It seems to be a sign of the times – veterans of 20, 30 even 40 years of corporate warfare are poised to assess their careers and their lives, asking the question “is it time to start a new chapter in my life?” followed closely by “Why don’t I start a business? After all, I have skills and experiences honed over decades of successful accomplishments. I am ripe for entrepreneurship.”
Welcome to the world of independence, on being your own boss! It can be incredibly freeing to do things on your own terms and at your pace, no longer having to ask a supervisor, manager or the Board for permission to enact your strategies. The flip side of the coin (and there always is one) is that all of the accountability and responsibility rests on your shoulders.
Now that you have made the decision to be your own boss, you will inevitably cross into uncharted territory – do I start my own business from scratch, buy an existing business or buy a franchise? When you evaluate the whys of getting into business for yourself, the reasons that are driving you may help steer you. Take time to truly understand your motivations. Work with a coach or a franchise broker to assess your risk tolerance, your options and how they may match for your optimal solution.
Lewis and Clark – Explore Building an Independent Business
Creating a business from nothing can be a true test of the independent American spirit, the type of stick-to-it-tiveness that characterized our early forebears and the adventurous spirit that settled this great nation. If you choose to head in the direction of creating something from nothing, good for you! Be aware, though, that independent business ownership may not be for everyone. If you want to be in control of every aspect and not have to follow procedural and process guidelines, starting from scratch may be a good alternative for you. Be prepared for perhaps a longer ramp-up to profitability and be open to seeking guidance and counsel from trusted advisors along the way. The good news is that your revenue stream would not be impacted with a potentially higher investment and monthly recurring outlay.
Louisiana Purchase – Buying an Existing Business
If you still want to be in complete control but want the leg up that buying an existing book of business would allow, this may be the best alternative for you. You will need to do a thorough due diligence of the business that you are interesting in acquiring. Take time to thoroughly understand the market, the operation, the books and the positioning of the firm. Also, ask probing questions about why the business is for sale. If you can, spend some time ‘interning’ in the business before you make your decision to make sure that it is a right fit for you.
The Manifest Destiny – Buying a Franchise
If the reason that you are exploring entrepreneurship isn’t necessarily rooted in complete control over every aspect of your business, a franchise may be ideal for you. If you have the start-up funds, but don’t have the patience for the longer ramp-up time of striking out alone, this is a strong alternative. You get the benefits of business ownership supplemented with already established processes, procedures, branding and marketing help. Most concepts provide ongoing assistance, including management counseling.
There is a price to be paid, of course. The initial investment and ongoing franchisor fees will impact your revenue. Depending on the concept you choose, there may be ‘rules’ or expectations that need to be followed in order to remain in the system. Just as with the other types of business ownership decisions, thorough analysis and due diligence is required. Speak with existing owners in the system and more importantly, speak with owners who have left. Understand what support they get for their investment and do some soul searching within to gauge your comfort level with everything that you hear.
The 18th Amendment of Sobering Statistics
The reality is, not every business will be successful. According to the Small Business Administration, two-thirds of small businesses survive for two or more years, and about half make it for more than four years.
People in the franchising field will tell you that franchises have a failure rate of about five percent, compared to the 30 to 50 percent failure rate of independent entrepreneurs; others question the 5% as wishful thinking or statistical manipulation. The glass is half empty crowd put the percentage for franchise failures at up to 30%. The failure rate for franchises does vary significantly based on the particular segment of the industry in which it practices.
According to a survey of small business owners, the major factors for business success were an ample supply of capital, a firm that is large enough to have staff, the owner’s education level, and the owner’s reason for starting the business in the first place, such as work/life balance or wanting to be one’s own boss. I’ll throw in some of the qualitative aspects of entrepreneurship, such as following your passion, having patience and the will to succeed; as business ownership is not for the undecided or faint of heart.
If you choose entrepreneurship as the next phase of your career, approach it with determination and gusto, then watch the fireworks explode.