Business Ownership – Finding the Right Business for You

Do you have the net worth you desire?

Do you have the flexibility and freedom to do the things you love? Family time, travel, charitable interests, sports, hobbies, etc.?

Do you enjoy getting up every morning and starting your day?

If the answer to any of these is no, ask yourself “why not?” Could it be time to find a new job or career? Should you get another job? Should you open or purchase an independent business or franchise?

The options are many, but where do you begin?

Most career decisions are based on emotions. Once chosen, you try to fit your life into that career. Wouldn’t it make more sense to fit your career into your life?

Many things play on our emotions when considering a career change: the level of prestige your career may bring; the name of the company or business; the income potential; love for the product; perhaps it’s related to a hobby. We call this an “outside-in” approach to finding a career.

Some perceive fast food restaurants as good businesses to own. Everyone wants to “own” a McDonalds, but no one ever wants to “buy” one. The busier the business, the more money they must be making.

Emotions prevent most individuals from seeing the “cost” of ownership. Fast food restaurants are certainly good businesses to own, for some people. But, owning a restaurant isn’t right for everyone.

To determine what is right for you, you must first determine what you want your life to look like and what you want your career to do for you. Determine your goals, needs and expectations and then look for a business or career that will help you achieve your goals. You must set aside your emotions and base your decision on facts.

Are you happiest when in charge or when working as part of a team? Do you enjoy dealing with people or would you rather work by yourself? Do you like diversity during the day, lots of activities or do you prefer predictability and consistency throughout the day? Would you want something to build, grow and pass to your children or to build equity for future sale? Where do you want to be in five years? Are you looking for security, financial independence or a place to put in eight hours, collect a paycheck and go home? We call this the “inside-out” approach to selecting a career or business.

After discovering yourself you might ask, “now that I know all these things about myself, how do I know if I should go find a different job or open a business? And if I decide on business ownership, which business will meet my goals, needs and expectations?”

Most people know what it means to be employed; however, most do not know what it means to own a business. Before taking that next job, you owe it to yourself to research all your options. How?

Use the “inside-out” approach to look behind the fa├žade of businesses and learn what it means to live and breathe the business everyday. By talking with current business owners you can discover what the return on your investment will be, what the actual initial investment will be, or how many hours a day it will take to run the business, etc. This can be a daunting task with the number of businesses available today.

The biggest obstacle to exploring business ownership is an individual’s ability to keep an open mind. Many individuals dismiss a business based on the name or perceived product or service. So, you don’t want to open a residential or commercial cleaning business. Why?

Obviously, you don’t want to clean someone else’s toilets, right? You need to stop viewing a business as “a job” and start thinking of it as a “business” where you are the OWNER. You shouldn’t be the individual cleaning the toilets; you should be creating jobs in the community for others to clean toilets.

If all you want to do is clean toilets, why would you buy the business, just go work for someone else. If you want to increase your net worth, hire people to clean toilets and offer the best toilet cleaning service in your area. Job versus business, which is right for you?

Michael Gerber says in his book The E Myth Revisited, to be successful one must work “on” their business not “in” their business. Talking with current business owners will give you the best idea of the ins and outs of owning a specific business.

Are there risks to owning a business? Yes, of course. Is there more security working for someone else? Not in today’s business environment.

Will you be a successful business owner? Increase your odds of success by restricting your emotions and using an “inside-out” approach to finding your next perfect business or career.

Is business ownership right for you? Have you done some real soul-searching lately?

If you have difficulty finding your best options, there are resources available to help you identify your personal goals and help point you in the right direction to obtain the success you want and deserve.

Exploring Business Ownership – Franchises, a Controlled Way to Own a Business (Part 5 of 7)

In part 4 we began a discussion on how to assess your risk tolerance for business ownership by analyzing the way you think. I covered the 3 main ways to earn income, outlined the risks associated with employment, and how employees typically think. If you didn’t identify with “employee think” then maybe you’ll identify with franchise ownership.

