Entrepreneurship is sexy right now. The lure of quitting the 9-5 and being in charge of your own destiny is strong.
The quote from Tony Gaskins "If you don't build your dream someone else will" is doing the rounds and we are almost made to feel boring if we aren't starting our own business.
If you've been dreaming of becoming an entrepreneur the first question to think about is what kind of business should you start?
In order to answer that question the real question to answer for yourself is what kind of lifestyle do you want?
So, what kind of life are you hoping the business will give you?
Anyone who starts a business is doing it because they want to live a certain way.
They may want to create something new, run things in a particular way, be in a certain kind of environment or maybe they want to just want to be able to earn money from anywhere.
What is it for you?
I find through my experience as a Business Startup Coach that generally people want one of these three options.
The three types of businesses people want to start:
1. An innovation-centered business funded startup.
2. A brick and mortar business and often this has been a dream of theirs for some time, a restaurant for example.
3. A location-independent minimal staff business that they can run from anywhere.
Let's look at the pros and cons of each model.
This is the most glamorous and has the highest stakes. Shows like Shark Tank perpetuate the idea that this is how businesses are started or helped to grow.
Personally this is my least favorite option for almost everyone I speak to through my business for two main reasons.
Firstly, when you accept money from a third party it isn't your money, you have to give it back or, more accurately, earn it back through the business. So while you get money to put into your business, which is flattering and exciting, you are immediately under pressure to make it work and make money for your investors.
Secondly, the more stakeholders who have an interest in your business the more people you have to please and essentially the more bosses you have. Which usually is exactly the situation you were trying to avoid in the first place.
If you have a business idea that you definitely want to go ahead with and it can't be started on a shoestring budget then go this route, otherwise consider your other options.
Bricks and Mortar
Many people grow up thinking they would love to own their own bakery or restaurant or boutique. It's a personal dream as well as a money making venture. It also feels like a real business - there is a premises, potentially with staff and you get to spend your time running things exactly how you want to.
If this is your dream - wonderful! Start looking into how you can make it happen.
If you are not attached to having your own space to go to each day I would encourage you to look into online business, and in particular online service-based businesses.
This disadvantage of bricks and mortar is the cost of the premises, stock, utilities etc. You are also extremely dependent on your location as to how much business you are going to get.
Location Independent Online Business
The huge attraction of having an online business is the low cost of startup and flexibility to run the business from anywhere. As long as you have your laptop you are set.
The fact that you would generally start as a solo operation also means there are no other stakeholders - no one you owe money to and no one else's opinion that you have to pay attention to.
As well as your costs being low, your revenues are practically limitless because you can have customers all over the world. As of writing I have clients in countries as diverse as Australia, USA, Canada, Argentina, England, Sweden and Russia.
Why a service-based business rather than product based?
When you start a product-based business you need to either buy or manufacture the product.
When you are operating on the Internet if you can buy the product somewhere so can everywhere else. You are generally going to have to buy in bulk in order to be able to make a profit. So you are taking a risk by purchasing stock.
If you manufacture the product that's a lot of complexity to deal with.
That's why I recommend that most people start off by essentially freelancing
If you choose a skill that you have that can be sold over the Internet - think social media, book keeping, coaching or consulting of some kind - then all you risk is your time.
You can get your first few paying customers and then build up a client base. Once you have regular money coming in you can look to scale - either by taking on employees to do the work for you, or by moving into information products.
I find this is the simplest, lowest risk way that most people can create a location independent business that involves them working between 15 and 30 hours a week and this is what I recommend to most clients.
Ultimately the business you start should fit your lifestyle, time you have available and financial resources you can put into it. Often it's better to risk less and start small than take on commitments like a business premise or startup funding so you have more freedom in how you start the business and in how you spend your money.