Monthly Archives: April 2015

Unbelievable Exercise Machine Business- Can You Make Any Money With an Ultra High End Pricing Strategy?

I was flipping through a Kiplinger’s magazine, when I came across an ad for an exercise machine promising a full workout in only four minutes.

I don’t normally pay much attention, since I generally believe that most exercise machines, like most diet pills and diet plans, are simply a way to take money from people looking for an easy way out of what is otherwise hard work. Most don’t live up to their promises of amazing results with hardly any effort, and so they sit unused.

Meanwhile, the sellers have taken their profits to the bank. That’s fine, it’s a free country and as long as they don’t violate any FTC rules on advertising or product claims, then gullible people are always going to provide a market for these kinds of products.

This particular ad caught my attention, however, because the machine was priced at $14,615. Plus, it looked like a medieval torture device, or possibly the result of an explosion in a metal shop.

Now, normally in these types of ads the price is either not shown, or shown in small type, and broken into some number of “easy” payments. But this ad glaringly displayed in large type the full price. Then most of the rest of the ad goes on to explain how no one believes their four minute claim, even though it is true.

I was interested enough in trying to discover the business plan behind this product to check out the website, to see if I could make sense of it. On the site, the founder explains how they hadn’t even turned a profit until 2001, despite launching in 1990, and then goes on to explain the high cost in terms of two people using it over 30 years, plus their offspring using it, etc. He also goes into something about how reducing the price when there isn’t a “ready market” won’t increase sales, and then compares it the price of a Boeing 747.

Clearly, he lost me. I don’t want to wait for my children to start using something before I start to see a reasonable payoff on my investment- at least not when we are talking about exercise equipment. I also don’t expect the cost to be compared to a jetliner, or even a small car. I don’t want to have to use it thousands of times for the cost per use to be under a dollar, or even under five dollars.

So is this business making any money? Well, I would guess that they only have to sell one to make back the cost of their ad in Kiplinger’s. And I would guess, even manufactured in low volume the machine itself only costs a few thousand dollars to produce. Therefore, if they could do any kind of volume at all, there would be a lot of profit in the sales.

But, how many people can spend that kind of money on exercise equipment? Very, very few. The website doesn’t even mention any financing options. And then of the people who do have the cash, how many are willing to spend it on this? An even tinier percentage, at which point I can certainly believe that they made no money with this product for the first twelve years.

For that kind of money, you can buy any exercise you want, including membership at a high end gym and a personal trainer for every workout session.

This product has two serious objections to overcome, which I think is one too many. First, you have to believe that it will do what it says, and then you have to believe that the promise if delivered is worth the extremely high asking price. That is going to be too high a hurdle for nearly every person that sees it- probably more than will ever allow this to become a viable product at this price.

A high price, or even an ultra high priced product with only one objection to overcome has a fighting chance of success. A Ferrari is a very expensive car, but it goes much faster and looks much different than your average car, so if you decide to buy it, no one has to convince you that you are getting something of value for your money. They only have to convince you to drop that much money in the first place. People may be jealous of your Ferrari, but you won’t have to convince them that you got something good for your cash.

The problem with the exercise machine is that if you ever tell anyone how much you spent on it, they will think, and probably say out loud, that you are an idiot. And that is a stigma that no product should have to overcome if you want it to be successful.

So is it making any money? Well, they wouldn’t still be selling it if no one was buying… but is it the best strategy for the most sales? Maybe not.

Finding the Right Motivation for Starting Your Own Business

The idea of starting a business is very attractive to many people. It is practically a genetically imprinted desire in the United States to want to one day own your own business.

At last report, nearly 3 out of 4 adult Americans indicated a desire to someday start their own business. I know I have always been one of them!

So there seems to be no shortage of initial motivation. The problem is getting it to the point of actually starting a business, and then keeping it up long enough to enjoy some of the rewards of business ownership.

The main reasons initial many motivations don’t translate into actually starting a business is because they are based on largely false conceptions or easily overcome problems that people simply don’t take the time to properly evaluate. The actual motivations that are strong enough to get people to be successful in their own businesses are the ones to identify for yourself and put to use.

