By Michael Kline
as Published in Conway Daily Sun
The great American Dream – Whether that is to create your own empire, open a neighborhood shop, or build a consultancy from a spare bedroom, most of us have had some desire to be our own boss. I have interviewed hundreds of entrepreneurs and want-repreneurs about the topic. Reasons for starting out on your own are as varied as the business ideas available. Top reasons include creating income, personal freedom, self-expression, autonomy and creating wealth.
I listed creating income and wealth as two separate categories. A livable wage/income can be created with relative ease, without necessarily creating a business entity that has equity or wealth attached to it. The simple question is do you want to own a job or own a business? Most startups come to me with an idea that would allow then to make a living. They wanted to earn at least as much as they currently earned at their job, but to be their own boss. If your business does not earn more than the owner is paid to run it, you own a job. If you could hire a manager to run the business and still pay yourself to oversee it and not be part of the productivity, then you have business value beyond owning a job. Too many people get excited about building a business they can sell one day for a multiple of 3-5 times what it earns. This is never the case when it only earns enough to pay the owner. Before you start, decide on your vision for the long term. There is not a right or wrong answer, but your answer will direct your strategy and decisions about nearly everything during the start-up phase. For instance, borrowing money against your house to create a job never works. If there is not enough profit beyond your salary, there is not enough cash to pay both the owner and the mortgage. Even if you have the cash, this may not a good investment, but there may be an emotional and psychological value worth every penny. If your job is making you sick, the money very quickly becomes secondary. You will want to spend some time discussing with a qualified advisor, not just of the financial analysis, but the emotional and physical well-being aspect of such big decisions.
Self-expression and autonomy are listed separately because some types of work (and workers) are very creative in nature, while others simply have the personality that does not appreciate a boss. Experience has shown that many entrepreneurs, who start a business simply to rid themselves of a boss, fail at being their own boss. The reality is that these folks are not entrepreneurs at all, but rather workers who want to rid themselves of their boss and go back to doing their work. If you do the work anyway, then you could do better to go out on your own. The problem is that just because you understand the work, does not mean you understand the business. Whether it is being a hairdresser, retailer, chef or software engineer, your own expertise is not likely to include site selection, lease negotiations, employment law, supplier negotiations, sales, marketing, bookkeeping, etc. Every hour that you spend doing your craft, working in your business, is an hour that you are not working on your business. Outsourcing can help in the skill areas you lack, but is not as easy as it sounds. It is relatively easy to outsource bookkeeping, for instance. It is very difficult to outsource sales and client negotiations in a service industry. It is equally difficult to outsource supplier negotiations and new growth strategies in any industry.
To be successful, the would-be entrepreneur would benefit from some deep soul-searching. Do you have all the skill sets required for your business? Is it reasonable to outsource the areas where you lack expertise? Do you have the money? Can you and should you borrow the money? Are you truly passionate enough about the work to see you through the (all-too-plentiful) tough times? I know you may not like having to explain yourself, but you should be able to explain your specific goal and why you want to own a business, at least to yourself and your family.
Like most decisions, this one will be emotional and that is okay. We tend to use our intellect only to rationalize our emotional decisions. I have lost count of the number of friends and clients who should not have started a business, but acted on the emotional drive to do so. Their stories generally do not end happily ever after. Most of us crave autonomy, mastery, achievement and financial freedom. This requires taking 100% responsibility for our lives, which may or may not require starting our own business. If you truly are an entrepreneurial thinker, you may be able to do well enough working for others that you do not need to take the risk and endless tasks of business ownership. My partners and I will be leading a 3 hour workshop on this subject, Thursday evening July 30 at the Met Coffeehouse in N. Conway. Cost is $20 including food and drink, visit our website to reserve a seat.