Owning Your Own Business - The 10 Things You Must Know
Whether you are starting your own business from scratch, going into a business opportunity, or buying a business, you need to have certain characteristics, traits, skills, and goals in order to succeed. So how do you know if you are ready to own a business? Basically, you need to ask yourself some hard questions and give yourself honest answers. If you don’t have the time and commitment to start a business, you need to look elsewhere for your income. You may be better served accepting a job with a company. There are those that need structure and a job is the place for them. But, if you are inclined to owning your own business, then lets discuss some necessary items. First, you need to have a plan. The plan can come from your own imagination, the franchisor, or the company offering the business opportunity. It doesn’t have to be something set in stone, and it doesn’t have to be fancy. It just needs to be a basic outline of what your business will be, what you will sell, how you will sell it, and what your operating costs will be. It is recommended that you include at least three months of operating expenses into your start up costs budget, which also needs to be determined in your plan. The next item is paramount to your success. It is the infamous 4 letter word and that is work.
Owning your own business is very rewarding but there are challenges. Among those challenges is being able to get access to the capital you need to sustain and grow your business. Owning your own business is the "American dream." The reality is, however, that buying a business is a serious financial and personal commitment that requires an understanding of what makes a business successful. All too often, new owners jump blindly into a business venture, only to be overwhelmed by the tremendous workload of starting a business from the ground up. Owning your own business is not a 9 to 5 job. Self-employed contract workers (writers, consultants) may work long hours under tight deadlines, while store owners spend anywhere from 80 to 120 hours or more a week maintaining their business. However, many people fall victim to a disastrous assumption. Owning your own business is hard work and there are many more failures than winners. If you do decide to go for it, then you need to go all the way and work your ass off.Starting a small business can test the limits of your endurance. The time, energy and financial commitment can rattle even the most dedicated business person. Starting a small business, after all, is very intimidating. If you want to start your own business, you have to be willing to put it all on the line. Starting a business, whether in your home or outside, is not as simple as some think. However, the benefits rival any small problems that might come along. Believe it or not, it's entirely possible to maintain a work at home career. There are a few ways of achieving the satisfaction of being able to work at home and making a career of it, but the true question is what do you really want to do?
Buying a Business - Steps
My occupation centers around helping business owners analyze their assets and coaching them on decisions as to whether or not they should sell all or part of their businesses. As such, I am privy to a wide variety of business information and I can tell you first hand, I tend to see a lot of bad operations. Additionally, based on my experience of having owned and operated several businesses myself, I also coach buyers on what to look for in a business and how the process of buying a business works. So it is not uncommon for me to skew to the negative side of things and to look for warning signs that could potentially hurt either party in a business resale transaction. I don't enjoy searching for the negative aspects of business, but I know them and I work hard to seek out, identify, and mitigate the impact that these risk factors may have on either party.However, I don't always find things that are bad. And during this time, with all the doom and gloom of our present economy, I thought I would share a story with you about an operator that stood above the crowd and ran an excellent business.Several years ago, before I began to specialize in the sales and acquisition of convenience stores, I worked as a transactional broker in multiple industries. One of which was the hotel and motel industry. At the time a friend of mine happened to own a boutique hotel in the Caribbean on the island of St. Croix, U.S. Virgin Islands. One day he mentioned to me that he was tired and since he had owned the hotel for several years he had decided to sell it so he could spend more time with his family. I agreed to help him and began to review his books and records. Upon initiating my review, one of the first things I noticed was that he was doing a good business...a very good business. By that I mean he was running a 90% occupancy rate and had been for several years. It wasn't like he'd just had a good year or two; he had been having very profitable years for quite some time. When I asked him how he had managed to get the occupancy rate to 90% and keep it there, he said that over the years, during the slow seasons, he would make several small changes to the property to maintain a fresh business. Every six months or so, he made sure to do something different to his hotel. It could be a new painting on the wall in the lobby or new trash containers or new towels, etc. But he would always make some change or add something new for his customers to see.When I asked him why he did that, his reply was, "My customers expect to see something new all of the time." He explained, "You see, even though a lot of my customers may be transient, many of them are not, because I work to keep them coming back to me every year. They enjoy their experience at the hotel and they want to see something different, even if it is a little thing." He also mentioned to me that when occupancy would begin to drop-off he would personally go into the town and offer air conditioned rooms to the locals for a reduced price to help fill his rooms and continue to generate cash flow.Wow, I thought. What a novel idea. He went and asked for