Motivations That Don’t Usually Work

First, let’s examine the motivations that generally don’t work for getting you into your own business. The most often cited are:

  • Desire to make a lot of money
  • Desire to lead the easy life
  • Desire to not be bossed around
  • Desire to impress others
  • Desire to be like someone else
  • Desire to have more free time/no schedule

Don’t these things all happen for people who own their own businesses, and so doesn’t that make them reasonable motivations for someone just starting out? The answer is no. Why? Because these events are usually byproducts of whatever got successful entrepreneurs to where they are in the first place. They are not what got them started, or helped them get through the tough startup phase.

Lots of people want to start their own business because they keep hearing it is the best way to become wealthy. It is true that owning a business is a much more reliable route to eventual wealth than working a 9 to 5 job. It is also true, however, that there can be some very lean years, and that the money often only comes after a lot of hard low paid work in the beginning.

People who think owning a business is the way to get rich and are motivated by the wealth factor are often turned off by the idea of hard work for little money, often less than they are making now, and so they never get started.

The same idea goes with people who see business owners driving nice cars or taking vacations they themselves couldn’t afford. The thing they imagine is a gilded lifestyle with lots of downtime and pampering. The reality of starting a business and making little money for an unknown amount of time is too daunting for them to be willing to take the chance.

But what about not wanting to be bossed around? Don’t lots of people start their own businesses because they want to be their own boss? That is true, however, there is a difference between wanting to do something yourself and simply not wanting to be told what to do.

Many people resent their bosses, or dislike being given direction, but that doesn’t mean that they are in any way motivated to actually do something on their own. Maybe part of the problem is that they are getting “bossed around” because they don’t get much done at all!

An even weaker form of motivation is wanting to impress others, or to be like someone else. People who are mainly driven to try and impress others will not be able to stand up to the criticism and naysayers actual entrepreneurs deal with on a regular basis.

Most serious entrepreneurs are pretty independent people, not overly concerned with what others think of them or trying very hard to get their egos stoked. That doesn’t mean they can’t be charming and make good salesmen and be flattered by admirers, but it is true that these are not their main motivations for getting to where they are in business.

The motivation to have a free time and not have to get up for an alarm clock is maybe the least informed perception of an actual entrepreneur’s life and so is a truly weak motivation that is easily upset by reality.

While it is true that many successful entrepreneurs can take more time off and be more flexible with their schedules than many employees, it is also true that they are very hard working as a general rule, and no one has to force them to get up to go to work- they like to go and often get in earlier and stay later than the people they hire to help them.

Motivations That DO Usually Work

OK- so if these motivations, which most people claim are the reasons they want to own their own businesses, are not going to get them very far, what kinds of motivations are going to be strong enough to get someone to start a business?

These are the most common motivations for actually starting a business:

  • Did the same thing for a boss, thought they could do better
  • Saw a great opportunity and couldn’t let it go
  • Couldn’t stand working for someone else
  • Started as a hobby, grew from there
  • Didn’t have any other options
  • Fell into it and liked it too much to quit

If you already find yourself in one of these situations, you may realize you already have the motivation you need. If you haven’t started yet, it is likely not because of lack of motivation, but something else is holding you back, which you should be able to overcome.

If you don’t see how one of these may fit with your present situation, then these are what to look for in trying to get motivated. Some may be harder than others.

For example, if you haven’t seen any great opportunities come by, then you can’t just make on happen. You can learn how to spot business opportunities better, but spotting one and actually finding it motivate you is not the same thing.

You also obviously can’t make yourself fall into something you turn into a business. Usually this happens when you have a particular talent or ability to do something, and you find people keep asking you to help them out. Pretty soon, you find that you can charge them for your help, and sooner or later this becomes a full time business.

