7 Key Steps in Transitioning to Business Ownership

The key question is why some businesses fail and others succeed. This is a debatable question and there are many opinions on this subject. However, I believe the core of the problem lies in the inability to develop good business habits from the onset of the transition into business ownership.

Too many people jump into business without fully understanding the level of involvement required to run a successful business. A common mistake, often made, is miscalculating the volume of effort needed and the resilience required to manage the ups and downs of business ownership. The bottom line is that those who are not mentally prepared for the journey of transition will have difficulties with business management and growth.

Here are 7 important steps to consider in transitioning to business ownership:

  1. Develop a business plan from the inception of the business all the way to the exit strategy. The best way to begin the process is to start with a vision which is often the big picture outlook. You can go about this by writing down everything you want to achieve. Consider this exercise the playground of ideas and exploration; a place where you have emptied all your toys to get a clear picture of what’s available in order to contemplate your next move.
  2. Take an inventory of your skills and abilities. Understand your strengths and weaknesses. This exercise will be helpful in the future as you come face-to-face with the daily management of the business. Don’t try to do it all. Don’t haggle with those things you are not strong in. Seek out the experts; it is well worth the investment.
  3. Know your industry thoroughly. Stay informed and be aware of the trends and how they can affect or impact your business. All the while, be ready to make necessary adjustments to your business strategies, such as implementing new approaches to old challenges based on what’s taking place in your industry.
  4. Set powerful goals and work towards achieving them because they are the lifeline of your business. Follow the SMART acronym for setting goals. Be sure they are Specific, Measurable, Attainable, Realistic and Timely. Select goals that reflect the different aspects of your life, such as spiritual, business, family, etc. Les Brown says: “Life takes on meaning when you become motivated, set goals and charge after them in an unstoppable manner”. Without goals we function aimlessly and have purposeless lives. Goals give direction to fulfilling one’s purpose.
  5. Integrate your marketing strategy into your business. Remember that the business plan is the guiding tool and is not an ornament for display. Follow the strategy and adjust as needed. Though the foundation will stand, but the implementation may vary. Get to know the pain points of your target market. Understanding their needs and challenges is critical in developing appropriate solutions to solve your clients’ problems.
  6. Build up a network of support. In addition to our own self motivation, much is said about external motivation and inspiration when interacting with other like-minded individuals. Take time to be inspired by the success of others and learn from their mistakes.
  7. Apply technology to streamline the business. Make deliberated efforts to keep up with technology as it relates to your business and apply it to improve business efficiencies and enhance management. Understand how technology can be useful and appropriate in your business.

There is no doubt business ownership helps to realize dreams. It also requires consistent, intentional, and deliberate actions to deal with industry changes and other economic factors that can adversely affect the business. At times we need additional direction and support to transcend to the next level. Don’t overlook the high returns you will achieve when you make the right investment. They can make the difference in running a successful business.

Exploring Business Ownership – Traditional Employment is Not Risk-Free (Part 4 of 7)

In previous articles we’ve talked about the personality types that have the best chance of business ownership success and helped you define your goals for wanting to be in business. Now we’ll explore how entrepreneurs, franchise owners, and employees generally think. Where will you find a match?

How You Think Vs Your Risk Tolerance

As I’ve shared previously, business success is far from guaranteed so it’s important that you assess your tolerance for risk before committing funds to any business venture. One very general way to assess your risk tolerance is by analyzing the way you think.

Generally speaking, there are three main ways to earn income in increasing order of personal risk; employment, franchise ownership, and entrepreneur business ownership. We’ll explore each to see which you identify best with.

The World of Employment

Employee think is:

I did what I was supposed (or told) to do and I can prove it.

If you’re most comfortable with a narrowly defined set of responsibilities, expect your desk (or tools or equipment) to be provided for you, want to call the IT department when your computer hangs up, crave regular working hours with paid vacation and holidays, and expect benefits paid by someone else, then you’ll probably be most comfortable in an employment situation.

When employment is a good fit you feel most comfortable when you do your part as a team member and leave the business consequences of your work assignment to others. If this describes you, take heart! There’s absolutely no shame in being an employee! In fact, most of the business world is made up of employees who willingly do their part and receive a fixed hourly or salary income in return.

Traditionally employment has also had the least amount of risk for loss of income, although that’s becoming less true. For several decades following World War II there was an unwritten social contract between large corporations (and even many smaller businesses) and their employees that went something like this:

If you come to work with us and work hard, then you are welcome to stay with our company as long as you like. We will retrain our loyal employees to take on new tasks and responsibilities because they are our most valuable asset. We will take care of you with good benefits and if you stay with us long enough we will also provide for your retirement.

