These days, the first question to ask when starting a business is: will it be online or a bricks and mortar business? If it's the latter, then the most important thing that you should consider when choosing a business is its location. Your chosen business should be within the geographical area in which you will invest the largest part of your time and money. Choosing a location where there is little (or better, no) competition will save you a lot of money on advertising and marketing.
If it's online, then you have to realise that your competition are only ever a mouse click away...sometimes not even that if you sell on a platform like Amazon or eBay - your competition are sometimes literally on the same page as you listings. It's easy to start a business online, and that IS the problem - everybody's there already. You have to REALLY dig deep to find a niche that has less competition.
A business plan is very helpful because it allows you to better analyze your business in an objective way. It forces you to ask "first principle" questions like "Why am I running this business? What need am I helping be met? How will I profit from it? Who are the competition?". It is also a great resource for measuring the costs of running your business and to come up with a detailed budget for investing in your business. You should also come up with a marketing strategy that is realistic and measurable in terms of costs v sales.
When considering a budget for your business, you should take into account the profit margin that you expect to earn in your business. If your margin is too high, your competition can undercut you. If it's too low, then you might end up simply becoming a "busy fool" - working all hours for a pittance. Many business plans get thrown into the bin when it's revealed that the profit margin is too low.
You also have to manage your expectations. "The burden of expectation" is a very real thing. Many business owners become disheartened because their expectations were too high. The notion that a business always has to grow and grow and grow in terms of both output and profit is ridiculous too (are you shocked to read that?). There is such a thing as a "lifestyle business" - that's how most businesses used to work, in fact! In other words, the purpose of the business was to create a particular lifestyle for the business owner. For example, a barber might make enough money working 5 hours a day, 5 days a week. Could he make more if he worked 50 hours a week instead of 25? Of course. Does he want to? Go an ask him! The barber who is happy with 25 hours a week is MORE of a success than the barber working 50 hours a week, is exhausted and burned out (but collects more money than the less busy barber). "Success" is measured by your goal. That goal isn't always "the most money". Think very carefully as to WHY you are starting a new business.
Finally, be patient regarding profits. You will have a lot of one-off costs in the first year while setting up the business. Always remind yourself of that, because those costs will eat into your profits. Do not be disheartened. Most businesses do not actually profit until at least the second year. Article kindly provided by iwmachines.co.uk