There are many variables that contribute to business successes and failures. So many in fact that choosing one as the sole reason you succeed or fail is impossible. There is, however, one variable that can have an immense impact on the future of your business—industry.

The industry that you choose to start your business in is critical to your chances of success, which is why it’s important to choose wisely. So how do you know which one is right for you?

I read recently that there are two main factors that need to be taken into consideration. First, how much experience do you have within a particular industry? Second, which industries are ripe for young, fledgling startups?

Research has shown that high performance among startups directly correlates with more years of experience, so it pays to start your business in an industry that you’re familiar with. In addition, there’s evidence that startups can sink or swim depending on the industry. In young industries your competitors, even if they’re ahead of you, aren’t so far ahead that you can’t quickly catch up. Technology intensive industries are constantly changing, making it easier to build upon an existing idea and undermine any advantages that your competitors may have. It’s also helpful to look for businesses that don’t require you to raise a ton of capital, something difficult for a startup to do.

If you have a good amount of experience in a ripe industry, then the odds are in your favor. If you have little to no experience in an already established industry, then your chances of success will drop and you may want to reconsider your options. Don’t let this scare you or give you a false sense of security. Just know that, good or bad, these are the odds you have to work with.

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