up capital: just look at Solyndra!) Pet-rlated businesses also seem recession-resistant. For some reason, people will continue to spend money on their pets even when they are in financial trouble.
But be warned: Trends are important, but they can change rapidly. My expererice in the video rental business taught me that.
Three Traits That Predict Startup Success
The second way I answer the question is to explain that any business can be a good business to start if it has three particular traits:
First, the business should have a significant competitive advantage over the competition. That means you can seperate yourself from the pack and quickly gain exposure with prospective customers.
Trait number two is a business owner with vast experience in the industry. Deep experience flattens the learning curve and helps avoid unpleasant surprises. In many cases the business owner's reputation can help the startup gain traction quickly.
Third, the business should be able to get to positive cash flow quickly. In today's credit markets, if your small business can't show how it will get to positive cash flow in the first 3-6 months; it will be difficult to obtain funding. Almost all investors and bankers want to see positive cash flow in at least the first year, but what they're really looking for is positive cash flow in the first quarter or two.
If your new business idea follows current growth trends and it possesss all of three of these traits, it's likely a great business to start right now.
