Your Value and Your Hourly Rate
This, of course, is the real question. Chances are that if a market
has room for you as a new competitor, and you have an eco64
How to Succeed as a Lifestyle Entrepreneur
nomical way to get the message to your target market, you have a
fighting chance of running your business successfully. However,
there are exceptions. Say, for example, you’re a Web site developer
in a community where there are talented college students
willing and able to work for very low compensation; this would
lower your chance of operating at a reasonable profit.
The rest of this chapter deals with three broad areas that
your up-front research should explore. First, I brief ly cover the
issue of barriers to entry. Next, I discuss researching your market
using published data and the Internet and then evaluating your
research. Finally, I detail how to research your competition.
Barriers to Entry
Some industries are easier than others for newcomers to
break into, especially true for lifestyle entrepreneurs. To set up a
business as a Web developer, for example, requirements are not
complicated or expensive. Besides the skills to make Web sites,
you need a computer and some basic peripherals, Internet access,
a telephone, and perhaps stationery. At the other end of the
spectrum, if you wanted to set up a new national overnight package
delivery service, you would be faced with daunting barriers.
You would need planes, trucks, pilots, drivers, representatives in
several locations, and so on. Whereas the Web developer could
probably get started for under $1,000 (assuming he already
owned the computer), the overnight delivery service would require
millions of dollars on day one and would have to secure
hundreds of thousands of customers very quickly to survive.
In addition to money, other barriers to entry may include
licensing requirements (some businesses require them, but most
don’t) and technical expertise inherent to some industries. Common
barriers to entry in some, but not all, industries are customers
that are more or less locked in to their current supplier. In
other industries, customers are far more fickle and are ready and
willing to consider someone new. For example, people are often
ready to try a new restaurant but won’t readily change the company
that delivers their home heating oil.
In the case of lifestyle entrepreneurs, other barriers to entry
might be anything that interferes with the nonbusiness aspects
of your chosen lifestyle. The necessity of working on Sundays,
for example, might not be a significant barrier to entry for the
traditional entrepreneur but might be for someone going into
business in part to have weekends free.
Make sure you choose a business that has low barriers to entry
or at least no barriers that would be incompatible with your lifestyle.
In general, service businesses have relatively low barriers to
entry as do retail businesses and many Internet-based businesses.
Some service businesses, on the other hand, require licensure or
certification that can be major barriers for anyone without the
appropriate credentials. Fields like medicine and mental health
require licensure to practice and have the additional barrier to
entry of certification by insurance companies and other thirdparty
payers.
In some situations, government authorities purposely limit
the number of businesses of a certain type by requiring permits
of which there are only a prescribed number available. In some
cities (most notably New York), you can’t operate a taxi independently
without a medallion, of which only a limited number are
available, and availability is strictly controlled by government regulation
to allow the city to control the number of cabs on the
street. Similarly, permits to serve alcohol in most jurisdictions are
only available in a limited number as decided by the city or other
governing authority.
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