How to Choose Your New Business Project
Advice for weighing passions and deciding where to focus efforts.
By Colin MacInnis
I tend to be a person that people open up to — friends sharing ideas with me, asking questions, and collecting my input.
While I will never admit to knowing all of life’s answers, there are a few topics in business I can speak to with confidence (and choosing a business project is one of them).
1. Decide The Reward You Want
Why do you want to start a new business project? Money? Reputation? Influence? A stronger network?
There are plenty of reasons to start a business and money isn’t always the motivator.
Did I start blogging because I wanted to make money? No. Blogging is simply an avenue for me to create content. The reason I started writing was to position myself as an authority for marketing management.
Do I make money because I write about business? Not really, but the process of running a website is an attractive feature for business partners. They are the ones who loop me in for different projects; paying my way forward.
A blog is only one example of starting a business, but you might have other projects and rewards in mind.
When closing down my technology company, Phased, I had a few debts to repay. I asked myself: what can I do today to make money? The answer was “teach someone to paddleboard”. It was that simple — SUP Baddeck was born.
In the case of SUP Baddeck, my motive was money.
In my opinion, the more someone leans towards making money, the more they will need to balance between the work they want to do and the work they have to do.
Do I enjoy writing proposals and issuing invoices? Not always, but my business revenues increase when I do them. Would I prefer to spend the majority of my time planning cool events for the startup community in my hometown? Absolutely, but if I can’t afford to feed myself, I’m on a losing track.
Before you decide on your new project, make sure you come to terms with the balance of activities you’ll need to do — this is vital for new founders.
2. Don’t Overthink Your Passions
A phrase I hear too often is “I need to figure out what I’m passionate about”. I can understand the frustration; entrepreneurs want to carefully decide where to focus their efforts so they don’t get bored with their idea after 3 years.
However, in my experience talking to friends about starting businesses, the undecided nature of selecting a passion is the reason they never really move forward on their ideas; the search for passion becomes a never-ending rabbit hole.
Here’s the bottom-line truth about passions:
- If you do something for 3 years, your interest on the topic will change (for good or for worse).
- The things you believe are your passions now might not be your passions later.
- There are still passions you have yet to discover.
With that said, forget your why. Set out to tackle things you care about today. If it doesn’t catch on in 2 years, you can always try another project.
3. Understand Sacrifice vs Sanity
Every entrepreneur will tell you starting a business requires sacrifice, however what most entrepreneurs won’t admit is when they should’ve taken a different path.
Despite what happens in your entrepreneurial journey, it’s important to keep your health and sanity. I think a lot of people get into startups because they want to be happier in life, but research has shown that relationships act as a stronger component to happiness than a career.
In my opinion, people enjoy life more when they are healthy, fit, and are able to celebrate (not resent) the accomplishments of their friends and family.
If ever starting a business that sacrifices your intellectual well-being, you’re in the wrong business. This includes businesses that require “blood, sweat, and tears” to make it work. I’ve started these kinds of businesses before and they are a quick way to feel angry at the world and the people within it — not recommended.
Instead, choose the business that will make your conversations interesting. Choose the business that will allow you to invest in yourself, mind, and fitness. Choose the business that will enhance the time you spend with friends and family. You don’t need to make millions of dollars to be considered successful. Instead, measure your success by the unique stories and memories you have.
For example, one of my many wonderous startup stories happened while I was working at the very first startup of my career — there was a fire. I remember sitting at my desk at Volta Labs 1.0 (Halifax) when a fireman arrived at the office door. It was like he rolled out of bed and was still groggy or something. Nothing about his body language or character struck me as there being any sort of emergency. At the time, I was unaware there was a fire.
“Hey” he calmly spoke. “Morning”, I replied. “Not a bad day, eh?” he said. “Yeah, not to bad. How can I help you?”. “Well, word is there’s a fire on the 3rd floor”. “Umm.. okay… is there?”, I replied. “Yeah, someone BBQing or something”, he said.
At this point I had no idea which way the conversation was going to go. Was it a false alarm? Was he knocking to let me know everything is okay? He continued the conversation: “Yeah.. so anyway, I’m going to need you folks to leave the building”.
Oh wow! There was an actual fire happening! Our team entered a light panic, packed our things, and left the office.
4. Brainstorm Ideas for New Business Projects
Now armed with the first 3 steps, create a list of ideas for business projects. As we continue further down the list, we’ll qualify your ideas; validating which one you should focus on.
