Today’s Jobs and Economy – Part 4 – Private Business Ownership

This blog touches on the option of starting your own business. Now you’ve got the chance to call the shots … be your own boss. Kind of an exciting idea isn’t it? I’ve learned a lot from others and from my own experience in this area and believe it’s best if I break this into a few different perspectives.

First, in the traditional business ownership scenario, they usually use their own money … life savings, take on debt, and many either borrow money from friends and family or include them as partners in order to get started.

Second, in many instances they take on additional debt through signing leases (offices, buildings, trucks/cars, etc.) and giving personal guarantees.

Third, once they get up and running they find themselves focusing on a myriad of matters of importance instead of focusing on what they have been good at (such as sales or operations) … all of a sudden they have to be all things to all people. They have to address local issues, legal matters, accountants for financial matters, negotiator for purchasing matters (or at least approve all transactions), serve as babysitter for some employee matters, and a collection agency for your accounts receivable matters. Sometimes you will find you are carrying out the garbage, cleaning areas, etc. Seems as if they find themselves doing everything except what they were good at in the first place.

Fourth … all of a sudden they realize they’re in a struggle. Instead of owning the business it seems like the business owns them … 24/7. They have to follow up on everything … be the first in and the last to leave. Then after everyone is paid they are wondering if there is going to be enough money left to pay their own bills, let alone reduce the debts they have incurred to start the business.

Finally, they either succeed or fail over a period of time. The bank, who was willing to be so helpful at the start is suddenly having to deal with “new issues” that have come up due to the economy (or their new policies or ownership, etc.) since you submitted your business plan and worked out your agreements. All of a sudden, what was agreed upfront doesn’t matter … they need to “re-evaluate” everything, and even though you may be meeting the agreed terms and governances. This means based on their input … not your input or experience. If you are being successful and don’t need their money or have other options for money this won’t be a problem. But if not, your position of negotiation has changed and they begin mentioning people whom you have never met before who seem to have more power and authority than you. In essence at some point in this journey the business is either successful, or they fail … many times forcing them to file for bankruptcy and falling back to a corporate or sales job.

Whoa … that doesn’t sound to romantic does it? My suggestion is that if you haven’t started your own business before, ask several friends who have … and be sure and talk to someone who has failed and listen to their input carefully … this is real life stuff. I promise you they didn’t start out thinking there was any chance of failure or they wouldn’t have done it. I believe you will find this description is more accurate than you may imagine. Many people who start their own business aren’t worried about getting a good return on their investment … all of a sudden they just want a return OF their investment … or even to get out whole. The last five years the economy has taken a hard and severe blow on many businesses … and not all are startups. Just be sure you go in with your eyes wide open, that you have done thorough reseach, and you have plenty of cash available.

Next: Financial Investor … earn a living from your investments.

What are your thoughts and comments on owning your own company?

© Phil Hoffman 2013. All rights reserved

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Tags: business, Investment, Ownership, Small business

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