How to decide on which business to start

People sometimes ask me what sort of business they should start. How to get it going is usually the next question.

There is no single answer I can give them. The decision depends on their experience, circumstances and what they want from running a business, alongside whether there are customers willing to pay.

My own route was not a case of dreaming up an entirely original idea.

Neither of the two technology businesses I co-founded began with an idea that was mine. In the first, I was already doing similar work for another company when someone suggested doing it for myself in another country. Until then, becoming a business leader had not been my ambition.

The second business already existed but was struggling. I began working with its owner to rebuild it and became a co-founder with a shareholding.

Those experiences influence how I think about this question. A starting point can come from work you know, a problem you understand or an opportunity to contribute something useful.

Decide what you want from running a business

Before comparing ideas, consider what you want the business to make possible.

You might want greater independence, a different working life, financial security or the chance to build something with a team. Perhaps there is a customer problem you care about enough to spend years working on it.

Be honest about the practical implications.

A business built around your personal expertise may give you control over your work while remaining dependent on your time. A company designed to grow substantially may involve managing people, raising money or accepting responsibilities you have not held before.

Think about the work you would be doing as well as the outcome you hope to achieve.

If you are unsure what matters most, spend some time exploring your reasons for building a business.

Start with what you understand

Your existing experience can give you a useful place to look.

Which customers, industries or ways of working do you know? Where have you seen people struggle? What do you understand that would take someone else time to learn?

You may have noticed an awkward process, a poorly served customer group or work that could be delivered more effectively.

That familiarity can help you ask better questions and find people to speak with. It does not remove the need to test your assumptions.

Be careful about generalising from one employer or one experience. Something that frustrated you may not matter enough to others for them to change how they work or spend money.

Use your knowledge to begin the investigation.

Look for problems people already make an effort to solve

Pay attention to what people spend time, money or energy dealing with.

How do they manage it now? What is inconvenient or costly about that approach? Who feels the consequences?

A problem can be real without supporting a worthwhile business. People may be willing to tolerate it, solve it themselves or pay less than it would cost you to serve them.

Look for evidence of action. Have they tried alternatives? Paid someone to help? Created a workaround? Set aside a budget?

If the idea comes from your own frustration, find out who else shares it and how their circumstances differ.

Before investing heavily in a solution, explore whether the problem needs fixing enough for customers to act.

Speak with potential customers before pitching the idea

Find people who could realistically become customers and learn about their experience.

Ask them to describe the last time the problem occurred. What happened? How did they respond? What did it cost them? What would they want to improve?

Avoid opening with a long explanation of your solution and then asking whether they like it. That can produce encouragement without helping you understand demand.

Listen for details that challenge your idea as well as those that support it.

Where the user and buyer are different people, speak with both. Someone may want your offering but have no authority to purchase it.

These conversations should help you refine the opportunity, not simply collect approval.

Understand the alternatives

Look at the businesses and approaches already serving the need.

What do customers value about them? Where do they fall short? Why might someone switch?

Competition can show that people already spend money in an area. It also means you need a credible reason for them to choose you.

Your alternative might be a more focused service, a different way of delivering it or a better fit for a particular customer group. Explain what the difference would mean to the buyer.

Include doing nothing in your comparison. Customers may prefer a familiar inconvenience to the effort and uncertainty of changing.

You do not need an idea nobody has ever considered. You do need a realistic understanding of where yours could fit.

Examine whether it could support a business

Make an initial estimate of how the idea might earn money.

Who would pay? What would they buy? How often? What would it cost you to find and serve them?

Include your own time. An offering can attract customers while leaving too little income once the work involved is considered.

For a service business, think about how many customers you could support and whether delivery would always depend on you. For a product, consider the costs of creating, maintaining and supporting it as well as selling it.

Work with ranges where you lack evidence. The purpose of an early calculation is to identify what needs investigating.

Your market opportunity assessment can help you examine the number of relevant customers and how many you could realistically reach.

Compare a small number of ideas

If you have several possibilities, assess them against the same questions:

• Do I understand the customer and their need?

• Can I reach suitable people to test the idea?

• What relevant experience or relationships do I bring?

• What would I need to learn or obtain?

• Could the income justify the costs and effort?

• Does the likely work fit the life I want?

• What would make me decide against it?

You may find that a less exciting idea has a clearer route to customers. You may also decide that a commercially plausible business involves work you do not want to do.

Notice where your confidence comes from evidence and where it comes from enthusiasm. Both can influence your decision, but they are not interchangeable.

Choose a manageable way to test it

Before committing substantial time or money, identify the most important uncertainty.

Perhaps you need to establish whether customers will pay, whether you can deliver the result or whether you can reach buyers at a sensible cost.

Choose a test that addresses that question. It might involve a small paid project, a prototype or a limited trial with clearly agreed expectations.

Decide what you want to learn, what you are prepared to invest and when you will review the result.

An early test does not have to prove the whole business. It should give you better grounds for deciding whether to continue, change the approach or stop.

Avoid building more simply because building feels more comfortable than asking customers to make a decision.

Consider how you will make the transition

Think about your circumstances alongside the opportunity.

What financial commitments do you have? How much time can you give the work? Who else will be affected? What support would help?

You may be able to explore an idea alongside existing work, subject to your commitments and any relevant restrictions. Other ideas may need more time or resources from the beginning.

Be clear about what would justify increasing your commitment. That could be customer evidence, a delivery milestone or a better understanding of the costs.

Give yourself permission to proceed in stages where that is practical. Equally, recognise when limited availability prevents you from running a useful test and decide what to do about it.

Make a decision you can explain

You are unlikely to remove every uncertainty before starting.

Aim to understand why you are choosing the opportunity, what evidence supports it and what you need to learn next.

Keep a record of those assumptions. Return to them as you gain experience so you can recognise when the case has strengthened or changed.

Choosing a business is also a choice about how you will spend your attention and take responsibility.

The commercial opportunity and your reasons for pursuing it both deserve thought.

If you would value space to examine an idea, question your assumptions and decide what to do next, explore working with me through founder coaching and mentoring.

Cheers,

Duncan