The best time to launch a startup is now, but choosing the right industry can be a challenge. For most entrepreneurs, the most lucrative field is the most appealing, but there’s much more to it. For starters, passion alone can not keep a business afloat, but profit that is only short-lived because of trends will ultimately lead to a startup falling flat in a few years.
In reality, a startup industry should align with personal interests, experience, and market statistics that indicate an industry’s performance and projected success rate. Startup survival data indicates that those who select an industry they are familiar with are more likely to succeed than those in industries where founders had little to no prior experience.
Defining one’s industry is important, and being as detailed as possible can make the difference between success or failure. Many entrepreneurs believe that the best strategy is to cast a wide net, but this ultimately leaves them adrift in an oversaturated market with no clear direction.
Instead of labeling a startup as “tech” or “retail,” aspiring founders need to identify a sub-field within their industry. For example, educational technology for healthcare professionals is a much more refined industry. Identifying the specific audience a startup will service creates greater opportunity for more accurate and informative market research.
Narrowing Down the Search
The best industries for startups are mostly those that involve providing a specific type of service to people in a way that impacts their life on a large scale.
Construction, for example, has profitable sub-industries in residential development and construction technology. In medicine, biotech and personalized healthcare services are pioneering the next generation of health startups.
For those who want to work strictly in the tech industry, cloud computing, big data, and artificial intelligence show the highest growth potential.
The ideal startup in 2020 will strike a balance between innovation and familiarity; relying on an industry that’s well-established can give a business the foothold it needs to perform well in its first year, while expanding into emerging subfields will provide the edge necessary to thrive.
The Bottom Line
Startups aren’t going anywhere, but it does take more finesse and research to find the right industry. Because there are so many emerging businesses in today’s market, it’s crucial for founders to take their time and pick an industry that’s both personal and profitable. Rather than trying to reinvent the wheel, it’s best to rely on data and find a relevant industry that aligns with personal experience and market potential.