I’m not sure if you’re aware of it or not, but there are literally thousands of people who, like you, are asking themselves if they should be their own boss or continue to have a boss. To become self-employed.
To be fair, I can’t answer it for them…or for you. Heck, I don’t know if you should be your own boss. And I certainly don’t know if you should have a boss…if you should be an employee. That’s because it’s a very personal thing. It’s also a financial thing and a timing thing.
In this post, I’m going to share what you need to look at if you decide on being the boss. The boss of your own destiny. Even in times like these.
The Decision To Be Your Own Boss
Don’t kid yourself; it’s a big deal to become your own boss.
Talking about being your own boss, and writing a check-and/or taking out a small business loan to do so, are two very different things. So weigh this decision carefully. There’s risk involved in starting a new business.
As a matter of fact, there’s actually risk involved no matter what type of business you end up becoming the owner of. That’s right; franchises are risky, too. Forget the statistics.
But, if you’re doing enough things right…things that can lower your financial risk, the rewards are yours for the taking. That said, do you know what the right things to do are?
Start With Why You Want To Be Your Own Boss
Why are you thinking about becoming your own boss now? What’s going on in your life? Could the thought of becoming your own boss have to do with the current state of your career?
For instance, are you going through what Terry just experienced?
Am I warm? Hot?
Alternatively, could it be that you’ve always wanted to own your own business, and you feel that the timing is right? Do you have several business ideas running through your head?
Nevertheless, whatever your reason is, you need to determine if it’s a strong enough reason to move forward. To not have a boss. It may not be. (That’s okay!)
Having a Boss Isn’t Necessarily A Bad Thing
I own and operate a website that’s focused on providing useful, straightforward information about franchising…about being your own boss.
But franchise ownership…business ownership/self-employment isn’t for everyone.
That’s because, for some, working for someone else works out great. I know lots of people who’ve been able to reach their professional, personal, and financial goals as employees. After all…
If you have a boss, it means that you:
- Have a job
- Receive a steady paycheck
- Have benefits
- Probably have paid vacations
- Have stability*
It’s all good.
That’s because I’m about to put the kibosh on this whole”working for someone else is wonderful” crap, right now. Here goes.
*This “stability” thing is a lie. Not my lie. Theirs.
Because when you’re an employee, your employer can pull the rug out from under you any damn time they please. In other words, you can get fired at any time. So much for stability.
The Bottom Line?
If you choose to work for someone else, they have the power. Period.
And chances are, at some point in your career, you’ll be downsized, fired, or laid-off. It’s not that uncommon these days.
Of course, either are the days of working for the same company for 30-years.
Heck, the days of having one career are history.
How About 7 Careers?
According to Steven S Little, today’s college graduates will have 7 different careers. Not jobs. CAREERS.
Given these points, it’s fair to say that working for someone else has its pluses and minuses.
So if you decide to remain an employee, for sanity’s sake, try to embrace the pluses and accept the minuses.
Because you could end up being just fine.
Check out these excellent career resources:
The Be Your Own Boss Option
It’s a fact that a lot of people want to be their own boss.
On the other hand, lots of people don’t.
Then there are those who vacillate between keeping their job or becoming their own boss, depending on their level of career pain.
In any event, one thing is certain; the decision to become your own boss is a major one. It
can be is life-changing. I know this from experience, as I’m self-employed myself.
And if you do it right, if you take your time and focus on getting the facts about whatever business ideas you have, great things can (and do) happen.
That’s why it’s important to look at today’s “become your own boss” options.
But before you do that, do the following.
Go Through Your Financials
Before you start searching for franchise or business opportunities that could make sense for you, figure out where you stand, financially. And, don’t guess.Please!
That means you need to put together a net worth statement. How?
Just subtract all of your liabilities from all of your assets. The difference between the two is your net worth. Figure out how much liquid capital you have access to. That’s what today’s franchisors tend to focus on.
For example, I’ve worked with people that have had net worth’s in the $750k range, but who’ve had most of their assets parked in retirement funds. If that’s the case with you, talk to your financial advisor. Some of my clients have done this-and I’m fine with it as long as it’s a perfect or nearly perfect situation.
Conduct A Family Meeting
Sit down with your family before you jump into a new business.
Don’t make the mistake of spending weeks…maybe even months looking around at “business opportunities” only to find out that nobody in your family supports your idea of being your own boss. If that’s the case, you have 3 choices.
- Listen to them, and forget “this crazy idea of yours.”
- Convince them you’ll take it slow and do great research on the franchise/business opportunities you find
- Dual-track it; conduct a search for a new job and at the same time, look for a franchise opportunity or business opportunity that will allow you to be your own boss.
If, ultimately, you decide to pursue one of your business ideas, do whatever it takes to keep those around you comfortable with your decision to become your own boss. They need to feel confident that you’ll do the right things. Maybe working with someone knowledgeable about business ownership will convince them that you really are focused on doing this right.
With that in mind, let’s look at the specific options available to you.
Start a Business From Scratch
Do you have a couple of business ideas?
Has something been percolating inside of you that needs to see the light of day?
Do you have a new product or new service idea that’s ready for prime time?
If so, what are you waiting for?
The three possible answers to that question include:
1. The right time
3. Lack of courage
I feel you.
But if you didn’t give your idea a try, is it something you’d regret in your later years?
“In every success story, you will find someone who has made a courageous decision.”
— Peter F. Drucker, management consultant, educator, and author
Suggested Reading: 6 Steps to Starting a Business From Zero
Suggested Video: Guy Kawasaki* on Entrepreneurship
*Shortly after I started The Franchise King Blog, I was lucky enough to be asked to contribute some of my franchise expertise to one of Guy Kawasaki’s projects. It was wonderful, and I got to meet him in Las Vegas at a conference. Anyway, he’s written several books that are perfect for people who want to start a business. Check out this book:
Finally, if you decide to start a business from scratch, you get to make the rules.
