Starting a small business, whether it’s an Etsy shop, a drop-shipping website, or a coaching service, is more achievable now than ever. Owning your own small business can bring both financial rewards and lifestyle benefits. Being your own boss and creating a flexible schedule is a dream for many.

However, one of the toughest parts of starting a small business is settling on the right idea. Like most aspiring entrepreneurs, you probably have several ideas floating around in your mind. How do you narrow them down? How do you pick one that will not only make customers happy but also keep you satisfied?

Here are six practical steps to help you brainstorm, research, and choose a small business idea that aligns with the life you want.

1. Identify Your Passion

Not all business ideas have to revolve around your greatest passion—sometimes, it’s best to save those for hobbies. Still, successful businesses tend to be fueled by some level of enthusiasm. This energy is crucial when you face challenges or tough days.

Many resources, like blogs and books, talk about finding your passion and applying it to business. The consistent message is clear: if you don’t care about the idea, you won’t put in the hard work necessary for it to succeed.

To figure out your real passions (rather than what you wish you were passionate about), reflect on your past experiences. Ask yourself:

– Where have you found the most success in life? This can include previous jobs, personal projects, or activities in your social life.

– What hobbies or activities bring you the most joy?

– When do you feel most relaxed and fulfilled? What circumstances make you feel this way?

2. Research Your Small Business Ideas

Once you’ve settled on a few ideas that excite you, it’s time to do some research. Look into the types of small businesses you’re considering to understand the work and commitment they require. Start by identifying an existing business in each category to use as a reference.

For each business, find out:

– Who founded it, and what inspired them?

– How long did it take for the business to become profitable?

– What sets their products or services apart from others in the market?

– What is their market strategy?

Next, reach out to these businesses. If one is local, consider visiting the shop, talking to customers and employees, and observing the operation. If the business is farther away, try contacting the owner or founder for a conversation. Ask them about their industry and where they see themselves in the future. Keep detailed notes so you can refer back to the insights you gather.

3. Create a Business Plan

A business plan is essential for any new venture and especially helpful during the brainstorming phase. It helps you clarify what you’ll be selling, why you’ll be selling it, and how you’ll do it. If you’re still considering multiple ideas, make a business plan for each one.

Writing a business plan forces you to think through the resources and strategies you’ll need, your market differentiators, and your management structure. Use the businesses you researched earlier as models. Look into their business plans or build your own based on your findings. The key is to think about how your passion ties into the business idea.

Entrepreneur John Rampton advises, “Whether you’re presenting your plan to investors, customers, or team members, it needs to show that you’re passionate and committed to your business.”

4. Think About Funding

Every business needs money to operate, and cash flow is critical, especially in the early stages. Even though it might not be the most exciting part of starting a business, funding is a necessary aspect to plan for.

Stay open to various sources of funding, such as:

– Angel investors: Wealthy individuals or groups that fund small businesses and startups.

– Crowdfunding: Platforms like Kickstarter and Indiegogo allow people to raise funds for
  business ideas.

– Venture capital: Investment firms that offer early-stage funding in exchange for a stake in
  your business.

– Small business loans: Relatively easy to acquire, but may come with high interest rates.

There are many ways to fund your business, so think carefully about which option works best for your situation.

5. Decide on Location and Business Model

Your business model and location go hand-in-hand. How and where you plan to sell to customers will determine whether you work from home, rent an office, or open a shop. Here are a few common business models:

– Online service-based business: This includes roles like coaches, freelancers, or
  consultants. As long as you have a laptop, phone, and reliable internet, location is less
  important.

– In-person service-based business: These are businesses like landscaping, photography,
  or private fitness instruction. While you may not need a storefront, your business operates
  within a specific area.

– Creative product-based business: For businesses like pottery, jewelry, or woodworking,
  you could sell products online, at markets, or in a physical store.

There are many types of business models, so start imagining where and how you’ll sell your products or services.

6. Think About Employees and Partners

Even if you start alone, you’ll likely need help as your business grows. It’s important to consider how employees and partners will fit into your vision for the company.

Think about how you’ll communicate your mission to them. How can you ensure that your employees understand and share your vision? Employees who are valued and feel connected to the company’s success tend to perform better.

Consider what perks or benefits you can offer to make your employees feel appreciated. Also, think about your role as a mentor rather than just a boss. As Carol Roth points out, “A trainer teaches employees; a mentor builds relationships with them. This helps employees learn to think for themselves.”

By creating a team that is motivated and shares your passion, your business will thrive.