Do You Really Want to Own a Business? – Part Two

Greg Kells of Sunbelt Business Brokers discusses the attributes needed for success and the four ways to become a business owner. 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 Two

Is business ownership in your future? Should it be?

Owning a small business is, in fact, how most millionaires got to be millionaires. But while the benefits of owning a business are many, not everyone is equipped to shoulder the effort required.

A supportive family is essential. Unlike the income that comes with a steady job, the cash flow in a small business is inconsistent. This changing income can put great stress on family relationships as can the effort and hours of the early years. If you plan to embark on business ownership it is essential that you have the understanding of what this may involve and the support of your family. I have been very fortunate over my many years in business to have a wife who rode the financial ups and downs and put up with the long hours and extensive travel with understanding and without complaint. I believe that without this support at home it would have been impossible to have achieved the same business success.

Attributes for success
You need to be completely honest in assessing your own attributes. While most business skills can be learned, low risk tolerance, communication skills and self-confidence may be valid reasons for not wanting to own a business.

The ability to inspire confidence is perhaps the greatest determinant in business success. In order to attract good employees, build positive relationships with suppliers and engage clients’ trust, you have to inspire confidence in yourself, your product or service, or your idea or vision.

Self-discipline is the second requirement. A business owner must address many things that may not be exciting or fun, but simply need to be done. Successful business owners tackle these without hesitation and without postponement. If you lack self-discipline, business ownership is not for you.

The third required attribute relates to attitude. Optimism, enthusiasm, a positive attitude and applied faith are needed for business success.

But perhaps even more important is vision and definiteness of purpose, without which success is improbable. A mastermind group (typically other non-competing business owners who work together confidentially to achieve greater success in each of their businesses) can be invaluable.

What else? High energy helps as does a pleasing personality and the constant desire to go that extra mile. Personal initiative is another trait you should find demonstrated in yourself, along with the ability to focus and direct your faculties to a desired goal. Imagination and creativity are useful but not necessary—many business owners have succeeded without them. Interestingly, it is not so much the brightest or smartest individuals who succeed, but those who best use the skills and abilities they have.

Ways to become a business owner
There are generally four ways to become a business owner, each with their own level of risk.

The most obvious is to simply start your own business. As 65% of start-ups fail, this is a very risky way to become a business owner.

The second way is to take over a family-owned business. While this can be successful, all too often the transfer produces poor results. The most common problems result from the “child” not having the skill or passion of the business founder.

We mentioned the ability to inspire confidence and the need for self-discipline, attitude, vision and definiteness of purpose. Without these, the business will falter. In many cases, running and growing the business is not the “child’s” dream, but taking it over from the parent is the path of least resistance. In some cases the basic skills have not been developed and the business is of a size where these skills are required.

Sometimes selling the business is the better option for both parent and child. I highly recommend getting professional advice prior to making a decision about transferring a business from a parent to a child.

The third way to become a business owner is to buy a franchise. The success rate of new franchise purchasers is around 80%. While the risk is not as great as starting your own business, the rewards may not be as great either. You may find that you need to own multiple franchise operations in order to make significant income. For example, a typical franchised hairdressing salon will make $25,000 to $50,000 per year. Although this may not seem appealing, many operators own multiple locations and owning 10-12 locations that each make $50,000 per year may, in fact, be quite attractive.

The fourth way to become a business owner is to purchase and existing operating business with trained employees, existing client and supplier relationships, a proven concept and location, plus training and financing from the previous owner. The success rate when purchasing such a business through Sunbelt Business Brokers is as high as 98%. If you were betting your life savings and the future well-being of your family, this is certainly the best approach – minimum risk and the potential for significant financial return.

As with a start-up, the purchase of an existing business may require significant effort and long hours over the first few years of ownership, however you do have a head start and very low risk.

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.