There are so many different kinds of businesses -- and so many different kinds of people -- that it's impossible to give specific advice on the particular type of business you should start. Only you will be able to answer that question, but to maximize your chances of success, you should:
To learn more about choosing the right type of business for you, as well as how to research and evaluate your business idea, read Start the Right New Business for You.
Businesses that use hazardous materials, make edible goods, care for children, sell alcohol, or build or repair structures, vehicles, or other items of value come with inherent risks. Unless you are prepared to start a corporation or limited liability company and can afford adequate liability insurance (which can be pricey), you may be better off working for one of these businesses rather than starting your own. For more information, see Risky Businesses.
In addition, there are some types of businesses that are particularly vulnerable to competition, including restaurants, bookstores, video rental stores, movie theaters, grocery stores, and Internet and computer service providers. But these businesses sometimes do survive, especially if they can fill a niche market and develop a loyal following.
Starting a business can be scary. But great rewards await entrepreneurs lucky enough to create successful small businesses -- benefits you may miss out on if you remain a wage earner for the rest of your life. Although only you can decide if you're ready to quit your job and plunge into running your own business, here are some of the rewards of going out on your own:
Although you can reap many benefits by starting your own business, there are definitely some risks. The most common include:
Even a good business idea might not be financially workable. To learn how your idea will fare, you should prepare what's called a "break-even analysis." In a break-even analysis, you project income and expense estimates for a year to determine whether, in theory at least, your business will make enough sales revenue to pay its expenses.
A break-even forecast includes the following:
If you find your break-even revenue represents an amount of work your business can handle -- that is, if you can easily bring in more than the amount of sales revenue you'll need to meet your expenses -- then your business stands a good chance of making money.
For more information on preparing a break-even analysis, see Will My Business Make Money?
To learn more about how to choose a business that will succeed, read Running a Side Business: How to Create a Second Income, by Richard Stim and Lisa Guerin (Nolo).