In short, you get to decide:
- How to get to market
- Business structure
As a result, it’s 100% pure entrepreneurship. But there’s another way to start a business. It’s less entrepreneurial…way less, but you can get to market quickly.
Open a Franchise Business
Did you know that when you open a franchise, almost everything you need to get your business up and running is provided? It’s one of the major reasons why the franchise business model works so well.
Suggested Video: “Buying A Franchise, Explained:”
Here are a few of the things you get as a franchisee:
- Proven business system to follow
- Detailed operating manual
- Formal training
- Tested marketing system
- Useful technology
- Purchasing power
In a nutshell, you get everything you need to start a new business. But there are a few negatives.
The Drawbacks of Owning a Franchise
I concede that franchising, as a business model, isn’t perfect.
For instance, just like in any industry, there are bad players.
In addition, when you buy a franchise, what you’re really doing is buying someone else’s business idea.
That said, there’s nothing wrong with that unless you’ve always wanted to start a business using your idea. If that’s the case, your enjoyment as a franchise owner will be short-lived. That’s because you’ll keep wishing that the business you own was something you started and developed. And that could turn into a major resentment…especially since you’ll be paying royalties* every month to the person who did come up with the business idea. Does that make sense?
About Royalties And Systems
*When you own a franchise business, you’ll have to pay a percentage of your monthly sales to franchise headquarters. These payments are know as “royalty” payments, and they can vary from 4%-10% or more.
For example, let’s say you own a franchise business that does $700,000 in annual revenue.
Your franchise agreement states that 5% of your revenue goes to the franchisor.
That means that you’ll be sending your franchisor $35,000 a year in royalties. That’s a lot of money!
But remember, the franchisor is the one who came up with the business concept you now own and operate in your local area.
In addition, the franchisor supplies you with the business systems, technology, marketing plan, and the support you need to operate the business effectively.
Finally, there’s an upfront Franchise Fee. (Normally $30,000-$60,000.)
That fee is what gives you the right…the license-to operate the business.
Another Way To Be Your Own Boss
There’s one more way to become your own boss:
You can buy an established business.
Fact: You may not know this, but dozens of businesses are bought and sold every day.
The reason you probably don’t know this is that they’re usually under the radar.
These businesses are under the radar because a lot of times they’re not advertised. It’s not like you knew they were for sale to begin with.
So, should you look into buying an existing business?
How To Find Local Businesses For Sale
What if you could be your own boss by buying an established business in your local area?
I’m talking about a business that’s up and running. A business that’s already bringing in revenue. A business you could take over and add your own imprint to.
If that sounds attractive, it’s relatively easy to find existing businesses that fit the bill.
Basically, all you have to do is contact a local business broker or two, and see what’s for sale in your neighborhood.
To find a local business broker, head over to The International Business Broker’s Association website.
Once you’re there, all you have to do is type your zip code in the search box on top. Once you’ve done that, contact information for business brokers near you will display. Just select a couple of them, and send an email or just dial them up. Then ask them for information on businesses for sale.
(My dear friends, Amber and Phil Madow, purchased Salon Savvy in Plantation, Florida, from the previous owner. That’s Amber.)
Pros And Cons of Buying an Established Business
For some, buying someone else’s business can be a good way to go. But there are a few pros and cons you should know about.
- Money will be coming in from day one
- You’ll have an existing customer base
- Numerous vendors are already in place
- You’ll have the freedom to grow/operate the business as you see fit
- Your business has instant name recognition
On the flip-side:
1. Due diligence may be challenging; business records may not be well-organized.
Not only that, the “books” may not show all of the income.
For instance, some small businesses (for tax purposes) may show low-profits. That could make it hard for you to get a small business loan to buy the business.
2. The given reason may not be the true reason the business is for sale.
For example, the owner may tell you that she’s selling the business because her kids “have no interest in taking it over.” That’s fine. It certainly sounds legit in this day and age. Unless of course she’s lying.
Call me skeptical, but what if there’s another reason? One that has absolutely nothing to do with her kid’s lack of desire to take over her business.
In view of that, could it be that the business is not doing that well? Are there problems in the business-or in the business model that aren’t apparent?
3. Growth may have already peaked.
To that end, as much as you’d like to think that your business ideas can significantly increase revenue for the business (if you become the owner), it may well be that the business has already reached it’s maximum revenue numbers.
The Process of Buying A Business
The process of buying an existing business tends to be lengthy. In fact, it can take 6 months or more to become the new owner.
To be sure, a lot of it depends on the current owner, and how much she cooperates, especially when it comes to opening the books to you-and your accountant.
In addition, financing may be difficult to obtain. If that’s the case, the current owner may have to jump-in and finance part of the deal…as in “Owner Financing.”
In the end, buying an existing business is a fairly common way to become your own boss. People just like you, all across the country, are looking at existing businesses as we speak.
To learn more about buying a business, check out these fine articles:
Should You Have a Boss or Be The Boss?
I’m going to end this post the same way I started it:
I can’t answer this important question for you. I’m not you. But the fact that you’ve read it says a lot.
Evidently, there’s something going on in your life…something career-related that’s brought you to this point.
With that said, I hope the information I shared here helped.
And if you ever want to talk about any of the career alternatives above, shoot me an email.
P.S. If you feel that this post would be helpful to others who may be experiencing career pain, please share this article.
Thank you, and good luck on your business ownership journey!