Entrepreneurs looking to enter into conventional businesses like retail, services, and small scale production often encounter a dilemma. On one hand, they are constantly being told to follow their passion, and secondly, they feel constrained by their roots, limiting their mobility.
Passion is often tied to what we know, skills we have developed, and reputation that has been gained. Passion often leads an entrepreneur to choose a market that is saturated. For instance, it is easy to be passionate about lifestyle businesses like music shops and yoga studios. The problem with passion is that the most attractive lifestyle businesses operate in saturated markets offering very low profits.
Locational constraints are also problematic because they cause entrepreneurs to myopically consider their geographic locale rather than seek out the best markets for their business concepts. The problems of passion and roots compound each other when the passion leads to the selection of a lifestyle business model in an already crowded regional market.
We suggest two solutions to this dilemma. Firstly, entrepreneurs may pivot their passions and enter related businesses that will still fulfill them, but which will not financially squash them. Entrepreneurs can look for niches that are underserved within a broader industry, or they can enter upstream or downstream markets. For example, while music shops may abound, music lessons may in need. Alternatively, while yoga studios may already be plentiful, the markets for distribution of accessories, equipment, and auxiliary services may be wide open.
The second solution is to expand the geographic scope of the entrepreneur’s search to include nearby cities. It may often be preferable to have a commute, or required remove communication, or a partner in another geography, rather than compete at home in a saturated market.
At LaunchScore, we help with both passion and roots. We calculate the expected earnings of 800 conventional business opportunities in 750 U.S. markets. Entrepreneurs can browse the opportunities to help them decide whether they should pursue, pivot, or consider other markets. Our search allows users to choose among many related business types and to examine results for regions that are near them, or farther away. They walk away validated or with new questions about their business ideas.