Franchise Ownership

Franchise owner think is:

I can run the systems, methods, and procedures that are already defined and documented. If you’ll show me how, I can pull the right levers and push the right buttons to make the business work.

If you’ve had middle management experience or if you’re a “systems” kind of person, if you like a broader scope of responsibility while staying within certain rules, if you can solve big picture problems but enjoy support when you’re having a tough go of it, if you want more personal freedom than being trapped 9 to 5 in an office cube, and if you want to build equity in a business investment that you can eventually sell, then owning a franchised business model is worth looking into.

Most people think of restaurants when they think of the franchise industry. However, there are literally thousands of franchised business models available in the US in at least 50 different industries, although in my opinion probably only a few hundred are truly robust or mature enough to consider investing in.

When you buy into a franchised business model you license the right to operate a business, usually within a prescribed territory, using the franchise brand name and their products, services, and methods of operation. You basically operate a “clone” of what other franchisees are operating.

Presumably the products and services have been tested and perfected, target markets have already been defined, marketing campaigns have been developed, store designs have been created, and the necessary equipment has been specified. You essentially operate the business model in accordance with the methods and procedures prescribed by the franchisor. Some feel that it’s a controlled way of getting your feet wet in the business ownership world.

Risk Assessment

In my opinion investing in and operating a franchise is more risky than employment, but has less risk than an unsupported entrepreneur-owned business. The franchisor has a vested interest in helping you succeed in their business model because they get a royalty cut of your sales income stream.

However, it is certainly possible to fail in business owning a franchised business model. If you don’t follow their system, if you refuse to market your business, if their business model, product, or service simply doesn’t meet the needs of the market place, or for any of a number of other reasons, then you can loose your entire investment (just like entrepreneurial business ownership).

If your risk temperament seems to be right for the franchise area, then I highly recommend retaining an independent outside advisor to guide you through your initial investigation and evaluation of the thousands of concepts available. Like independent fee-for-service financial advisors, getting professional counsel to help you navigate through this area will be money well spent.

Did you identify with “franchise owner think?” If not, stay tuned. In part 6 we’ll explore how entrepreneurial business owners think.

Exploring Business Ownership – Maybe You’re a High Rolling Entrepreneur – Part 6 of 7

We’re wrapping up a series on evaluating whether the concept of business ownership is right for you. Most recently we’ve discussed how to assess your risk tolerance by analyzing the way you think. We’ve covered the 3 main ways to earn income, outlined the risks associated with employment and franchise ownership, and how each personality type typically thinks. If you didn’t identify with either of those, then maybe you’re an entrepreneur at heart.

Entrepreneurial Business Ownership

Entrepreneur think is:

How can I meet the needs of my customers by profitably solving the problems they have?

If you want to chart your own course, solve all your own problems, be captain of your own ship, be totally responsible for whatever success or failure comes, and chafe at the thought of working for someone else in return for less risk, then you probably have the entrepreneurial bug.

Risk Assessment

Being an independent business owner is a high risk proposition with a high probability of first time failure.

Why high risk? Because you will most likely pledge every asset, such as home equity, savings, 401(k), etc., that you have to finance startup or purchase of the business. If your venture fails, you may very well lose everything you’ve spent or offered as collateral. (This is also true for franchise owners.)

Why a high probability for failure? Because first time entrepreneurs have such a clear vision of what they want to do and how to do it; they think they know everything! I have several colleagues who generally refuse to work with first time entrepreneurs because (in their words) “they think they know more than I do and helpful suggestions that I make are either ignored or become implementation battles.” Truer words were never spoken.

If your risk temperament is right in line with the type of person I’m describing and you want to go forward, then how can you improve your chances of success? Buck the trend by getting lots of experienced advice and counsel from those who have gone before! Be willing to listen to those who have graduated from the school of hard knocks and learn from their mistakes to avoid making them all again yourself, because you simply don’t have either the time or the money to survive the experience of learning it all firsthand.

We’ll wrap up this series in part 7 by outlining why businesses generally succeed or fail, and I’ll suggest some more reading resources and offer some advice on how to navigate a path to success.