So You Want To Be A Small Business Owner
There are many excellent reasons to want to be a business owner.• You can get rich owning your own business. Yeah, there's that IPO thing. And there is definitely the opportunity to "flip" your business, or "roll up" to a larger player for 15 times earnings. But it's much more likely that your wealth will come from that quiet wealth builder, equity accumulation, which comes from amortizing a loan, building retained earnings on your balance sheet, asset appreciation, etc.
• There is a great deal of self-satisfaction, and just plain ego food in owning a successful business. Especially if it's YOUR dream that you are making come true.
• You can achieve status by owning your own business. As Mel Brooks said in the movie, The History Of The World, "It's good to be the King."
Sound good? It definitely can be. But you knew, curmudgeon that I am, that I wasn't going to let you off the hook without a little reality check. And since most of us don't need much coaxing to leap to all of the really cool things that can befall a business owner, but rather must be dragged, kicking and screaming, into discussions of the negatives, I will spend more time here on the cons than the pros.
It's Good To Be The Owner, But...
Owning a business has made many people rich, or at least financially independent. But for every one who got rich, there are hundreds who just made a living, and thousands who failed.
It's true, owning your own business can give you more control over your life. But don't ever get the idea that being an owner means you don't have to answer to anyone. You still have to say "yes sir" and "no ma'am" to customers, bankers, landlords, etc. If your desire to be an owner is driven by not having to take orders from your boss, bad idea. Being an owner won't solve that problem. Being an owner only means you will have different bosses than when you were an employee.
The next thing I'm going to say may shock you: Until your business gets established, there will be times you will feel more like you work for your employees than the other way around. And in today's market, where prospective employees are so scarce that you are more likely to take an applicant's pulse than take his or her application, there will even be times when you feel as if you are being held hostage by your employees. So much for being a king, huh?!
Everyone wants to achieve status. However, there will be days as the owner of your own business when the pressure will be so great that you will be driving down the road during a particularly bad day, and you will see a guy on the highway wearing an optic orange vest, holding a sign that says STOP on one side and GO on the other. At that moment, as he waves you through the construction, you will actually envy him because you're on your way to tell your banker why you need more time to pay back a loan, and Mr. Stop/Go is just waiting for "Miller time".
Now, if you are what I call a "small business dreamer", you're accusing me of trying to take the air out of your sails, and the fun out of your dreams. But if you are already an owner, you're nodding your head knowingly, and telling the dreamers to "listen up."
You Are Not Ready To Be An Owner If You Still Think Like An Employee
Here are a few more things you should know before you start your own business, and they focus on why as an owner, you cannot think like an employee.
• Paycheck? Yeah, maybe. But maybe not at first. If you have to take some money out of the company to live on, don't plan on a regular paycheck of any significance. Not for a while. Maybe a long while. Some businesses do great from the start and so does the owner, but don't count on it. If you believe you deserve a regular paycheck of any size, don't quit your job. You're still thinking like an employee.
• Don't think personal income, think equity. You must trade the employee's scorecard, the W-2, for the owner's scorecard, the balance sheet. If you want your company to take care of you one day, you must take care of it today.
• At least in the early days, until you get your organization to a certain size and level of success, you eat what YOU kill. Remember those ten, two letter words: if it is to be, it is up to me.
• You work for yourself - you can't call in sick. And since you don't get sick days, you can't build any up. If this troubles you, don't quit your job until it stops troubling you.
• You don't get a regular off day. In the beginning you'll be lucky if you get regular sleep.
• Vacation? Who's going to mind the store? And if you think you've got money for a vacation, you probably need to keep it in the business, at least in the first year or so.
• Whatever you did as an employee in your spare time (golf, tennis, fish, hunt, played bridge), you will do less of as a business owner. I'm sorry, but this is one of those natural laws.
• No matter how tough your day has been, you can't run away. I mean, literally, you can't leave the building if you don't have to. Opportunity doesn't know you've had a bad day. Sometimes it knocks when things are at their worst. If you're not there, it will go somewhere else.
• It's your business. You turn the lights on and you turn the lights off. Every day.
Whatever It Takes
Are you prepared to do whatever it takes to run your business day after day, no matter what happens, no matter how tough it gets? I know you're ready to be your company's first president. But are you ready to be your company's first receptionist, salesperson, accountant, delivery person, janitor, etc?
One way to know that you are ready for business ownership is when you can convince yourself that you are capable of thinking like an owner and not like an employee.
Write this on a rock... Being in business for yourself can be extremely rewarding, but it's not easy. If it were, monkeys would be doing it.
