Finding a Business Idea: Some less obvious, lower-risk options

A number of my clients are tempted to start a business, often because they’ve been laid off because of COVID and are having a tough time landing a decent job.

I tell them that the idea is the least important part; success is mainly about execution. Nevertheless, many of them remain eager to hear some ideas. Here’s a buffet of the kinds of things I often suggest.

Don’t innovate; replicate. The leading edge too often bleeds, guinea pigs often die. It’s less risky to take an successful business concept and execute well. My favorite example is Noah Alper, who founded Noah’s Bagels. There already were a number bagel shops in the area but Noah came up with a better recipe and opened a store in a neighborhood with lots of bagel lovers. Little by little, he expanded to 38 stores whereupon he was bought out for $100 million.

So, think of stores that are doing well, visit (subject to COVID restrictions) and see what you can learn. Could you do it better, less expensively, or in a different location, or online? 

Passion may not be required. Some people need to be passionate about the product or service, but other people realize that as long as the product is worthy, they’ll derive plenty of satisfaction just from seeing those sales and satisfied customers. To broaden your options, you might want to consider a wide range of ethical businesses, not just those selling products you’re passionate about.

Use inside knowledge. In your line of work. Have you observed pain points, something that's frustrating, especially to people in power? If not, might you query your friends? That resulted in a client learning that a railroad that operated on both sides of a major river spent a fortune on cab fares transporting employees from one side of the river to the other. The client offered to run a shuttle service, saving the company lots of money while making my client a good living. Another example: A client worked in the wine industry, where he learned that wineries find shipping a pain, so he opened a business that ships for a number of wineries in the Napa Valley.

Source an undervalued product? I'll change irrelevant specifics to avoid breaching client confidentiality, but a client, whom I'll say is an electrical engineer, bought returned or obsolete lab equipment as-is, from manufacturers. He repaired them and sold them to countries in which such equipment would be welcomed.

Serve less competitive markets. The just-mentioned client used that principle: He sold in locales where the latest-and-greatest would be too expensive. Another example: I had a client who sourced used brand-name jeans for a couple bucks a piece by driving around to lots of Salvation Army and Goodwill stores. When he accumulated a shipping container full, he sent it to a developing nation where a local sold them for $8 a piece to eager customers.

Conversely, I had a client who, once a year, flew to central Europe where he placed ads in local newspapers for used vintage or antique violins. They’re in greater supply there than in the US and so could sell them in America at a tidy profit. When he had a shipping container full, he had it shipped to his home, where he stores the violins for sale—Picture a garage full of fiddles.

Choose a dull-normal product. Few people graduate from a prestigious college wanting to start a business in mobile home park maintenance, used truck part brokerage, or a commercial printing machine service. So competition in such fields can be weak. So it's perhaps no surprise that, according to the book, The Millionaire Next Door, which summarized interviews of 750 millionaires, the most common route to wealth was owning such a “dull-normal” business. I had a client who decide to own a hot dog cart, and sold his franks on a busy downtown street. After learning the business hands-on, he hired someone to run that cart, expanded to six carts, and retired before he was 40.

Go further up the supply chain. Say you’re passionate about beer. The obvious and thus too crowded choices are to start a craft brewery or brewpub. A less risky option is to start a beer business that’s further up the supply chain, for example, distributing spices for beer making. (One concoction is called Grains of Paradise.) Of course, that may not be as sexy as welcoming people to your brewpub, but getting in further up the supply chain may be a safer route to good income while still enabling you to be part of the beer community.

Search for new laws and policies, As you read the local or national news, keep your antennae out for business opportunities. For example, North Carolina mandated that henceforth, all students must take earth science. Well, a burned-out science teacher read that, whipped up a workshop for teachers and pitched every school district in the state: “I’ve developed a workshop that will prepare your teachers to teach earth science.” She was busy immediately.

The takeaway

I want to reiterate that what I’ve done in this post is the easy part: suggesting ideas. Thomas Edison was right Success is 5% inspiration, 95% perspiration. I’d add, “smart perspiration.”

I read this aloud on YouTube.

You can reach career and small business counselor Dr. Marty Nemko at [email protected]