June 17, 2010
There is a perception that to own a small business is a ticket to financial independence, and the purest form of entrepreneurship. It is certainly true for many small business owners, but there are many who are completely different from the exchange of experience in business ownership.
This article explores some of the things you learn once you buy a business. The idea of this paper is to prepare the the buyer for the future activities they may be responsible for.
Be prepared to work their business
Many new business owners are totally unprepared for the level of work and dedication that is required when you buy a business. Owning a business suggests that you are the boss. The reality is that you are not. You are responsible to your customers and other stakeholders, and must be prepared to continually provide superior service. You may need to work longer if you have never been responsible for worrying about the problems of your clients.
You are fully responsible for the business
When you buy a small business, you must be mentally engaged, to some extent, 24 / 7. Leaving the company at 5pm on Friday and not have to think about it until the following Monday is not likely to happen. If an employee fails to satisfy key clients, you are responsible. When the plumbing leaks, you are ultimately needed to correct the problem.
You own all the tough decisions
As the owner of the company all tough decisions are on your shoulders. This includes dismissal of employees, if that time comes, or dealing with angry customers.
You are paid last
As owner, you cash your check last. You only get paid after all the suppliers, employees, creditors and all others are paid. You have an obligation to pay everyone else's needs, and if that means that your share is smaller, it is the way it is.
The risk of loss
Owning your own business involves the management of risk levels. There is a risk that the company does not go as planned, and you may lose all or part of your investment. You must be emotionally prepared for the possible outcome.
Selling a business can be difficult
Many business owners think that selling a business is as easy as selling a house. Certainly not. Many business owners often believe that if the income or profits decline, they just sell to someone to take over the company. This is not a realistic scenario and you should talk to an expert to get clarity on your business and your market. Talk to an experienced business broker, M & A lawyer or other professional to learn the process of selling the company.
This article is not intended to scare you about buying a business. Instead, the goal is to identify some of the questions you should be aware of before embarking on this path. Business ownership is an important experience which changes lives, which can cause significant danger and hardship. It is also important and positive satisfaction that could come too. Make an informed decision before buying.
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