 |
 |
 |
 |
 |
 |
 |
 |
 |
|
|
Are You Ready To Own A Business? One of the latest surveys released from a 1996 Gallup poll found that an amazing 3.5 million new businesses were started in the U.S. last year. Obviously, becoming your own boss has never been more popular. If the idea of having a business of your own sounds appealing, you're not alone. Millions of people have tried it and liked it. Would you? To help you decide, ask yourself the following 10 important questions compiled by VR Business Brokers, the oldest and largest national business brokerage franchise in the U.S. 1. Do I thrive on risk and challenge? Do I want the freedom (and the responsibility) of owning my own business, of not having a boss, of not having a company to tell me what to do (and to protect me from my own mistakes)? You cannot buy or start a business without taking on challenges and risk--and all parties involved in the buying process need to start thinking in terms of risks and accepting the challenges as well as the rewards. 2. What are my reasons for buying or starting a business? That is your prime motivation? Think about this point carefully. Are you being truthful with yourself? If your motivation is purely financial, remember that most businesses need to be built before they return large dividends. Do you want job security? In this area you may have some strong motivation, depending on how your present company is situated in its industry or how you are presently situated in your company. Are you dissatisfied with your present job? Are you not getting the recognition you deserve? Were you denied the raise you're worth? If you purchase a business, you'll have the opportunity you're considering satisfy your prime motivation more than your present job?
3. How much do I have to invest? Or, how much are you willing to invest? Just because you have $50,000 or $100,000 liquid cash doesn't mean you will feel comfortable about spending it all on buying or starting a business. What is the risk factory that you're ready to buy into? How much of that ready cash are you willing to invest? If you run short of cash "half way across the river," will you be willing to put up your home as additional collateral? Decide exactly where you stand on the risk factor curve. 4. What would I like to do with the rest of my life? Do you want to be your own boss forever? Do you want to run this particular business forever? Just because you've bought your own business does not mean you're locked into that niche for the rest of your life. It does allow you the opportunity to be your own boss--perhaps for the first time. You may be successful but still decide that you want the corporate umbrella back. If so, you can always say, "Hey, I want to sell this business. I want to move out of owning my own business and move back into the corporate arena." However, experience shows that most people who move out of the corporate arena do not chose to return. THE RIGHT FIT? When you're looking at a particular industry, determine what skills and tools you can bring to the table. Is this the industry with which you would most like to be involved? What attributes do you share with this industry? Are you personally well-aligned with this industry? 5. What is the trend of this business or industry? When you investigate a particular business, find out the trend of the gross sales (up or down) of that business. What cash flow will you have to work with? Has cash flow been increasing or decreasing? 6. What are the necessary expenses? The necessary expenses are leases, rents, utilities, labor and inventory--plus whatever other expenses are required to run the business. 7. What is my support group? Who are the supportive individuals who will align with you? Will you have a team of cheerleaders, or will you be out there by yourself? Most likely, when you confide that you want to buy a business, your mother, father, friends and business associates will say, "You're crazy! You don't want to leave your job. It pays well. You've been with the job for 12 years!" That's because they don't understand your prime motivation or the personal goals that may be prompting you to consider buying your own business. Because "your dream" means leaving the company you're with, they can only see the lack of security you're courting. They can only see the risk. Is your spouse behind you? Is he or she part of your support group? It can be difficult for your family when you make the leap from a salaried position (even if that position may be somewhat tenuous) into a business of your own that will require many thousands of dollars in support--plus many more thousands of dollars in working capital. And it may not even generate any cash flow for a while! At best, it may yield a reduced cash flow while you're getting started. Do you have financial advisors? Do you have attorneys whom you know from past working relationships? What will their opinions be? You don't need to look at the books of even a single business to know what your attorneys' opinion will be on any particular business. You can find out right now by saying, "I'm thinking of buying a business--what do you think?" More often than not they'll say, "no. That's not a good way to go." That answer may not influence your decision to buy a business, but at least now you know what their position is right up front--so that when you do find a business you'r excited over and the experts say, "no," you won't let it color your judgement because that's the same "no" answer they gave before even looking at the business opportunity. This means you can weigh their opinions and say, "Well, they were always against the idea in general, but what are the positives and negatives they see in this particular transaction?"
REASON FOR SALE 8. Why is the present owner selling the business? (This question only applies if you are buying an existing business.) Is it due to poor health or retirement? Is it due to a partnership dispute? Has the business outgrown the owner's abilities? Or is it a simple case of burn-out? The 10 most common reasons people sell are retirement, illness, relocation plans, desire to upgrade, dispute with partner/spouse/landlord, not making enough money, can't handle the business because of poor management or under-capitalization, burn-out, a better opportunity is found in a different business or job offer, or the seller is a professional entrepreneur whose business is buying, building, and selling businesses. 9. How do I fell about this particular business? You've gone out, you've toured it, you've looked at it. Now what is your gut feeling? Do you like the industry? Do you like the customers? Do you like the feel of the business? Are you comfortable with the idea of being there every day? 10. How do I compare to the present owner? Is the present owner the easygoing Joe-next-door type or a high octane dynamo? Or is he someone just like you? Does the owner do business in a way that you would not like to do business? If you changed those operations you don't like, how would it affect the business? Consider how you compare with the present owner. Would you be as good a business operator--or better? Few people ever buy a business expecting to do things exactly the same way the present owner is doing them. Most people tend to envision additional opportunity for the business. Perhaps they plan to increase advertising or expand the product line. Be aware that it costs money to build or expand a business, so don't let untapped opportunity be your prime motivation for buying a particular business. Buying any business must always be a decision that stands on its own. "If you're thinking about buying a business, think over these 10 questions," says Cathy Vallevieni, president of VR Business Brokers. "Answer them honestly. Your future path will become more apparent. Nothing worth having comes without cost. If you want to be your own boss, risk is the price of success."
|
