When choosing a business model I always recommend that it be something that you are passionate about. It seems that when passion is lacking, it is harder to get up in the morning and to do the things that you need to do in order to work your business. So, that would be the first rule. If you’ve thought of an idea, chances are you are somewhat passionate about it, so follow your gut. For some people, passion may be the wrong word to use. If this is YOUR idea, then by all means follow up on it. On the other hand, if it is someone else’s idea and they are asking you to become involved or to invest, and you are ambivalent or somewhat negative about it, it might be best for you to bow out right in the beginning. This can be difficult when it’s a friend, but a true friend will understand and a heartfelt and honest answer should get through. Maybe you could offer your expertise in other areas, something that would not tie up your money and that does not tie you to the project too closely. In reality, just being a supportive friend can be the best you can give of yourself.
The second thing I would do is to look at other businesses similar to what I’m thinking of doing and figure out what it is that I can do differently, or do better, than what my potential competition is doing. If there is no potential competition in the area or demographic that you are looking at, then you don’t have to be quite so creative. In fact, it might be better to leave some of your more creative, which usually means more costly, ideas on the back burner in case someone decides to take your idea and open business next door or down the block. If that happens, then you will have something up your sleeve that can put the competition back in its place.
Then, research! Research! Research! The web is a valuable tool and one which you can use to find out how other similar businesses are doing. Your research should identify the demographic that you will be targeting, how close is the nearest competition to where you would like to do business, and what percentage of the market share like businesses have. Your research should also answer all of the money questions, such as what will the start up costs be, what is the profit margin, how soon you can expect to start making a profit and what will the monthly expenses be for all operating expenditures. If you have a question in your mind, it should be answered, on paper and honestly. And if the answers don’t add up to a positive, then definitely reconsider the business model you are mulling over. On the other hand, if all your numbers add up to making a profit within the first six months, then you have a fantastic, wonderful, can’t fail (maybe) business model and you should pursue it.
Finally, if you cannot find investors for your business model, then you should seriously think about finding a different model to pursue. Most investors have either experience or instinct when it comes to what works and what doesn’t. You may be able to convince a bank to lend you the money, but if you can’t get at least one investor on board, it may be time to do a serious reality check and can one business model in favor of another. Listen to the investors you talk to. If you hear the same thing out of more than one mouth, chances are they are right…and you are wrong.
Choosing the right business model is critical to success. The perfect balance of heart and mind should help you to choose the most successful business model.