Contrast that historic practice with the current social norm of viewing employees as a commodity to be hired when needed and laid off when not.

Risk Assessment

Employment and depending on others for income who may not have your best personal or career interests at heart carries the least risk of the three income earning options. But it’s not risk-free and is far more risky now than it used to be. Let me suggest the book The Disposable American: Layoffs and Their Consequences, by Louis Uchitelle, for further reading (I have no financial interest in this book).

Didn’t identify with “employee think?” Check out part 5 where we’ll explore how franchise owners think.

Business Ownership – 4 Things to Consider Before Jumping Into Business Ownership

Are you making the income you desire?

Do you have the flexibility and freedom of time to do the things you love, such as spending time with your children?

Do you enjoy getting up every morning and going to work?

If the answer to any of these is no, ask yourself “why not?” Could it be time to find a new job or career?

70% of the adult population has a desire to be self-sufficient. Only 5% of them ever achieve this through business ownership. Why? Most people don’t know how to research business ownership and fear they may choose the wrong business.

Many people have misconceptions about business ownership. Some feel it costs more than it really does; some feel it costs less than it really does; some feel it is harder than it actually is; and some feel it is easier than it really is.

At one time you may have researched the cost of a McDonald’s, Dunkin Donuts, or Subway (these seem to be the most popular) only to discover you need a net worth of $500,000 or more. YIPES!!

Yes, many of the well-known franchises cost a lot of money. In one respect you are paying for the name. But also, restaurants, which most people think of when they think of franchising, are one of the most expensive businesses you can open.

Most people don’t realize; when you open a restaurant, YOU will own the tables, chairs, countertops, refrigerators, stoves, dishes, cookware, and the list goes on and on. Restaurant equipment can be expensive even for the basics. You may or may not own the land and building, but you will at a minimum be leasing prime real estate which can be costly. But, if you don’t have a prime location, then the restaurant will not do well.

On the flip side, relatively inexpensive home-based or van-based businesses are alternatives to expensive, well-known franchises. Since home-based businesses don’t require a visible storefront, people won’t know that you, the business or product exists. Home-based businesses are dependent on “sweat equity,” your time, money and effort required to advertise and build up a clientele.

For a home-based business you must know the best way to sell yourself and your product or service. Word of mouth can only get you so far. Advertising is expensive and many times ineffective. You must enjoy being out and about meeting people telling them your business is open and what product or service you are offering.

Once you have decided on your business, how do you ensure success? Most businesses fail because of poor planning, which generally leads to insufficient operating funds before the business makes the turn to profitability.

Planning needs to consider the price of the property (buying or leasing), fixtures required, technology required, marketing material creation, graphic designers, copy writers, inventory, research, the elusive operating expenses and personal living costs while the business gets off the ground.

Based on your demographic studies (you did do these didn’t you?) how long will it be before you break even and start taking home a salary sufficient to cover YOUR living expenses? Knowing what price the market will bear for your product or service will help you determine your break-even point.

How many employees will you need and how much will they cost? What will your utilities run? What about your real estate costs – lease or purchase, public building or home-based, fixed or mobile?

YIPES!!! How do you find out all this information? Research! Talk to other business owners. Find a mentor or a personal business coach.

How hard is business ownership? If you think you can quit your 50-60 hour per week job to open a business and only work 30-40 hours a week then you think business ownership is easier than it is.

Owning a business means you don’t have a traditional “job”, but it doesn’t mean you don’t have to WORK for a living!

No one will tell you business ownership is easy; if it was everyone would own a business. Business owners typically (1) find careers they are passionate about BEFORE they make the leap and (2) find the benefits of working for themselves outweigh their hours and hard work.

When you own a business no one makes you work long hours or put in the extra effort except yourself. No one can fire you for leaving work for a couple of hours to go see your children play baseball or soccer. On the other hand, customers can “fire” you if they expect you to be open or to arrive at a certain time, and you don’t.

Unlike a traditional job, when you own a business your income is dependent upon your ability to find and retain clientele, and the perceived value of your product or service. This is especially true for home-based or van-base businesses.

Do you have the itch to own a business? Is business ownership right for you?

You can only answer these questions if you know what you are passionate about, what your long term dreams are, what your strengths and weaknesses are, what your likes and dislikes are.

Business ownership can be scary; it can also be very rewarding. Research your ideas and plan appropriately to achieve the success you want.