business opportunity, business markets

The most crucial question in starting a business is also by far the hardest to answer. What business? The question applies equally to the company that's soldiered on for years, staying put and staying small - or smaller than its owner would truly like. The same effort, applied in a more fertile field, would generate better results. The problem is finding the field.

There's a marvellous moment in The Graduate when a friend of Dustin Hoffman's screen father buttonholes the young man and offers him a one-word recommendation: 'Plastics'. That's not been a bad business, either. Nor has the one nominated by Lord Rayner in his early days as a managing director of Marks & Spencer. Asked what business he would recommend to an aspiring entrepreneur, Rayner didn't hesitate: speciality breads.

That phenomenon has applied in many other markets, from stereo to ice cream. Purchasers have traded up, going for better quality at higher prices. The small firm, stealing a tiny proportion of the large company's mass market, can make a tidy fortune in its special niche. But that general principle still doesn't answer the specific question. It doesn't even need asking, of course, if you have a special skill, some high-tech brilliance that's certain to win customers - if it works.

At one point, high technology seemed by far the surest choice for the aspiring start-up. In 1992, half the top twenty in Fortune's list of America's fastest-growing companies were working in the broadly defined computer industry. They literally ranged from A to X: from Artisoft, whose niche lies in helping PCs to work together, to Xilinx, making reprogrammable chips. In 1994, Artisoft is still among the 100 fastest growers, but only just: Xilinx is out.

The point isn't simply that high-tech is an up-and-down occupation (though it is). The 1994 top twenty include only four computery wizards. But as high-tech times have become harder, some very humdrum occupations have come to the fore - led by a couple of retailers. One sells hardware and garden tools and fixtures. The other, a franchise operation, has an intriguing variation on the usual themes: it sells both new and used goods.

That's not unknown in British retailing. Video games are traded that way in many a High Street. But surely no purveyor has matched Funco in selling Nintendo and Sega: this American firm has grown by 179% a year. It's no longer small, with $50.5 million of sales. But that expansion meant multiplying nearly tenfold in five years from a small base. In 1991 there were just three FuncoLand stores. Today there are 127: they average some £300,000 of sales a year, by no means on the far side of the moon.

The relevance of American experience to Britain is long-established. Eating chains are only one of the business imports which continue to demonstrate that the Atlantic is easily crossed eastwards. Feeding is still fast-growth in the US, where new operators are stealing a free ride from McDonald's, Burger King, Pizza Hut and the rest. Just as the enormous growth of sliced bread stimulated the taste for something superior, as spotted by Rayner, so the proliferation of the vast fast-food chains gives their chance to successes serving slower Texan-style steak or chicken-on-a-spit.

Don't bet too quickly on such US hits staying American: are you sure that child play centres, say, or premium quality golf clubs, or second-hand sporting goods wouldn't work in Britain? Wherever you see a business that's apparently prospering, either in another country or at home, that's an important clue. Direct imitation is not the answer, though. Every business idea has to be adapted to fit your own personality and perceptions.

It helps, of course, if the proprietor's instincts and interests coincide with the business choice. Anita Roddick's recent rash of troubles can't obscure the fact that, by following her own feelings about natural cosmetics, she built Body Shop into a fabulous business: and one which, reversing the usual flow, travelled successfully to America. But chickens-on-a-spit, whose original three locations are now hundreds, attracted three non-foodies from Blockbuster Video: while the video-game king of FuncoLand came from mail-order computers (he'd gone bust). Ultimately, only one instinct matters: the nose for a profitable turnover.