In Entrepreneurial Leap, I discuss the importance of determining which business options you’re drawn to. There are three main factors that will determine the business you ultimately choose.
- Type of Business
- Size of Business
We’ve already addressed the first factor, industry, in a previous article. If you haven’t already, read about The First Step in Starting the Right Business for You. Once you’ve decided which industry suits you best, it’s time to dig a little deeper. Within each industry, “type of business” is defined by three different aspects:
- Service or product
- B2B (business-to-business) or B2C (business-to-consumer)
- High end or low cost
Let’s consider these one at a time.
1. Service or Product
First, you need to decide whether you’re drawn to the service side or the product side of business. To explain the differences between these two types of companies, let’s start with service businesses. These firms typically charge a fee for the work that’s performed. For instance, attorneys and accountants charge an hourly rate, a landscaping company charges you each time they cut your lawn, and a marketing firm charges you a flat monthly rate to build your brand and increase your social-media presence. Service businesses basically sell the owner’s or employees’ time, talent, and experience.
Examples of service companies include auto repair, IT services, project management, event planning, financial planning, medical practices, logistics, mortgage brokers, home cleaning, physical therapy, software development, architecture, hair salons, and spas.
On the other hand, product businesses make, sell, or distribute tangible products. That may be appealing to you, as many entrepreneurs like to touch, feel, and see what their business sells. Many people prefer tangibles. If this describes you, then you’re probably more drawn to a product business.
Product businesses include agriculture, auto dealerships, retail stores, and companies that manufacture things, such as equipment, food, supplements, tires, watches, metal fabrications, or textiles.
2. B2B or B2C
The second aspect of choosing a type of business is deciding between B2B (business-to-business) or B2C (business-to-consumer). In other words, whether you choose a product or service business, you can sell to two types of customers, businesses or consumers.
B2B companies sell services or products to other businesses. B2C companies sell directly to consumers: individuals or families. Ultimately, you have to decide if you’re more passionate about working with businesses or consumers.
3. High End or Low Cost
Going another level deeper, the third aspect of business is high end or low cost. You need to decide if the product or service you offer will be high quality/high price, and typically lower volume, or lower quality/low price, and typically higher volume.
Where do your passions lie? Deciding is important, because it’s extremely difficult and rare to succeed at offering both. There’s no wrong answer when choosing between these two options. There’s only the best answer for you and your company.
When looking at these three aspects at a high level, what are you drawn to? I don’t expect you to come up with that answer right now—although maybe you already have! The goal is to provide you with a context that will help you arrive at an answer.
To learn more about different types of businesses, and to read some powerful examples of successful entrepreneurs who built companies in each of these categories, buy and read Entrepreneurial Leap.
https://www.youtube.com/watch?v=pQyJZG6RG9A I wish I could rattle off 10 business ideas that you could start tomorrow and make a million dollars. I’m not that good, no