You can’t go into competition with your bosses in all cases- sometimes the requirements of starting that particular business may be beyond your means. Other times, you aren’t working in a field you would want to get into, or you may not be working at all. Some enterprising people, however, will go get a job in a field they intend to start a business in, to first learn the ropes while getting paid, and determine if they really want to go into it full time on their own. If you have an idea that fits this scenario you may want to do this because it is a fantastic way to do market research.

People who start their own business because they don’t have any other options are often hampered by their legal status, previous record, personal credit or language issues that hold them back from getting an acceptable job anywhere else. They are motivated to succeed by the fact they really have no fall back plans.

If you are starting a business because you can’t stand working for someone else, you have to realize it isn’t that you can’t stand work, or can’t stand your boss, it is simply that you need to do your own thing. You also should be OK working with people in general, and able to deal with customers, who are like bosses in some ways- if you don’t make them happy they will “fire” you by not giving you business anymore.

The difference between these motivations and the ones listed originally are that they are core beliefs that will withstand hard times and tough challenges.

The “compete with the boss”, “hobby becomes business” and “fell into it” motivations all come with a pre-existing notion that the business will work because the people involved have already seen it work, either on a smaller scale, or for someone else.

The “great opportunity” motivation usually buries itself deep in the entrepreneur’s brain beyond any doubts, so it remains there until it is either proven or some seriously powerful notion dislodges it- far beyond the normal self doubt and fears that sidetrack lesser enthusiasm.

The “can’t stand bosses” motivation works because it is based around a deep seated belief that there just is no other way. This is one I fell into. I can and have worked for other people but it never felt right and I always knew on some pretty basic level that I would be self employed. The bookkeeping service I own now is just the most recent in a long line of things I’ve tried (many of which have not worked out) rather than going back to work for someone else. Once I took my last paycheck I never looked back and never had plans to go back- it just wasn’t me.

The “no other options” motivation is based around the actuality of there is no other way. In both cases, these are not motivations that can be easily thrown off. If a person in either situation is barred from proceeding on one plan, they will simply switch tracks and keep trying. Unlike the other motivations which are built around a faith that it will work out, these two are based around a conviction that it has to work.

These are not hard and fast rules, obviously, and some people have been successful in getting into a business simply because they wanted to make a lot of money and saw that as the best way to go. For the majority of successful business owners, however, the motivation came from one of the reasons listed above that had nothing to do with wealth, free time or any other day dream type of perks associated with entrepreneurship. That doesn’t mean you can’t enjoy those perks, but if that is all that you are aiming for the chances are you are going to fall short long before you get there.

The next step for you is to honestly assess why you want to get started in your own business. If you find your reason listed in the first section, then it is time to stop and think through whether you are ready to deal with the challenges and realities of starting a business. You may want to rethink the business you want to start, and see if there is a reason in the second set of motivations that fits you, and start from there.

Being motivated by something that won’t desert you in hard times is what allows you to be persistent in your attempt to start a business, and persistence is what allows you to succeed. If you find yourself questioning your motivation, this is the first thing to work on in your quest to start a business. Once you have this figured out, the rest is almost easy!

How to Build Support for Starting Your Business Among Your Family and Friends

Having people backing you who believe in what you are doing can make a crucial difference in your overall chances for success.

If you are single and have no one depending on you, this is the easiest situation to be in when starting a business. You may or may not have your patents and friends support, but at least no one else will be financially impacted by your decision.

Things get significantly more difficult when that is not the case. If you have a spouse, they will be part of your financial decision, even if they aren’t part of the business. Having children makes the situation even more complex, because obviously you have to weigh the risks of impacting their welfare as well.

While it is nice to have friends behind you, most serious entrepreneurs will push forward even if most of their friends think they are crazy.

What happens if some or all of these people are telling you not to start the business you want to start? Is there a way to win them over, or is there a way to push forward even if they are against it? Usually, the answer to both questions is yes.

The first question to ask yourself is which people in your life do you consider it important to get support from? There is no point in trying to win over the support of people you don’t really care about convincing, or having be behind your efforts.

