7 Best Small Business Ideas for New Entrepreneurs
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Deciding to strike out on your own, be your own boss and start your own business can be exciting, but it can also be fraught with uncertainty and concern. There are no sure bets in business, so you’ll have to carefully consider what’s the right business venture for you. The things to think about include your skill set, the time you’re willing and able to devote to your new venture, and how and where you’ll operate your business.
Here is a look at what questions to consider, including how your skills and passions can guide your choice and what you’ll need to get your business off the ground.
Assessing your skills
What is your experience right now? You may be considering a small business that’s a 180-degree move from your current career path, but that doesn’t mean your resume won’t come in to play down the road. So what does your experience look like? If you think you’ll need financing for your business in the future, you want your resume to give investors or lenders peace of mind. Having related experience or expertise in your new line of work will help bolster your loan application. If you don’t have experience, then you should consider what you can do to gain some of that experience. That could mean taking classes, going through a certificate program, or even doing volunteer work.
What are you passionate about? Maybe just as important to an investor as experience and expertise is your passion for your project or small business. So if you aren’t sure what line of work you want to look into yet, make a list of your interests and what matters to you. Sure, businesses are about making money, but what else is driving you to become a small business owner?
How much time and energy are you willing or able to commit to your new small business? It takes a lot of work to start a small business and it may take a lot of work to maintain it. You have to be honest with yourself about how much time you can commit to your new venture and for how long you can commit that amount of time. Does it make more sense to start it as a side project and grow it from there, or are you thinking about jumping all-in to a full-time business? You also want to be honest about what you hope the time commitment will be in the future and how that ties into your financial goals for your new small business.
Is your businesses viable?
Have you done any market research? According to the NFIB, a nonprofit small business advocacy group, the things you really want to figure out are who your customers are, who your business will serve or be attractive to, and the size of the market in your preferred location.
Talk to other small business owners about their experiences in your market. What were some of the hurdles they faced and what do they think of your small business idea? Their feedback could be invaluable. Plugging into your local entrepreneurial network will help you gain perspective on your market as well as perhaps open doors to new opportunities. The U.S. Small Business Administration offers a comprehensive look at how to do market research and analysis.
Does your business solve a problem in your market? The NFIB recommends that your new business should add value, offer a product or service cheaper or superior to competitors, offer the product or service in a new and improved way, or satisfy a currently unmet demand. If your new business idea doesn’t do any of those things, that could be a big red flag.
Is your business unique? Who are your competitors? Are they on the upswing? Identifying your competitors and how they are doing may help you figure out if there are enough customers for your idea. It also may help you figure out how to do business a little better and develop a competitive edge.
Looking for business funding? Learn more about small business loans here.
Assessing the costs
Not all start-ups will have the same associated costs. The type of industry you’re in, where you’ll run your business, if you’ll have employees and whether you need inventory, will all determine your costs. But there are some fairly common costs to launching a new business, including:
- License and permit fees
- Equipment, including computers, software, development equipment and furniture
- Office and storage space
- Inventory or the materials needed to manufacture inventory
- Office supplies
- Website design and hosting
- Business cards and other hard-copy marketing collateral
- Accounting and/or legal services
Some expenses are one-time costs and others are ongoing. You should budget out for ongoing expenses for at least a year. Costs can also fall into the nice-to-have and absolutely necessary categories. If you are strapped for cash or want to start small you should begin with just what you absolutely need.
Will you need extra training, certification or special permits? It’s time to sit down and do some research into what it would take to make your startup legal to operate. It will also depend on your industry as well as your state or other governing bodies. All of these processes may not just cost you money, but also time.
What about patents? Did you invent a new way of doing something or a brand new product? If so, is it worth patenting your design or invention? This may not just be a cost issue, but a time issue as well. How does this process fit in with when you wanted your business to launch?
What capital do you have on hand? Will you need to borrow? You should do your research when it comes to startup costs and get a really good estimate to figure out if you’ll need to borrow money. If it turns out you don’t have enough money to self-finance, and you need to borrow, you’ll have to assess your options. Will you apply for a loan? Do you have the positive credit score to support being approved for a loan? Or are you planning on alternative lending solutions? And what kind of loan works for you?
7 best small business ideas
If you know you want to start a small business, but aren’t exactly sure what industry would be a good fit, here are some small business ideas to get you going.
Real estate services
How hot is the housing market in your area right now? If you live an an area where real estate is moving, it might be time to set up shop. According to a Sageworks report on the 10 Most Profitable Businesses, activities related to real estate had a profit margin of 12.8 percent, while offices of real estate agents and brokers had a profit margin of 12.5 percent from May 2017 to May 2018. This, of course, may require you to get a license or certification depending on the type of work you are looking to do in the real estate market. But for now, the real estate market is booming once again.
If you are good with numbers, are a CPA or have experience in the financial sector, you could make a nice business for yourself. According to Sageworks, small businesses in the accounting, tax preparation, bookkeeping and payroll services sector had a profit margin of 11.7 percent from May 2017 to May 2018. Much like real estate services, you may need a license or certification depending on the type of work you are looking to do.
Baby boomers aren’t getting any younger and caring for older generations will be big business. According to the U.S. Census Bureau, by 2030, more than 20 percent of U.S. residents are projected to be age 65 and over, a projection that could mean older people would outnumber children (age 17 and younger) for the first time in U.S. history. Having a strong understanding of the healthcare industry or medical industry may be a boon when thinking of a startup in elder care, but there are less technical aspects of this industry as well. Older people may need help with grocery shopping or basic tasks as well as simple companionship, which may open up opportunities for entrepreneurs and small businesses.
People really love their pets. And they are willing to spend money on them. According to IBIS World, the pet grooming and boarding industry is expected to grow at an annual rate of 9.1 percent to a total of $8.2 billion and it is mostly small businesses that are cashing in on this rise. Depending on your location, there may be licenses and permits associated with running a storefront for pet grooming or boarding, but “shoe stringing” at the start of your small business in this arena may mean you start out as a mobile business or even a pet sitter to gain name recognition.
Big business dreams can start small and they can start on four wheels. Want to run a restaurant? Open a food truck. Want to be a makeup artist? Pack up your supplies and take them to your clients’ living rooms for weddings, proms or major events. Anytime you can bring the service directly to the people you may be adding value. Think of services that would be beneficial to bring to people. Pet services may be a good place to start, but makeup or hair professionals or even massage therapists may benefit from making their business mobile. If you already work in one of these sectors starting a mobile business may be a good way for you to not only strike out on your own, but stand out. The overhead will be lower than with a traditional storefront, which you may eventually be able to grow into.
Have you always dreamed of opening up a little bed and breakfast? Well, now might be your moment. According to Sageworks, the small business category of traveler accommodation saw a profit margin of 9.8 percent from May 2017 to May 2018. This is an area where you are going to want to check to make sure everything is on the legal up and up in terms of permits and zoning, but you can try your hand at this kind of small business by running a small rental property if the market is right. Advertising on Craigslist or even posting your location on Airbnb could be a low overhead way to see if the traveler accommodation industry is right for you.
Do you think you could excel at network or event planning? Then a small dating services business may be the perfect thing for you to start. Dating services are currently a $3 billion industry that had an annual growth of 11.2 percent between 2012 and 2017. Small businesses in the dating world don’t need to provide the full-scale services that the heavy hitters like Match.com, eHarmony.com or even Tinder provide. Matchmaking services and singles events like speed dating account for 14 percent and 7 percent of the industry revenue, respectively.