someone's business.So I began to work at selling his hotel. I can't tell you how many interested people I had look at his hotel. Finally I found a businessman and his son from Ohio who had seen the property, met with the owner and had even gotten the accountant involved in the sale of the business. But just when I was about to write the purchase agreement the deal came to a screeching halt. The buyer said that he could not buy the business.I asked him why? Was it because of the asking price? Was there something wrong with the cash flow or the numbers of the business that did not look in order? No, it was none of those items at all. The numbers were great and the assets of the hotel were in excellent condition. The answer to why he could not buy the business still rings through my ears today as clear as if it was yesterday. He said, "I cannot buy this gentleman's hotel, because he is doing such a good job of operating it that there is no more upside left for me." He said, "I cannot begin to operate it any better than the present owner, because he has done everything right in operating the business and continues to do so even during the hard times."Astounding as it may sound, this hotel was the proverbial case of a car with eight cylinders running on all eight cylinders and doing so well that there was no more upside left in the business. The business was doing too good to be considered salable.It wasn't until some years later that I encountered this same issue again. I was contacted by a gentleman who owned about 12 convenience stores and had decided that he wanted to sell about half of them to reduce his work load. Here again when I inspected the quality of the physical assets of the stores and reviewed his books and records I discovered that I had encountered another "eight cylinder car running on all eight cylinders".The man and his team were great operators. Whenever something broke in the store or something needed replaced or maintenance on the outside, they fixed it. I could not find a blemish anywhere and most of the stores were over 5 years old. His merchandising and floor plan was laid out well and the store traffic flowed. Every time I visited a store they had merchandising specials throughout the store from different vendors. All of his stores were very profitable and operating well. I remembered the hotel in St. Croix and prepared myself for some tough sales. But I was wrong. I ended up selling all the stores he asked me to sell. I know that the people who bought those stores were happy knowing they were buying excellent running assets. And they were especially happy with the fact that all they had to do to maintain the stores success was to continue with the process of running the stores the same way that the previous owner had.So what is the moral of this story?When buying a business you always have a choice. You can buy a business that is an excellent running business and all you have to do is show up and do the same things that the last owner was doing. This would be like buying an eight cylinder car that is running on all eight cylinders.Or you can buy a business that needs some attention and some tender loving care and has more upside, but will also take more work to get the business tuned up and running well. This would be the eight cylinder car that is only running of six cylinders and needs work. In other words it is a fixer upper.Either way you go you will always generally be farther ahead than trying to start a business from scratch and doing it the hard way. So go for it. Find the business that suits your taste and then decide if you are buying a fixer upper or one you can walk in and is ready to go and begin to enjoy the journey.
Own Your Own Business and Live Happier
Whether you are starting your own business from scratch, going into a business opportunity, or buying a franchise, you need to have certain characteristics, traits, skills, and goals in order to succeed. So how do you know if you are ready to own a business? Basically, you need to ask yourself some hard questions and give yourself honest answers. If you don't have the time and commitment to start a business, you need to look elsewhere for your income. You may be better served accepting a job with a company. There are those that need structure and a job is the place for them. But, if you are inclined to owning your own business, then lets discuss some necessary items. First, you need to have a plan. The plan can come from your own imagination, the franchisor, or the company offering the business opportunity. It doesn't have to be something set in stone, and it doesn't have to be fancy. It just needs to be a basic outline of what your business will be, what you will sell, how you will sell it, and what your operating costs will be. It is recommended that you include at least three months of operating expenses into your start up costs budget, which also needs to be determined in your plan. The next item is paramount to your success. It is the infamous 4 letter word and that is work. Do not get caught in the trap of thinking that; if I go into my own business that means less work. That is not the case. You will need to pour yourself into the business to get it going. The difference is that it will be worth it in the long run. The most important part of your plan, and the most often left out section, is never give up. You need to have a set backs and challenges. There will some time that you will be asking will I ever make a profit? Put your shoulders to the wheel and keep going. Keep you eye on the ball and stay to the basics that you will learn from your Mentor or Franchise leader. Businesses take time and commitment. I am not talking about the kind of commitment that the chicken makes when it offers you an egg. I am talking about the commitment that the Pig makes when you are eating ham. Many people want to own their own business so that they can have more time with their family, friends and enjoyment in life. You can earn that right by working hard and doing the basics of a proven successful system. Lets work together and find you that system. Contact me at http://www.life-athome.com
Owning Your Own Business - The 10 Things You Must Know