Convincing Your Spouse

Usually, the most reluctant person to convince is a spouse. This is because they will usually be the one most impacted by the decision, in many ways. For them it might mean feeling stressed over the financial risk, having to budget more, getting to spend less time with the person starting up or any combination of these worries and others.

The best way to convince a spouse that this is a good idea is to show them that there is a specific plan for the business, and that it isn’t as risky or as overwhelming as it might seem. Usually this just means showing them the business plan. Show them how much money is on the line, and why you think there is a very good chance for the business to be successful.

Show them that you have done the research and ground work necessary to take most of the risk out of the venture. You might also want to talk about back up plans, and other options and milestones that you will either meet or work on considering a different course of action. The idea is to get them comfortable with the plan, and understanding it, so it doesn’t seem like a big unknown risk.

You may also want to solicit their advice and feedback. If they feel they have some part in it, they will be more likely to want to see it succeed than if it seems like something that is just going to pull the other person away.

You can use the same strategy to a lesser degree to demonstrate to anyone else who you would like support from that this isn’t just some crazy scheme, but a well thought out and thoroughly researched plan to accomplish a specific goal.

You don’t want to let other people’s negative impressions of your ambitions turn you off doing what you want to accomplish, so there isn’t much point in spending time explaining yourself to people in general who will tell you all kinds of horror stories about people they’ve known who lost everything in small businesses. At the same time, anyone you run into who may know someone in the business you are entering or have specific experience that can be helpful is worth listening to just for an outside opinion.

Which Advice to Heed and Which to Ignore

For example, if you are starting a dry cleaning business, and some friends tell you it won’t work, but they all have day jobs in unrelated industries, it isn’t worth giving much thought to their comments. If you run into someone who owned a dry cleaning business for ten years, however, and that person tells you that what you are trying to do won’t work, it will certainly be worth listening to them.

You may not agree in the end, but at least they have some credibility, and even if you don’t agree with their ultimate opinion, you may be able to get lots of other useful inside information from them, if you take the time to listen.

If you run into a situation where you have made your best effort to win the support of someone important to you, and you still are unable to do it, then you have to decide what to do next.

One option is to agree with them to disagree, and then set a mutually agreeable way to resolve the situation. For example, suppose no matter how many plans you show them, your spouse will simply not agree that the business is a good idea. You could suggest that you will only invest so much, and only work on it for so long, and then if it isn’t working out, you will move on to something else.

That way, even if they don’t agree, they know there is an end point where either they are proven wrong because it is working, or they are right and you agree to give up and do something else. This way they aren’t worried that the venture will eventually consume the entire worth of the family, or go on so long that eventually there is no way out.

Another option is to get them to agree that if some third party says it is going to be OK, they will support you, and if not they won’t. Obviously this only is fair if the third party is someone neutral, and someone actually capable of listening to the plan and making an educated assessment of the likelihood of success. This is sort of like deciding to go to arbitration.

A third option is to scale back or change the plan to something that is more acceptable. The smaller the project, the less business risk there will be, and the easier it will be to overcome any objections about financial ruin or overwhelming debt.

While there is no absolute requirement that you have the support of your family and friends when you go into business, it certainly makes the overall experience much more palatable and rewarding. If you have to spend mental energy and time everyday overcoming negativity on the home front, in addition to all the challenges of starting a business, it can often be too much. And sometimes, it is too much just at the point where if you had just gone a little further, you would have had a big breakthrough and things would have gotten a lot better.

It is always a good investment of time to build some support for yourself at home before embarking on a startup journey. The business will test you enough without having to fight the fight every night at home as well. If you haven’t done it yet, make sure you spend some time doing it now.

Understanding Risk and How it Relates to Your Business

Lots of people will tell you that entrepreneurs are risk takers. That isn’t actually true.

Most of the entrepreneurs I know would rather avoid risk. What they want to do is maximize their success by jumping into sure things that other people haven’t discovered yet. They use their inside knowledge or insight to make a profit where other people aren’t sure or haven’t seen a way to make a business work.

Risk is defined as: The possibility of suffering harm or loss; danger.

