Plan & start

What is the best type of business to start? (Infographic included)

You’ve decided to start your own business or a side hustle and now your mind is overwhelmed by tons of questions.

You are probably wondering what is the best type of business to start? What are the various types of business ownership? Which business will interest you? Which is the right one? If you are working full time, what type of business would work most with your full time job schedule? Will you be able to devote the right amount of time to make this business successful? Should you start a new business or buy an existing one? Which business will allow you to balance your time well between work and family?

Wait.. what should you do next?

Woman working on computer with a confused look on her face

I am right there with you my friend. I went through these questions in my mind several thousand times, if not more. And to be honest, this was the big topic of discussion between my husband and me for several dinners, several walks around our neighborhood and (ha ha) even several vacations!

One thing I can tell you right away is that there is not “one solution fits all” answer to this. There are several factors to consider, some of which I wish I had known before buying our business. Nevertheless, we learnt quickly and you can too!

The “Ideal Side Hustle” Venn Diagram

Yes, a Venn Diagram from those dreadful math classes! Remember when your teacher taught you about unions and intersections?

What we are looking for is the intersection of three very valuable factors:

– Interest
– Time
– Budget

All of these considered within the purview of a thorough market research. Looking into these in more detail will help you determine the best type of business to start, specific to your situation. I will go over these in more detail below.

Interest

Interest refers to the areas you find passionate – whether it is reading, gardening, coding, designing, baking and so on. Each of us have areas we are interested in, things that we want to do in our spare time. That is your area of interest. Using this you will derive the appropriate industry and more to come on that below in the next section.

Time

Time is probably the most important factor to consider as you are thinking of starting this business as a side hustle. If there is one thing you do not have unlimited supply of, that is Time. You should consider the amount of time you are willing to spend on your business, which will include starting the business, laying the foundation and then on-going operations of the business. If you think you will need extra 1 hour every day to work on your business, multiply that with 3. Believe me, you will need the time and focus to establish, sustain and grow your business. So, based on the requirements of your full time gig, determine how much time you can spare for your business every day and over the weekends.

Budget

Budget is yet another important category. How much capital you want to put into the business is a very personal thing. What is right for you, might not be the amount that a friend or family member is willing to put into a business. If you are looking to start a new business from scratch, the capital will be lower since you are starting small and can control how much money you invest into the business and how you want to throttle the amount. On the other hand, if you are looking to purchase an existing business, you will have to put down a larger capital likely but you might be spending a little lesser time establishing the business from scratch.

Once you have come up with ideas that fall in the intersection of the Time, Budget, Interest circles, the next step is to understand what type of business do you want to do and what is the best business for your specific circumstances.

Types of Business

Let’s say you decided through the venn diagram exercise above that you would like to start a business in the field of Design, because you are a creative person and that is your passion, and you have figured out that you will spend 2 hours of time on it every weekday and 4 hours over the weekend. However, ‘Design’ can mean several things – you could provide the services of Design to customers or you could provide artifacts that are designed by you or you could have a store which sells beautifully designed items. So, you need to decide the type of business that is of interest to you and what would be best for you.

Below are the main types of business that you should know about at a high level. There’s also an infographic included at the bottom of the page for your convenience.

Services

Service is a type of business that provides intangible products or services to customers. These businesses offer skillset that is not comprised of goods with physical form but instead activities that are performed by professionals possessing the specific skill set. Examples of businesses in the Service Industry are manifold, like Lawn mowing, Accounting, Online Marketing, Architecture, Cleaning Services etc

Manufacturing

A manufacturing business buys the raw materials and creates new products. These businesses often involve purchasing raw materials, assembly of materials and creation of products. These manufacturing businesses can be elaborate ones with huge manufacturing equipment and plants or could be simpler ones. An example of a manufacturing business for Design could be an entrepreneur who creates Greeting Cards. They purchase the required papers, inks, and use their printers to produce the cards. They can sell these to another business, which is a B2B (business to business) model or sell to consumers directly as B2C (business to consumers) or they could be wholesale manufacturers who typically sell to retailers.

Distributorship

Distributorship definition comprises of businesses which buy products from a manufacturing company and sell the products to consumers or retailers. They are usually the middle-man between the manufacturer and the consumer. Distributors often have to set the right price of the products they are selling, so they make enough profit and are yet able to successfully sell the products.

Retailer

Retailers sell the products to the consumers, usually via a brick and mortar store or physical point of sale. These comprise of all the stores we see, like grocery stores, boutiques, jewelry stores, book stores etc. Retailers can also sell online, which is definitely gaining a lot of popularity in the current times.

Franchise Business

Franchise is an important topic and while it is not a category amongst the business types noted above, any of the above businesses could be a Franchise. In the context of a side hustle, a Franchise model is an extremely important topic to consider and one that requires a more in-depth review but at a high level, with a franchise, the parent company establishes the process and procedures and shares those with the Franchise owners. Each independent franchise owner offers their products and services in a geographic area called territory. They pay Franchise Fee and Royalties to the parent company for using the brand name, and the process and procedures.

Needless to say, as a side hustler, buying a Franchise is a smart idea to consider since you will benefit hugely by the established processes, protocols and trainings already put into place by the head office. A great place to look at the top 100 Franchise companies is to go here.

And yes, we did the same when we started thinking of our side hustle.

Once you have decided on the type of business to start, check out our step by step guide to set up and launch your business. All the best!

Image of infographic with various Business types

What is the best type of business to start? (Infographic included)​