Which is Better, Investing or Owning a Business?
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.
It is everyone's dream: roll out of bed at the crack of noon, stumble to the front door in your PJ's, pick up the newspaper and check the mailbox. And in the mail, there is a check waiting for you - maybe it's $1,000, $10,000 or even $100,000!Such things only happen in fairy tales, right? Wrong! But there are some things that have to happen first:1. You must have the discipline to actually WORK in your business. Most people get up and go to a job. It becomes a habit, a safe routine. When you have your own business, there is no one telling you what to do or when to work. It's easy to get way laid. Many business owners create systems and a schedule to replace the routine for a 9-5 job.2. You must be willing to deal with the insecurity of no steady paycheck. It's usually a good idea to have at least 3 - 6 months reserve to cover living expenses while you're getting your business off the ground. Or phase out your 9-5 job gradually. 3. There are lots of details that you must learn about running a business that have nothing to do with making money: filing quarterly estimated IRS returns, business licenses, filing payroll taxes, withholding, unemployment, workmen's comp... The list goes on.4. By all means, read the book E-Myth Revisited by Michael Gerber. Owning a business is all about systems. Just because you love to bake, it doesn't mean you should own a bakery.5. Another 'MUST READ' recommendation: You Need To Be A Little Crazy - The Truth About Starting and Growing Your Business by Barry Moltz. Barry gives the inside story of the ups and downs of being a business owner. The toll of being a business owner effects not only you but your family as well. Barry describes the stress of being self-employed can have on your health and on your relationships.6. Be sure you not only know what you're getting yourself into - but make sure your family and spouse understand and are willing to make the sacrifice as well! They need to be prepared for you to work harder than you've ever worked before--AND without a steady paycheck. Without the support of those who love you, you will never succeed.7. Having a business that doesn't require a "bricks and mortar" store or office is a huge advantage. Overhead is cut to a minimum. Maybe it's an Internet business where you sell "moon cookies" on line and a fulfillment center warehouses the product.8. Not having inventory is a huge advantage! Not having precious capital tied up in inventory gives you a huge safety net. Starting with a service vs. a product can be a much easier start-up financially - IF you have experience and a "following" of clientele in the service you're providing. 9. Multi-Level Marketing businesses are a great way for a beginning entrepreneur to get started with a very low entrance barrier. "Rich Dad" Robert Kiyosaki has outlined the benefits of this type of business in his book The Business School For People Who Like Helping People.10. Brad Sugars, who markets a program called "Billionaire in Training" recommends buying an existing business vs. starting a new one. Acquiring new customers is most expensive when you have none. Buying an existing business gives you a built-in client base.
Buying a Business - The Traps and How to Avoid Them - Part 1
If you've ever wanted to buy a business with "no money down", and have heard someone say it goes on all the time and that it's possible, then I have some good news and some bad news.The bad news first: No matter what anyone says, you can't buy a decent business with nothing down.In the 50 plus years I've been in business, buying businesses and teaching other people how to buy businesses, I've never seen it happen. I've never once run into a seller that will let you in with nothing down. It just doesn't exist. But here's the good news: Just because you can't buy a business with nothing down, if you find one that makes sense and it's large enough, you can finance it 100%, without using even a penny of your own money or borrowing a dime from your friends, family and relatives.How can I say this?Because there are, in fact, lots of ways to finance a business -- including banks, government loans, joint ventures, suppliers, owner financing and, my personal favorite, investors. You can use one of these methods or combine them however you like. Most of these tactics are relatively fast, simple and clean...and a lot easier than you may think.When I was still teaching about buying businesses in seminars many years ago, people would often confuse 100% financing with nothing down. But they aren't the same thing at all. The next time someone says you can buy a decent business -- one that's not a dog, a turn around or some kind of Mickey Mouse operation that's sinking fast -- with nothing down, run away from them as fast as you can. Because chances are they're trying to sell you on an idea that simply doesn't exist.
Owning Your Own Business - The 10 Things You Must Know
I get asked this question all of the time. Mainly, this question comes from people I run into that own and operate a small business and have always done things for themselves. The business may have a few employees, own some assets and is quite profitable. When speaking with them, I always hear "I don't really have any legal problems so why do I need a lawyer? Business is good and my employees love me." Well, when I hear this, I know what I am getting into.The first thing I ask these people is: how is your business structured? LLC? Corporation? Once we determine that answer, the next questions become: Do you have an operating agreement if you are an LLC or by-laws if you are a corporation? Do you have annual meeting minutes? Seven out of ten times people respond "no" to these questions. This is why they need a business lawyer. If they are not following corporate formalities and organizational protocols and someone would sue the company, the chance of that plaintiff piercing the corporate veil and attacking the owner's personal assets increases exponentially. Another question I ask is: do you have written contracts for the work you perform and the business dealing you are involved in? About 4 out of 10 say no. Again, this is why they need a business lawyer. The handshake agreement doesn't work in today's society. Everything should be in writing, not because you can trust no one, it is because you need to protect your rights. If they don't have contracts they use or have written them themselves, you can bet that they will spend insane amounts of money to settle disputes that could have been prevented by working with a business lawyer from the start.Lastly, I usually ask them if they understand the various federal and state employment laws that govern the employer-employee relationship. Most respond with "Pennsylvania is an employee at will state and I can fire anyone at anytime." This is what I call a ticking time bomb. Yes, it is true that Pennsylvania recognizes employment at will; however, there are various laws that give employees protection from discrimination, unfair treatment, unfair wages, etc. Most of the time these business owners have no idea what they don't know and end up doing something that costs them ten of thousands of dollars to settle. This is why they need a business lawyer. So as you can see, there are many reasons to work with a business lawyer when you own a business from the start. People improperly assume that the only time they will need a lawyer is in the event that they get sued. However, a good business lawyer will help you run your business in a way that limits the reasons for which you could be sued at a fraction of the cost it will take to litigate and resolve a dispute down the road.
Buying A Business - The Basics