No smart person going into business wants to suffer harm or loss, therefore, they try and stack the odds in their favor, and once they figure the return they can make more than justifies any potential loss, they go for it. Real risk takers are the ones who don’t do any work ahead of time to try and learn what they are getting into, or they go into something knowing the odds are long in the first place.

Most people who have “safe” day jobs will tell you that going into business for yourself is risky. They figure that not getting a paycheck on Friday is taking a risk, and not having a company pay for benefits is risky. In reality, of course, they can get laid off or fired from their job. They also are placing all their eggs in that one basket.

Being self employed is in a lot of ways less risky than having a job- you control your sales volume, and even if one customer leaves you have more to fall back on. You also enjoy certain tax benefits, and can succeed on merit instead of on office politics or an unfair promotion system. But this is after you’ve established yourself. How do you weigh the risk before you start?

The risk of starting a business comes down to two key elements- your previous experience in the same business, and the amount of assets at stake.

The first is pretty easy to determine. The farther what you want to do is from what you know how to do, the bigger the risk. This just makes sense. If you’ve sold insurance for twenty years, but you want to open a restaurant, you are taking a big risk by not having any idea how the business works.

Now exactly how much risk it involves is very dependent on the situation. If you are getting into an easy business to learn, it might not be that big of a problem. There are also several things you can do that will go a long way toward mitigating the problem:

  • Get a job in the industry before you start your business
  • Find a partner with experience
  • Hire an employee with experience
  • Form an advisory board that has a few members with experience
  • Spend time with an owner in the same field in a non competitive area
  • Speak with vendors in the industry
  • Take classes related to the field
  • Thoroughly research the industry

The second aspect of risk is how much is on the line in terms of assets. Assets include not only the cash you put at risk, but anything else you may use to borrow money, such as a house, retirement account, etc.

Obviously the smaller the amount at risk the lower the reward has to be in order for the risk to be worth taking. If you are putting everything you own up to start the business, and failure will mean bankruptcy, that is risky because you have no room to fall back or try something else. On the other hand, if you are only risking a week’s pay, there isn’t much risk at all.

The object is to combine knowledge of the business you are trying to get into with putting the least amount of capital at risk to make the startup as close to a sure thing as possible. The better you can do this, the easier it will be to get motivated to start a business and make it a success.

By the way, evaluating risk doesn’t end when you get your business started. It applies to lots of decisions you make about the direction and ways that you grow, how you hire, how you finance your growth and so on. Just because you have overcome the first hurdles doesn’t mean everything else you do will work out. Or that you are automatically going to be successful in future businesses just because you were successful in your first.

But let’s not end on a down note! One of the beautiful things about this country is that failure does not carry a stigma. So you can try and fail and try and fail and try again and no one will look down on if you keep on trying to succeed. Persistence is one of the most important qualities in an entrepreneur. But if you do keep failing, you might want to work on reducing your risk and increasing your chances of success for the next time around so you can finally come out on top.

Sources of Capital- A Quick Guide to New Business Financing

There are many sources of capital for starting a business (or funding an existing one), but not all kinds are a good fit for each type of business.

This post is a quick run through of each of the major types, pros and cons of each, the amounts available, the time frame and requirements to get your hands on the cash, and the overall chances of securing each type of funding.

These are the basic types of financing available:

Your Own Money

Obviously the easiest, fastest least hassles kind to get. You may feel limited by the amount, but often it is better to scale back and start something that works with what you have, so you can get started now, than try to raise a much larger sum going down one of these other routes. The vast majority of small businesses (and this includes almost all of our bookkeeping clients) are started using this type of funding.

Family

This depends entirely on your situation. The pros are that you don’t need good credit, an application or anything else. The con is that if you can’t pay it back, you wish you’d never borrowed it from this source in the first place. A lot of clients who can’t fund the whole thing themselves go here to make up the balance.

Friends

This is just like family, except they will probably be harder to convince, so your chances of getting go down accordingly.

Bank- Collateral

This is easy to get if you have a home or other asset you can borrow against. The downside is you must start paying it back right away, and if you can’t you may have put a very valuable asset at risk. Not a decision to make lightly.

