Many people who have dreams about either starting or buying a business fail to consider all the impediments before making sound decisions. Don’t get us wrong, owning a business is one of the most satisfying things an entrepreneur can do as it meets many of our personal and primal needs. So, it may come as a surprise, but due to downsizing and the uncertainty these days of keeping a corporate job, upwards of 70% of Americans want to own a business. Perhaps you’re one of these people, millions ready to take the plunge to pursue the “great American dream”. We salute you.
However, there are dozens of factors to consider. So, before rushing headlong into something you cannot achieve or sustain, let’s step back and consider what’s at stake. Firstly owning a business is a major life altering decision, which is not to be taken lightly. Secondly, it will cost you in time, money and relationships if you don’t choose properly. You could land up broke, divorced, and depressed or at the least downhearted. But in making the right choice, you could have fulfillment, lots of fun and greater control, and oh by the way, make a lot of money.
To help guide you in the decision-making and to consider many of the elements of your choice, here are some tips for you as you start the process of finding your dream business.
Serious Thoughts About a Business
Running a business is not like working for a corporation. It’s not an eight-hour five-day workweek, so this is something you really need to deliberate over, especially if you value your free leisure time. Owning a small business is your life and it is highly integrated into everything you do. However, if you to choose a to buy a business that you’re truly passionate and excited about, it won’t seem like work at all. When you do something you love, you’ll stand a much better chance of success, and longer hours won’t seem like drudgery.
It’s all About What you Know?
Don’t even consider trying to buy a business for which you have neither knowledge nor experience, it will be a total struggle at best and a disaster in the worst case. Choose a business where your skills, knowledge and expertise can be applied and you feel very comfortable. For example, if you work with your hands and are very practical don’t chose a business where one-on-one activity is required, such as any type of consulting, or people oriented service business. If, you on-the-other-hand, you are an outgoing type you may want to consider these types of businesses. The key is to find a business, which will put you in the drivers seat for success, as you will have all the ingredients to meet the need.
It’s all About the Lifestyle
Choose a business that suits you and your lifestyle needs. If you came out of the corporate world you will probably need to maintain regular business hours and a an organized schedule, but for those who are much less structured irregular hours and flexibility are the key components. For example, if you’d like to work at home, consider a web-based business instead of a formal office where you are making customer sales calls and attending meetings. It’s you life and your decision to make.
Money is the Prime Mover
Nothing happens without money. It is the oil that greases the gears of a small business and the means to turn an idea into reality. You need to spend quality time addressing the financing of the new business, whether it is a start-up or you intend to acquire an existing business. The are numerous ways to raise funding for the new venture, it can be from a regular bank, a venture capitalist, a private equity group, or angel investors. On the other hand, if you can secure sufficient funds to acquire a business you may be able to grow organically without any future outside funding. If you acquire an existing profitable business, then revenue can provide the operational and growth capital as the need arises. So, it depends on the type of business you envision regarding capital investment. Some businesses are not so capital-intensive, while others are exactly the opposite. Regardless of the amount of capital requirements, the source and terms need to be carefully scrutinized, as you do not want to start off on the wrong financial foot.
It’s Like a Chess Game, all About the End
Although it sounds trite, the day you start up your new company or acquire an existing business is the day you decide to exit, at least metaphorically. Without an exit strategy you have no idea really how you would want to run the business to meet the end goals. Just because the business is running smoothly and you are making profits and growing, doesn’t mean that you have positioned it for subsequent transition, sometime down the road. You must have an exit strategy for your new business right from the very beginning. You’ll need to decide whether you want to build it and sell it in the near future or keep it as a continuous source of income, regardless of its disposition. The exit plan helps you to choose the optimum business structure in order to avoid major legal and tax problems in future. There are numerous questions to ask, but a good business intermediary like BBNY can help you in that task.
Whatever else you do, think through everything you can before taking the plunge and investing in a small business. Don’t do as many discouraged and disheartened entrepreneurs do and fail to consider the multiplicity of factors that control all the outcomes in owning a business. Make time to carefully consider all your options and try to choose the right direction for you. It will payoff in the end.