Explore Options Before Taking Owner Plunge
By Dave Wagers
With the slow economy of recent years and the huge numbers of jobs that
have been lost or shipped offshore, many people for the first time are
considering owning their own businesses.
Although there are many opportunities for business ownership, a
majority of would-be entrepreneurs are unsure how to take the first
step. Of those who take a first step, many tread the wrong path and
either fail to achieve business ownership or end up with a business
that is not a good fit for them. Many people wind up simply changing
jobs or occupations, hoping to hang on until the next round of layoffs.
A good "business ownership coach" can make all the difference in
finding a business that fits the individual.
A good process for exploring business ownership should provide
prospective entrepreneurs with the tools, services, and support system
needed to learn about their options and to pinpoint opportunities that
match their goals. I recommend a two-step process that calls for
introspection and extrospection.
Inside exploration
Start by creating your own treasure map. You will have a beginning
(personal and business needs), middle (expectations of the business),
and end (goals you want to achieve as a result of the business).
For the beginning, start thinking of your special business and
personal needs. Examples may include less overnight travel, no evenings
or weekends, flexible schedule, lots of people contact, no sales cold
calls, etc.
Separately begin to list your expectations for the business. Examples
may include how long it takes to break even, the number of employees
required to run the business or whether you want any employees, is the
business product- or service-based, etc. Remember, the lists you are
creating will change, as you better understand what your priorities
are. However, this will be your first draft.
Your next list will describe your strengths and weaknesses, and your
likes and dislikes. Everyone has mastered some number of skills from
selling, public speaking, relationship building, or writing software to
organization and problem solving. Write yours down in as much detail as
possible. Many if not most will be transferable to your new business,
and the better you understand what skills you bring to the business the
quicker you will know what complementary skills you will need to hire.
A crucial element of your treasure map is your goals: what you're
trying to achieve over the next one to five years. Be as realistic and
explicit as possible. Spend quality time on this and review it
regularly.
If you don't know where you are going there's an excellent chance you
won't get there.
The last element of your inside exploration is an up-to-date and
accurate view of your financial situation. This step will serve two key
purposes, first to determine how much you can afford to invest in a
business, and second to determine how large a loan you can obtain to
finance the remainder of the business. It's important to know your net
worth, amount of liquid capital, and borrowing capacity.
Once you have completed your treasure map, it's time to start following
your map to find the treasure. Again, this is an area where a good
business ownership coach can really help. In this outward exploration
component, you will put your goals, needs, expectations, strengths,
weaknesses, and financial situation lists to work for you.
To begin, explore a variety of business models: owner-operator,
manage-the-manager, service vs. retail, single site vs. multiple sites,
area or master development.
The important thing to remember at this point is to keep an open mind,
don't jump to a premature emotional decision, and follow the process --
the map developed earlier. The goal is to learn as many facts about an
industry or business model that has appeal, talk to as many owners of
similar businesses as needed to feel comfortable with the answers, and
always compare the results back to your goals and what you're trying to
achieve. If you change one of your important goals at this point be
sure you're not just making a compromise or letting your emotions rule
in a way that you will regret later.
What it costs
For many people, this is the fun part, but it can also be very
confusing, frustrating and even fear-producing. Another area where a
good business ownership coach that's familiar with various business
models, opportunities that are available and investment requirements
can be very helpful.
There is not a very strong correlation between what a business costs
and the potential income from the business. There are many good
businesses a person can own for $50,000 to $150,000 that will generate
a similar income to one costing $1 million or more.
In other words a six-figure income executive could potentially own a
business for less than the price of a new car.
The available options are almost limitless for a person today, from
starting a business from scratch, buying an existing independent
business or considering a franchise. A good coach will be able to help
you understand the advantages and risks of each option. Franchises, for
example, are not all fast food and are available in about seventy-five
different vertical industries.
In general, a person with a good credit rating can finance 70 to 80
percent of the cost of a business, utilizing various programs such as
Small Business Administration loans. Retirement funds can be invested
in a business as well.
If you have ever thought about owning your own business, you owe it to
yourself to at least go far enough down the road of exploration to
discover if it is a good choice.
After all, if you think about it, you are either working to help
others achieve their dreams or you are working on achieving your own.
Dave Wagers is a business ownership coach and franchise owner of The
Entrepreneur's Source in Portland. He can be reached at 503-356-8200,
800-854-5155 or davewagers1esource@yahoo.com.
© 2005 American City Business Journals Inc.