Bank- Line of Credit

This requires higher interest and is for a smaller amount than a collateralized bank loan, but you don’t need assets to borrow against. You are still liable, however, so if you do have assets, they will be attached and you will have to make good one way or another on the loan.

Bank- SBA

This is a poor choice for starting from scratch businesses, but an excellent choice for acquisitions or franchise deals. It is also very good if you are buying the land and/or building you are going to be using for your business.

Credit Cards

Easy to get but high interest. If you do use them, try to only use them to buy things that retain their value. For example, using it to buy inventory is less risky because you can always resell the inventory to pay off the credit card, even if you have to lower the price some. Using a credit card to buy advertising, pay payroll or by something else which retains no value is a more risky proposition, since you will have no asset to fall back on to repay the borrowed money if things don’t work out.

Crowd Funding

This is a relatively new avenue and there are lots of cool success stories, plus this is a low risk avenue and low cost to pursue. The main point to pick up on there is “story”. If you have something cool to talk about, or better yet, demonstrate on video, then you might have a decent chance of raising some cash.

It helps to have a track record, a tangible deliverable and need an amount of money that fits the typical fundraising profile of these kinds of sites. Raising $400K to open a restaurant is probably not going to happen (since you are only going to get local people who can actually enjoy the fruits of their investment, and it’s too much money for this site). On the other hand, a cool app, a gadget or a cause related product or service might do very well.

Leasing

Leasing won’t put money in your pocket, but you can use it to effectively lower the amount of money you need to get started. You can lease all kinds of equipment, vehicles, etc. Lowering how much you need to get started is as effective a strategy as raising capital when it comes to getting off the ground.

Angel- Amateur

This is often who people think of when they say silent partner. In reality, these investors can be much more than silent partners, it just depends on their specific requirements. The best angel to find is someone who is very familiar with the type of business you are starting.

For example, to get an investor for a new restaurant, you should seek out successful restaurant owners who may have an interest in investing some of their cash into a new place, without them having to take on all the responsibility of running it. That way, they will be a great source of info as well as cash, and will understand much better the risks and rewards of the investment that someone with no specific knowledge.

The usual way to pay these investors back is either with a buyout agreement after a certain number of years, or by selling the business altogether after a certain number of years and splitting the gains. Either way, this agreement should be in ironclad writing before any money changes hands.

Angel- Professional

This specific type of angel only invests in deals they think a venture capitalist would be interested in funding once the business gets a little further along. They often fund very early stage ideas, and provide the money that builds the prototype, pays for patents, and gets the first few customers on board.

At that point, they will look for another round of funding from a venture capital group. Because of this, they will only consider types of businesses that a venture capitalist will invest in- high growth businesses typically in the high tech or bio tech fields.

Venture Capital

Venture capitalists won’t consider a business that doesn’t have at least a nine figure ($100,000,000+) potential valuation, which rules out 99.9% of small businesses. Even if you do fit that requirement, your chances of getting venture capital are relatively tiny.

You might be the next youtube.com or Snapchat App with a billion dollar payday after only a couple years work, but the odds are very long. To figure out if pursuing venture capital is worth your time, we’ve got another article coming soon on using venture capital to start your business.

The One Real Secret to Business Startup Success

A point largely missed by many people new to the idea of starting a business for themselves is that you don’t need a blow-the-lid-off great idea to get started.

In fact, most of the time, you are much better off not trying to launch a fantastic new idea. Or waiting around to have one.

The best businesses to start are mostly like businesses that already exist, just that they are slightly better. There are countless examples in the business world. Domino’s pizza is just a pizza, but it comes to your door. Dell made computers along with tons of other, but they didn’t build it until you ordered. Southwest is just another airline, but they traded some luxuries for cheaper tickets, and people responded.

