JULY 04, 2012 Small-business owner Jason Geno evaluated opportunities for over a year before leaving his day job to strike out on his own in 2003. In human resources and operations management at the time, he squirreled away money for making the leap while performing the legwork necessary to open his own business.

“From the first day I decided to start my own business, I took a planned approach to investigating various business options,” says the owner of Washington, D.C.-based Human Capital Initiatives (HCI), which analyzes and advises on the efficiency of public agencies and private mid-size companies.

“I chose an area I loved—consulting and advising—and then pinpointed a specialty and market that required those services,” says Geno, whose company today pulls in over $1 million in revenue annually.

Such attention to detail during the investigation stage of starting a business means a higher likelihood of success, says Lang Glotfelty, chairman of the San Antonio chapter of SCORE, a mentoring program for entrepreneurs sponsored by the Small Business Association (SBA). “Evaluating a small-business opportunity should take at least six months,” says Glotfelty, who has owned seven of his own companies in records management and fixed-asset inventory and regularly advises individuals who are just starting out.

Here are a few things to consider when researching a possible entrepreneurial path.

Consider your background and interests. To discover your ideal business, start by examining areas in which you have experience and that inspire you. “Since you’ll be eating and breathing your new venture, especially for the first three years, it’s important to love the business,” says Glotfelty, who also recommends that new business owners have some background in their chosen field. “Staying in your comfort zone makes running a business much easier, and the contacts you already have are vital to the success of your new venture.”

Identify a need. When deciding on his business, Geno drew from his experience in human resources and operations management and looked for areas in consulting where there was a gap in service. He noticed that large companies had access to efficiency consultants and advisers but that there was a dearth of help for mid-sized companies, so he decided to target that market.

When examining markets, Glotfelty advises potential business owners to look beyond superficial findings. “If you come up with an idea for a consignment store for teenagers and you can’t find any in your market, either you’ve got a really good or really bad idea—which is where market research comes in,” he says.

Identifying if there is a product or service like yours and who is likely to frequent your business is vital to starting a business. A number of government sources offer a wealth of information about markets, trends and consumer behaviors, including the SBA’s business data and statistics page, the U.S Census American Fact Finder, Fedstats.gov and the comprehensive Economicindicators.gov , which provides market and economic information from the Bureau of Economic Analysis and the Census Bureau.While it’s a good idea to look for new or expanding markets, tread lightly around trends and products and businesses that change quickly and may become obsolete or overcrowded tomorrow.

Determine location. Where you can set down roots is another critical component of assessing the viability of your business idea. If your business is a brick-and-mortar retail, you’ll need a location with a high volume of appropriate traffic. Service businesses offer more leeway in terms of location and can even be started at home, but you’ll still need to think about realistic proximity to your clients.

Crunch the numbers. Choosing the right business also requires looking at the financial facts. “Lay out your financial plan for the first 12 months, including your costs, projected income and growth and see how long it’s going to take you to see a profit,” says Glotfelty.

Determine how much the business is going to cost you and how you’ll pay for it. Options include bank financing, savings, personal credit and borrowing from friends and family.

What are your favorite methods for evaluating business opportunities?

A freelancer since 1985, Julie Bawden-Davis has written for many publications, including Entrepreneur, Better Homes & Gardens and Family Circle. Julie blogs via Contently.com

.Photo credit: Thinkstock