Do you really want to own a business part 2

Is business ownership in your future? Should it be?

As we shared in part 1, while the benefits of owning a business are many, we’re not all equipped to shoulder the effort required.

A supportive family is essential. Unlike the income you get with a steady job, the cash flow in a small business is inconsistent. This changing income can cause significant stress on family relationships as can the effort and hours of the early years.

If you plan to embark on business ownership it is essential that you have the understanding of what this may involve and the support of your family.

I have been very fortunate over my many years in business to have a wife who rode the financial ups and downs and put up with the long hours and extensive travel with understanding and without complaint. I believe that without this support at home it would have been impossible to have achieved the same business success.

Attributes for success in business

You need to be completely honest in assessing your own attributes. While most business skills can be learned, low risk tolerance, communication skills and self-confidence may be barriers.

The ability to inspire confidence is perhaps the greatest determinant in business success. In order to attract good employees, build positive relationships with suppliers and engage clients’ trust, you have to inspire confidence in yourself, your product or service, or your idea or vision.

Self-discipline is the second needed ability. As a business owner you must address many things that may not be exciting or fun, but simply need to be done. Successful business owners tackle these without hesitation and without postponement. If you lack self-discipline, business ownership is not for you.

The third required attribute relates to attitude. Optimism, enthusiasm, a positive attitude and applied faith are musts for business success.

But perhaps even more important is vision and definiteness of purpose, without which success is unlikely. A mastermind group (typically other non-competing business owners who work together confidentially to achieve greater success in each of their businesses) can be invaluable. The Inner Circle www.theinnercircle.com offers such groups.

What else? High-energy helps as does a pleasing personality and the constant desire to go that extra mile. Personal initiative is another relevant trait, along with the ability to focus and direct your faculties to a desired goal. Imagination and creativity are useful but not necessary—many business owners have succeeded without them. Interestingly, it is not the brightest or smartest individuals who succeed, but those who best use the skills and abilities they have.

Ways to become a business owner

There are generally four ways to become a business owner, each with their own level of risk:

1.  Start your own business. As 65% of start-ups fail, this is a very risky way to become a business owner.

2.  Take over a family-owned business. While this can be successful, all too often the transfer produces poor results.The most common problems result from the “child” not having the skill or  passion that the business founder had.

We mentioned the need to inspire confidence and for self-discipline, positive attitude, vision and definiteness of purpose. Without these the business will falter. In many cases ,running and growing the business is not the “child’s” dream, but taking it over from the parent is the path of least resistance. In some cases the basic skills have not been developed and the business is of a size where these skills are required.

Sometimes selling the business is the better option for both parent and child. I highly recommend getting professional advice prior to making a decision about transferring a business from a parent to a child.

3. Buy a franchise. The success rate of new franchise purchasers is around 80%. While the risk is not as great as starting your own business, the rewards may not be as great either. You may find that you need to own multiple franchise operations in order to make significant income. For example, a typical franchised hairdressing salon makes $25,000 to $50,000 per year. Although this may not seem appealing, many operators own multiple locations and owning 10 or 12 locations that each make $50,000 per year may in fact be quite attractive.

4. Purchase an existing operating business with trained employees, existing client and supplier relationships, a proven concept and location, plus training and financing from the previous owner.

The success rate when purchasing such a business through Sunbelt Business Brokers is greater than 98%. If you were betting your life savings and the future well-being of your family, this is certainly the best approach—minimum risk and the potential for significant financial return.

As with a start-up, the purchase of an existing business may require significant effort and long hours over the first few years of ownership, however you do have a head start and very low risk.

You may be interested in some resources that are provided free through the Sunbelt network worldwide site: Business Buyer’s University (BBU), an e-book “Secrets of Buying the Right Business (for you) Right” and a 12-video training package guiding prospective buyers step-by-step through locating, valuing, financing and buying a privately held business.

You can register for the e-book and series at on the Sunbelt Business Brokers international site. Note that there are a few references in the e-book and video that are specific to the U.S. Your local business broker can “bring you back to Canada” where these arise.

For more  tips on buying (or selling) a business, be sure to sign up for Sunbelt Canada’s monthly newsletter.