Lots of people do bookkeeping and payroll, but CapForge does it at a professional level with mom and pop pricing and service. Everyone else either charges two or three times or more what we charge, or else you end up with a one man or one woman “firm” who misses deadlines, charges by the hour, disappears for weeks at a time or altogether and where you have to depend entirely on one person. So we stand out- not with a radically different idea but a simple idea well executed.

All you really need to do is take a basic, successful business idea, and figure out how you can make it a little better or a little different or a little more appealing or a little more specialized or a little more luxurious and away you go.

Here is a perfect case in point. There is a company in Dallas that makes customized baby blankets. That in itself is nothing new. There are lots of companies that make baby blankets and will put your baby’s name on it, and that doesn’t count the one you get from your Aunt Donna and your Grandma Helen.

The two slight twists this company put on the idea is that they will let you do 200 characters instead of the usual 20, and they will turn it around in a few days instead of a few weeks.

The extra characters mean people can do more info: a poem, the birth date, the middle name, or whatever else they want. The faster turnaround is just nice because once people pay for something they hate waiting.

So all this company did was take something people already like and want to buy, and they made it more likable (by adding more room to personalize) and faster. That’s it. Nothing tricky. Nothing amazing or really new or hard to explain. Just a little bit better.

You can take the same formula, apply it to any business, and be assured you will quickly move to the front of the pack. Now- go find something to slightly improve!

Business Startup Question- Do What You Love or Do What You Know? I’ve Got the Answer!

This is a frequent topic of conversation among people considering entrepreneurial ventures- is it better to do what you know or do what you love?

My response is that it is usually best to do what you know in a way that you can love.

For me, I love working with entrepreneurs and hearing about new businesses and helping them get off the ground and operating profitably. I can do that with the bookkeeping business I own and for the parts of bookkeeping I love less, I have employees!

Does this strategy work? Well, here is a story that profiles 18 successful women entrepreneurs, and of those, 13 are doing something directly related to their previous work experience. So, I think for most cases, looking for something you know that you can do in a way that you will love is the best way to identify a business you can start yourself and be successful.

Why do I say that? For two reasons. The main reason to do what you know is that it dramatically lowers the risk of starting a business because you are already very familiar with the industry, the customers, how sales and marketing works, the kinds of product pricing and features that are important to customers, and all kinds of other factors that an outsider to the industry would have to learn from scratch.

Chances are you also already know some key people you can hire, and have a Rolodex full of people you can call on to be customers, vendors and advisers to your new company. You will walk in with built in credibility before you even have your first sales call. This is not an advantage to be given away lightly.

The second reason it that often the reason you don’t like working in the industry you are in is not so much the industry itself but the current job or position you have. For example, you might not like working for a general contracting company because of the ethics of the people you work with, or the constantly behind schedule nature of the job.

But that doesn’t mean that if you were running your own company you would have to operate the same way- you could change the things you don’t like about it for the business that you run. Very often people who leave to go do their own thing do so because they believe they can do the job better, and this includes creating a work environment much more in line with their personal desires and needs, rather than having to try to adapt to whatever culture is already built into the place they currently work.

This is an excellent motivation for starting a business, unlike a lot of other reasons people come up with, because the strong belief in your own ability to create a better situation will get you over a lot of rough spots that other potential motivations won’t.

So what does this mean if you really hate the job you are but you probably could do it better on your own- is that the only choice for getting started? No- you might have a hobby you really love that could turn into a business. In this case, it comes out nearly the same, because chances are you know the hobby so well you will have the same advantage of being able to quickly get yourself set up and will know exactly who the customers are and what they are looking for.

It may take some time to learn how the industry itself works, as opposed to just being an end user hobbyist, but since you know the products and the customers and likely the vendors as well, it shouldn’t take you too long to learn the business side.

The hardest business to get into is one you know nothing about. There are ways of dealing with this as well, and it certainly doesn’t mean you shouldn’t ever start a business doing something you don’t know. It does mean you should spend time learning everything you can about it, however, and talk to as many people active in the industry as you can.

In the end, you should start a business that you can do well and will also love doing- at least mostly. Usually, this is doing something you already know well, and that is always the first place I suggest you look for a business you can start.