Do You Really Want to Own a Business?

Greg Kells of Sunbelt Business Brokers discusses the impact, rewards and stages of business ownership. This article originally appeared as part of a series called At the Broker’s Table published in the Ottawa Business Journal.

Do You Really Want to Own a Business? – Part One
Some have “floated” into business ownership, working alongside parents or other family. But most have had to jump into deep water to get the keys to their own business—establishing a start-up, buying a new franchise or purchasing an existing business. “Do you really want to own a business?” The answer can have a huge impact on the rest of your life.

Let’s start with the benefits of owning a business.

Many people choose to own a business because they do not enjoy working for and being directed by others. They may feel underappreciated, believing that their talents could and should generate greater returns based on the significant effort they are putting in. They feel that they are making someone else rich and that perhaps it’s time to start doing the same for themselves.

The financial rewards and the community acceptance that comes with owning a business can be significant. For many, these are the greatest factors in their decision to get into business. The ability to substantially enhance the value of a business then sell it tax-free is a great addition to the regular income and dividends that ownership of a small business can provide.

Yet, although a great incentive, financial rewards are not the main reason people get into business. Many are seeking personal freedom—the right to control their own destiny, to work with family members and to use the business as a means of enhancing their skills and abilities. Often the motivation relates to boredom, lack of personal development and the feeling of being stuck in a rut at their current job.

Others have a passion to work in a particular field and to pursue personal goals related to that field. Still others see business ownership as a means of personal growth and achieving a desired lifestyle.

Impact on others
Each of these benefits is a valid reason for considering business ownership, but you must also look at the downside. It’s often said that “the worst day of business ownership is better than any day working for someone else.” However, with business ownership come responsibilities. Those responsibilities are to employees, to clients, to suppliers, to financing sources and, of course, to family.

Many small business owners work long hours. Fortunately for most there is real enjoyment in what they are doing and accomplishing, and even though in the early days the hours may be long, it somehow doesn’t seem like work. But these long hours can have an impact on family relationships, on community involvement and on friends.

Businesses typically go through four stages:
At the entrepreneur stage, the business owner is directly involved in every aspect of the small business.

As the business grows and matures, it moves to the supervisory stage where employees are responsible for most functions in the business; however, the owner is looking over the shoulder of each of those supervisors and is actively involved in almost all decisions.

During these first two stages, the demands on the business owner are significant, both in time and energy.

Fortunately, many businesses evolve to the third stage of a managed business where managers are responsible for the various business functions and able to operate in a relatively autonomous way, with the owner involved in development of the systems and processes that are being managed; only on an exception basis does the owner get involved in decision-making.

The wise owner who gets his business to this third stage can enjoy a very rewarding life. That life can include much free time, greater community involvement and the rewards that come from assisting in the personal and professional development of those they work with. There are also significant financial rewards at this stage if the business owner has done a good job.

At the enterprise organization stage, the organization can begin expanding into different areas, such as leveraging the client base with other services or expanding geographically. With all these benefits, what prevents so many people from becoming business owners? For some, it’s an aversion to stress and risk along with the pressures of having to make decisions. For others, it’s limitations in their education, experience, skill, energy, organization, or financial resources preventing them from taking the plunge. And for many, inertia—coasting with the status quo—seems easier than change.

Greg Kells
Sunbelt Business Brokers of Canada

Gregory Kells, Mergers and Acquisitions Master Intermediary, Certified Business Intermediary, Life Member Institute of Business Appraisers, Certified Machinery and Equipment Appraiser, Certified Senior Business Analyst, Licensed Business/Real Estate Broker, is President of Sunbelt Business Brokers Inc. (Canada). His focus on Sunbelt’s development has made Sunbelt the premiere business brokerage in Canada. Gregory Kells is an international entrepreneur with extensive business development, marketing, and management experience. Mr. Kells started the Canadian operations of Sunbelt Business Brokers in 2002 and in addition to opening 27 offices in Canada he is developing business brokerage in 10 other countries.