In Starting a New Business, You Shouldn’t Leave Your Backyard

Several years ago, I was trying to convince a client who specialized in small business credit to join with us in using the EXIMBANK to finance movies.  His response was, “Well, that seems a little out of my backyard.  I have to stay within reach of what I know.”  I always kept that in mind when one of my brother-in-laws offered up with “a great small business opportunity.”  First, it was their digital psychiatric counselling to prisoners; then they dreamed of a shrimp farm in the middle of the desert; and a few weeks ago, it was converting abandoned cars in Kauai to scrap metal and selling it in Honolulu.  Needless to say, I am not moving abandoned cars, or shovelling shrimp from a flooded sandpit.

Susan Reid, in her article, Stay within 2 degrees in starting a new business, touched on this concept(no, not shrimping).  She broke it down a good list to follow in order to identify a good business fit for you:

Step 1: Identify the things you love to do: This is a rule that I told my sons.  The first son is going into graduate school for poetry, the second son is starting at U C Irvine as a jazz pianist, the third, well, he’s chasing girls in high school.  I told them that there is money to be made almost anywhere your heart it.  You just have to find your blue ocean and go for it in a strategic manner.

Step 2: Identify businesses that match your current interests: I don’t necessarily agree with this point.  I don’t advocate following in the path of other small businesses, but to learn from them.  American ingenuity did not thrive by doing the same thing someone else did, but better.  Instead, look at the small businesses and focus on the customer’s wants and needs that are not being met in other businesses.  You may create a new industry.

Step 3: Talk to other small business owners: Just like above, learn but don’t emulate.

If you want more of an approach, go to my Blue Ocean article.  In small business, go with your passion, stay in your backyard as far as your core competency, learn from others, and implement a strategy.