Are You Making These Two Mistakes In Business?
Starting a business is both exciting and daunting at the same time.
So many variables, so much to think about, so much to do, the whole process can get confusing and over-whelming.
Mistakes inevitably will be made; which isn’t a bad thing per se, as mistakes are what make us learn and grow.
But there are two mistakes the majority make, and which if rectified will pay huge dividends in the long run…mistakes which I myself have been guilty of.
The Two Mistakes
Mistake Number 1: Starting A New Business
Mistake Number 2: Never Thinking About The End BEFORE You Start
It’s not hard to imagine why these mistakes occur; most won’t consider them to be mistakes in the first place, as they tend to run contrary to ‘normal’ mode of thinking.
“What do you mean don’t start a new business, how else do you build a business if you don’t even start?!”
“Think about the end?! Need to focus on getting up and running first not the end, pssht.”
If the people I talk to don’t say these words outright with a snigger, their facial expression and body language certainly do.
So let me explain mistake number 2 with an example.
The Boomer’s Business
Mr A started a business 30 years ago, with the only intention of making a living.
As time went on, he just went along with his business, building it bigger and bigger through hard work and sheer grit.
Sales increased into the millions, as the client based increased, in turn the supplier based increased, as did his work-force.
Mr A is now in his 60s, he’s worn-out and wants to retire.
Big problem…his business has long-term contracts still in place. There is debt well into the hundreds of thousands, which was/is being used to expand the company. There are loyal hard-working employees that have stuck with Mr A for a long time, and rely on the wage they get from working for him.
All in all, it’s going to be very expensive for him to shut up shop; as well as emotionally draining to lose his life’s work, and send his loyal workers into hardship.
The other option for him is to sell his business; which comes with it’s own challenges, as well as fees, stresses and time-consumption…but which fits nicely into mistake number 1.
The Stress & Worries of Starting New
Why start a business, from scratch, with nothing…when you can BUY a successfully running and cash-flowing business like Mr A’s?!
Imagine: the stress of setting everything up from nothing; i.e. the legal entity, the product and/or service, inventory, trying to find your first customer, premises, trying to build your brand, worrying about cash-flow & initial investment, hiring staff….the list goes on.
The biggest worry, of course, when starting a new business: how long before I start making money?!
Could be a few months, a year, maybe 2?!
Then there’s stress management and those dastardly thoughts: “Will I EVER make money from this?! Did I do the right thing?! Should I just give up and go back to something more stable?!”
The statistics are widely known about how many new businesses fail within a year, or 2 years and 10 years…unfortunately, the vast majority of new businesses don’t make the 10 year mark.
What To Do Instead
How do you counter that risk?!
How about buying a business that’s already been running for decades, has strong cash-flows already, has a built up customer & supplier base, with a team of staff already in there running the day to day activity…and where you can make money from the day you walk in?!
The best part…there’s an owner who’s desperate to sell because he never thought about, nor prepared for, the end-game!
So desperate that he’s willing to negotiate deferred payments, meaning you don’t even need to pay the price of the business up front and can in fact pay from the profits of the business you’re now acquiring over time.
It’s a win-win situation.
There are literally millions of businesses for sale, for various reasons, but with the baby-boomer generation coming to retirement years the market is rife for some excellent deals to be made.
And most of these businesses were built prior to the technological age; meaning a quick upgrade could and should increase efficiency and subsequently profit quite quickly.
So, if you’re looking to start a business…re-consider your options. You’ll find it’s far less riskier to acquire one that’s already running.
Either way, make sure you know where you want to end and/or get out before you start, otherwise you could be trapping yourself at a later date.
If you need anymore information or advice on the above, leave a comment or contact me directly.