If you have dreamed of business ownership, you may have found a business concept that captured your interest. Yet, after a short period of a few days or a week, that interest and even excitement was gone—even before you had done any serious research on the opportunity. What happened? You began to encounter road blocks. These road blocks may appear to be overwhelming; however, understanding the primary concerns faced by business owners and evaluating the facts behind them will allow you to move forward in your entrepreneurial journey.
There are four primary road blocks that you will most likely encounter. When evaluating a business to own, be prepared to address these head-on:
1. Personal Expenses: Understand your “roof & table”
How much money does it take to cover the cost of the roof over your head and food on your table for six months? Though called “roof and table,” don’t forget to include all of your monthly expenses for six months—insurance, utilities, taxes, etc. If I have learned anything from working with first time business owners, it’s to make sure you have money set aside for six months. The #1 reason that new businesses fail is simply due to running out of money. The stress of paying those expenses should not be where you are focused. You will have other concerns to interest you—trust me.
2. Personal Time: Balance your work with your life
A lot of people seek business ownership in order to have more free time. However, ask a business owner about the work schedule they actually keep and most often they will say “whatever it takes.” In a traditional business ownership model, you may be working 10-12 hours per day at times, but you have the flexibility and discretion in how you live those hours. I chose to be a business owner 12 years ago when I was working 7am to 7pm in a corporate job and getting home as my kids were going to sleep. Those years go by quickly and I wasn’t going to miss them. Yes, I stopped work at 11am for a Veteran’s Day Celebration, but made up that time after dinner that evening.
There are also semi-absentee ownership models. In these models, the owner works 10-15 hours per week once the business is up-and-running, leaving time for another job or obligation. Though these types of ownership arrangements do exist, though they are more the exception than the rule.
Remember, you are making a family decision. A business of your own will affect your family as well. Family members must know and accept the demands that business ownership will entail.
3. Business Plan: Solidify your financials
You need to be concerned about your financial ability to not only start your business, but also to continue to operate it until it begins to make a profit. Building a financial spreadsheet that projects out your first year will be key to your success. Based upon projections, you will be able to breakdown your year into milestones and identify ramp-up time. Enthusiastic entrepreneurs will project years 2-3 as well.
You will want to know not only when you reach breakeven, but when you can begin paying yourself a salary. Budgeting for and paying yourself a salary is fundamental to your happiness. There are lots of unhappy business owners who have never earned more than a company vehicle and a handful of cell phones. Being an entrepreneur is wonderful as long as your bills are paid and obligations met.
4. Sales Plan: Identify your sales process and market position
Regardless if it is a product or service, you need to have a comprehensive sales processes. Customarily, the business owner is tasked with marketing and promoting the business within the marketplace. If you are not the “selling type,” you need to consider hiring a sales manager.
There are great products and services that go unnoticed every year simply because potential clients didn’t know they exist. You need to know your target market well and where, when, why, how they source their information on purchasing comparable products or services. Always keep in mind your value differential—what makes your product or service “new, unique or different.” It may sound old school, but your potential clients need a reason to make a change in their buying practices.
The best way to overcome road blocks, and that overwhelmed feeling, is through research. Proper due diligence is critically important. Having a working understanding of these primary road blocks will afford you the ability to conduct a more complete and thorough investigation of any business that you think may be right for you. Most importantly, you may very well be able to move forward in your entrepreneurial journey and eventually be the business owner you have dreamt you would become.