Startup requires passion, realism – Best way to choose new business is to examine whatever field you know, love.

You’re smart, you work hard and you figure it’s time to quit life as a wage slave and start working for yourself. Now how do you find the right business?

By:
Barry Flynn
Orlando Sentinel in NASVF.org

A few veteran managers, especially those with a lot of financial expertise, have the luxury of looking around for an industry with the most profit potential. But the best approach for the rest of us, business advisers say, is usually to focus on something we know or love.

"To have a successful business, you have to be passionate," said Donald M. Scarry, an economist at Rutgers University in New Jersey.

Take Holly Monahan, a one-time bookkeeper and accountant whose divorce a few years ago forced her to contemplate a change of work life. Without a husband at home to share child-rearing, Monahan wanted to quit her regular job and start a business that would let her work at home with her children.

With the help of a paid career coach, Karen Battoe, Monahan started making lists of things she liked or wanted to do.

"I love children," Monahan said. "I love communicating with other mothers, socializing, decorating, anything pretty.

"After a while, children’s retail popped out at me."

Battoe also recommends using some of the many surveys and personality tests designed to gauge temperament and determine one’s interests. Community colleges often will administer the tests for a fee, she said.

Monahan ultimately opened a children’s clothing store, Katelyn’s Kloset, in Lake Mary, Fla., selling new and used clothing, mostly on consignment. That was three years ago. The store has done so well that she has opened a second clothing store and a shop that specializes in haircuts for children, Kids Kuts.

Even so, Monahan needed more than passion to make her businesses go. She said she did a lot of research on what was feasible. She relied on her own sense of what parents want for their children. And she listened long and hard to her potential customers and used her accounting and other skills to start and run her new ventures.

For instance, she said she loves to negotiate, and persuaded landlords to give her favorable leases. So, while passion may be important, a good solid dose of realism is important, too.

"You’ve got to break yourself of the if-I-build-it-they-will-come mentality," said Edward Rogoff, a professor of management at Baruch College in New York City and author of a forthcoming book, "Bankable Business Plans."

"A lot of people have dreams, and when you talk to them, it comes out," Rogoff said. But they still need to figure out whether their ideas are practical.

Take the avid sailor and fisherman who wants to be a sports-fishing-boat charter captain.

"You’re going to go down to the docks and talk to some guys in this business" to find out what the business is like, Rogoff said.

"Does this meet anybody’s need?" Rogoff asked. In other words, is there really a market there when you get to the docks?

What resources are needed for the business? For example, licensing and safety requirements may be a major barrier for prospective boat captains. If an adequate boat costs too much, that might squelch the deal, too.

"You’ve got to carefully work the numbers out" on such issues, Rogoff said. "There you have to be cold-blooded." No matter how much you love something, if the numbers don’t work, you need to forget about it and move on to something else, he said.

Rogoff suggests getting an estimate on your prospective company’s likely performance by using data published by the Risk Management Association. The group publishes key financial ratios culled from the financial statements of 150,000 companies — without identifying them, association spokeswoman Kathleen Beans said.

Even after focusing on a business you would like to be in, however, it still might be too early to take the plunge. Practical experience in the business is invaluable.

"The worst possible thing is someone who says, ‘I enjoy eating and cooking, so I’ll open a restaurant,’ " said Al Polfer, director of the University of Florida’s Small Business Development Center in Orlando.

Instead, get some experience before you risk everything on your venture. "If you want to start a restaurant, go work in a restaurant for a year," Polfer said. "Be a manager."