Thursday, May 31, 2012

Business ownership myths debunked

Carver Yacht by Lisa G. Lilla - Photography
Carver Yacht, a photo by Lisa G. Lilla - Photography on Flickr. 
Thinking about leaving the corporate world behind and doing your own thing?  Fantasizing about yourself as the founder of tomorrow's iconic Facebook or Apple or Google?  Seeing yourself tooling about on the yacht that your profits bought for you (and helped you write off on your taxes)?

Business ownership is romanticized almost as much as parenthood is.  When they are not in the throes of it, parents wax on about the joys of watching baby Bethany learn to walk, and about the pride associated with being there when Junior walks across the stage to receive his diploma.  They show you photos of the happy times.

Parents forget (or perhaps work not to remember) about colic, endless runs to the closest public rest rooms, years of poor sleep and mountains of chicken nuggets and mac and cheese.  They shudder at memories of reacting badly to teenaged sass, and they don't want to talk about it.  They brush recollections about destruction of property and scrapes with the law into the backs of their minds.  Yes, business ownership is like that.  Your clue to the big reality check is when you ask a business owner how it's going and they say "I'm having fun."  No, they are not.  Not making any money, so how is that fun?

Myth #1 - You'll make your own hours.
It's easiest to do this when you have no customers and no employees, because other than rearranging the pencils on your desk you'll have nothing to do.  Once you have customers, though, you'll need to be there when they want you to be there.  You might even have to hang around with nothing to do for a while until customers know that you're there when they are ready for you.  And once you have customers, the non-customer-facing tasks might just have to be done outside peak selling hours.

Myth #2 - You'll make a lot of money.
You might pull down a tidy sum from your business venture.  But as grampa used to say, it's not how much you earn, it's how much you keep.  You'll have a facility to pay for and employee salaries to support.  If you have a long-term vision for your business you'll be reinvesting some of your profit in it, in the form of marketing, staff development, and research and development.  You'll be purchasing materials if you're producing product, and you won't get your cash back until your product sells.  Some of your employees will likely earn more working for you than you do as the owner of the company.  Because cash is so essential to the health of your business, you may choose to leave money in the company rather than take it out for your personal use.

Myth #3 - You'll do what you like to do.
If you are focused on applying your skills and knowledge in your new business it's possible that you're buying a job rather than starting a self-sustaining business.  If that's what you want - a job that you control - OK.  But you won't ONLY be doing what you like to do.  Until the company is big enough and profitable enough to hire people to do the finance, the sales, the hiring - guess who's doing it?  You.  Moreover, if you like to engineer but hate sales, how are you going to acquire the opportunities to do your engineering work?

Myth #4 - If you build it, they will come.
People will buy from you if they know about you and trust you enough to give you a shot at selling them services.  They will buy if they see a good potential for a positive return on their investment.  But how will they know that they need you?  Are you selling something as essential as toilet paper?  Are you a necessity, a luxury, or somewhere in between?  How narrow or broad is your potential market.  You have to build it right, then do a good job of getting the word out and bringing them in.  And then you have to deliver to meet or exceed their expectations.  You have to get the ball rolling to initiate the selling/buying process, and then manage the whole sales-service cycle in a manner that brings customers back for more.

Have we scared you off of this business ownership idea yet?  These are only four of the myths.  There are more.  This isn't the easiest job in the world - not by a stretch.  But for those who are willing to stare busy days and uncertainty in the face in order to create autonomy and/or a real legacy for themselves, their families and their communities?  For those people business ownership is the only gig in town.                                        

1 comment:

Jackson Brown said...

Business possession is romanticized nearly the maximum amount as parenthood is. You can make lots of money with it. People will purchase from you, if they have a belief in you.