Operating the wrong business is the most frequent mistake that start-up entrepreneurs make. Here is a checklist to help you to evaluate if you are in a potentially successful one or to reassess the business you are in:
· If you have not yet selected a business, take your time and wait for the business that is just right for you. You will not be penalized for missing opportunities. The selection process takes a lot of planning and your experience and complete knowledge is vital for your success.
· A common problem is not having much money to start a business. Surprisingly, there are a number of businesses that require no money at all.
· Don't tackle or pursue businesses that may be too challenging. It is better to identify a one-foot hurdle than try to jump a seven-footer.
· Try to identify a business that has long-term economic potential. "Pitch your tent where the crowd is going, not to where it is."
· A big mistake can be an error of omission. This means you may fail to see an opportunity that is right in front of you.
· Keep in mind that as a general rule specialists do better than non-specialists. Wouldn't you be more inclined to take your sick child to a doctor whose practice is limited to children rather than to a general practitioner?
· Operate a business that will grow in today's and tomorrow's markets. Many small retail stores are no longer in business because huge stores such as Shoprite and others provide more choices to the customer and often at a cheaper price.
· Look for businesses that focus on a "consumer monopoly" with pricing power and long-term predictable growth prospects.
· Businesses to avoid are "commodity" businesses where you must compete entirely on price and in which you must have the lowest cost to survive. "In a commodity type business you're only as smart as your dumbest competitor."
· Most service businesses have pricing power. Pricing power means that you will not need to have the lowest price in order to secure business. Your customers will be willing to pay a fair price for a better product or service.
· If you are manufacturing a product, consider the pros and cons of contracting out production to a low-cost supplier. In other words, operate a "hollow corporation." A "hollow corporation" is a company that subcontracts manufacturing and packaging.
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