The steps going forward will require an idea. If you’re still refining your idea, I highly recommend taking a design thinking approach which was first mentioned to me by Darren MacDonald.
In essence, design thinking is an approach to idea generation that involves emphasizing with users, talking to potential customers, and refining your original idea into something that people actually want. The end result of design thinking is to determine a somewhat validated idea. From there, design thinkers are prepared to take their ideas forward for financial consideration, market assessment, and prototype development.
5. Be Obsessively Realistic About Your Idea and Consumer Behavior
People generally follow routines. They might hit the gym before work, sleep in on Saturdays, or waste hours on their phones before bed.
A personal observation I made while browsing Snapchat’s “SnapMap” was that the majority of people in cities across North America were waking up, going to work, coming home, and watching streaming services like Netflix, Disney+, Prime, and HBO.
Routines form habits and habits are hard to change. Consider how your business might weigh against someone’s routine. How does it fit within their day? How would someone most likely hear about your business? How would people most likely access and use your products and services?
The more realistic you are about consumer behavior, the more impactful your go-to-market strategy will be.
Success will come when you position the right optics or find the right angle. Then you’ll be “found”.
6. Determine How Much Capital is Required
New businesses need money. You may need to buy new equipment, license software, or develop strategic partnerships. Whatever it is, these activities require cash and it’s up to you to decide if you can afford it.
I recently watched a business pitch where 4 co-founders presented the idea of opening a pet store. They identified PetSmart, one of North America’s largest players, as a competitor. Their solution was to open a store at the same size, scale, and caliber as PetSmart; directly competing.
At the end of the presentation, I asked how much capital the team needed. “Millions”, they replied. I asked how much they were going to contribute. “$100,000”, they replied. I urged them to reconsider their business and to think of a more strategic angle they could take to intercept PetSmart.
It’s this the kind of thinking new entrepreneurs need to have.
A market player like PetSmart can afford to compete; the group of 4 young co-founders can not.
I recall a time living in Halifax when I had no job and $1,600 rent due in 2 weeks. I decided to quickly ramp up a consulting company focused on Hubspot services. After 10 days, I had 2 clients and $10,000 in revenue. My rent was covered.
Thinking back, could I have built a consulting practice on par with IBM? Absolutely not. Could I build a full-service agency? Possibly, but the quality wouldn’t have been good. Instead I chose an area I could specialize in to make customers happy. My total cost to start up was $428 ($68 to register the business and $30 per month for a website for 1 year). My business was profitable in its first month of operation.
As a last piece of advice for capital, consider the running cashflow your business will require before breaking even. If the first year of your business will cost $100,000 with a net profit of -$10,000, then your business will require an additional $110,000 cash injection for year 2 with hopes that the end profits are closer towards $0. This cycle will continue until such time that the business either breaks even or files for bankruptcy.
7. Choose Your New Business Project
By this point, you have decided which reward you want, you’ve considered selecting a business that won’t destroy your health, and you’ve brainstormed ideas for a new project.
From there, you applied a realistic lens to your idea and thought of ways you idea would fit against peoples’ routines. Lastly, you performed your financial analysis.
What do the financials tell you? Are you comfortable with the amount of money required to make your business work? If it feels like too much, perhaps it is. Are there ways you can specialize further to alter your operating costs? Can you take a different angle that makes it more affordable?
An investment I considered was a recreational watersport facility in downtown Sydney, Nova Scotia. My first draft of the financial projections placed the investment at $40,000 (enough for an MVP). Upon further analysis of the market, I didn’t feel comfortable with the risk. I informed my partners of the decision to not go forward, but they countered with an attractive offer.
“What if we opened the deal and gave you more freedom and flexability to create other revenue streams like events, festivals, food, drink, and renting facilities to other providers? Would that make you more comfortable with the risk?” I suddenly had a burst of inspiration for the project. I could build a little empire on the waterfront and my business partners would help give me more autonomy over operations! I was very pleased, but the feeling didn’t last.
My father, a well-accomplished Chartered Accountant, was skeptical on the new arrangement. The new deal changed the original model from being a part-time seasonal effort to an all-year-round operation. The new sources of revenue would mean more responsibility, employees, and overall management. After a second financial analysis, the investment amount shifted from $40,000 to approximately $250,000. I definitely could not afford to start the business.
I emailed my partners and the deal was dead.
In your analysis of your business projects, consider the weight of the market opportunity and the real financial risk involved to start and succeed with the project. Some businesses are cheaper than others and it’s okay to play it safe.