| Why run a business? | | | | questions until everyone is sick of you and then ask |
| It's the dream of many people to escape the rat | | | | some more. You need to know one hundred per |
| race and be their own boss. Running your own | | | | cent what you are getting into. |
| business can be seen as a route to freedom, financial | | | | Be wary |
| success, and a happier life. | | | | Whenever you buy a business you should be |
| Running a business can be very rewarding, both | | | | extremely wary. You are especially vulnerable if you |
| financially and from the point of view of personal | | | | are thinking with your heart rather than with your |
| development. The buck stops with you and you are | | | | head. |
| master of your own destiny. That can be a scary | | | | Sometimes businesses use "creative accounting" to |
| proposition for some people, especially those | | | | make things look better than they really are. |
| addicted to a regular pay cheque. | | | | Sometimes they just plain hide problems - the |
| The reality is being an employee is not the safe | | | | accounts might be showing a healthy profit, but the |
| option it once was; those little words "you're fired" | | | | reality may be that certain money that is outstanding |
| can strike at any time. On the other hand, "I quit" is | | | | to creditors have not been taken into account. As |
| just as easy to say if you are prepared to make a | | | | the business is a legal entity in its own right those |
| go of it. | | | | debts stay with the business even if the director |
| Are you committed? | | | | changes. |
| Are you really committed to starting and running your | | | | So be warned, be as sure as you can that the |
| own business? Running a business is hard and long | | | | company is above board. Get professional advice, |
| hours are involved. Are you ready for that? Is there | | | | there are things that you can do such as a staged |
| an alternative? How about remote working? How | | | | takeover of the business, with various contractual |
| about working via the Internet? How about freelance | | | | obligations on both sides. |
| consulting? How about stock market trading? How | | | | Build your brand |
| about just sticking to your job? | | | | You should always look to build the brand of your |
| Seriously consider the options open to you and don't | | | | new business. This might mean anything from your |
| consider starting or buying a business until you are | | | | staff wearing company t-shirts, to the look of your |
| sure you are prepared to make a lot of sacrifices. | | | | website, to how you deal with customers or even |
| Choosing a business | | | | the style of your menu. |
| So, how to chose a business? Many will say that the | | | | Brand is important and one of the best ways you |
| business chooses you. You will be attracted to a | | | | can add value to your business is by building up its |
| certain market segment by your own inclinations and | | | | brand. |
| abilities. One of the fundamental decisions you will | | | | Brand is important for all businesses, from the |
| need to make is whether to start from scratch or | | | | smallest beer bar to the national carrier. When you |
| buy an existing business. In the rest of this article I | | | | are buying a business also look for a solid business |
| am going to assume that you are going to buy an | | | | model where there is potential to build the brand |
| existing business. I am not saying that's always the | | | | further, it's an area many owners neglect to their |
| best option. But for the purposes of this article I will | | | | great cost. |
| make that assumption. | | | | Invest in your people |
| Buying a business | | | | It is vital to invest in your staff. Many don't because |
| When you buy a business you are buying the future | | | | they believe the staff will go elsewhere and the |
| profits of that business. So in order to settle on a | | | | investment will be lost. The opposite is true. If you |
| sensible price you need to have a good idea of what | | | | fail to invest in your staff, even the person who |
| those likely profits are going to be. Also, you are | | | | cleans the floor, they will go. They won't want to |
| buying the potential future profits of the business. | | | | leave if they are progressing, taking on new |
| The ideal business is one where there is the most | | | | opportunities and feel well looked after. |
| potential; if a business is basically sound, you can look | | | | It is really important to train your staff to perform |
| at ways of growing the business. | | | | their tasks, as you, their business manager, want |
| There are many things to look for such as leverage | | | | them to. If you buy a business and the staff carry |
| of the existing business model, expansion, | | | | on with their bad old habits, when you want them to |
| re-negotiating with suppliers, opportunities to make | | | | deliver a superior service, then you are doomed. |
| the business more efficient. Discussing these is | | | | Sometimes it means a clean slate is required, as |
| beyond the scope of this introductory article. | | | | some people just can't, or won't, adapt to the new |
| Settling on a price for a business should be done with | | | | order. |
| the help of a business professional, preferably one | | | | The difference that some simple training can make is |
| who has a proven track record in valuing businesses. | | | | remarkable. Take restaurants as an example. Next |
| Negotiation of the price of the business is very | | | | time you eat out look around you with a business |
| important. In a way you are making your profit on | | | | owner's eyes. How is your waitress dressed; is she |
| the deal when you buy, you need to get the best | | | | smart, clean and readily identifiable as a member of |
| price possible that makes sense from a business | | | | staff? How does she greet you? How does she |
| perspective. If you have evaluated the business | | | | present the menus? Does she suggest a special of |
| carefully you should have a maximum price in mind | | | | the day, or perhaps recommend particular side orders |
| that you will be prepared to pay. Do not hesitate to | | | | that genuinely enhance the main course? Does she |
| walk away from the deal should negotiation down to | | | | up-sell or side-sell? Does she serve you promptly and |
| this level turn out to be impossible. You have to have | | | | attentively, or does she appear in a dream world? |
| a deal that makes sense to you - not the seller! | | | | We are not talking rocket science here - just |
| Business = a money machine | | | | fundamental good service (something that is |
| A business is a money-making machine, pure and | | | | notoriously lacking here in the UK). |
| simple. That is the bottom line. Like any machine it | | | | These are many business problems that can be |
| needs looking after, bits will need replacing from time | | | | solved by adequate training and incentive. |
| to time. It's your job as a business owner to make | | | | Performance related bonus does work, but you need |
| sure the machine is running as efficiently as possible. | | | | to do it right. It needs to be targeted. There will be a |
| You need to oil it, service it and get specialists to | | | | fixed bonus for meeting certain targets, such as |
| work on it, but the business's job is to churn out | | | | correct greeting of the customers. |
| money. | | | | I could go on, suffice to say training makes a huge |
| Occasionally, you might need to climb into the guts of | | | | difference, many a failing business can be picked up |
| the machine, but try to avoid being there too long - | | | | for a song and turned around simply by giving the |
| always think of yourself as working on the business | | | | staff adequate training. |
| rather than in the business. You are there to tend | | | | Lead by example |
| and control the machine and ensure the efficient | | | | As the business owner you are the leader. You |
| running of it, not become a greased-up cog in it. | | | | shouldn't expect to sit back while people around you |
| You always need to be looking at ways to improve | | | | do all the hard work. You need to roll your sleeves |
| your machine's ability to churn out money. You might | | | | up, get your hands dirty and lead from the front. It's |
| even have several machines all working in harmony | | | | really important to demonstrate by example how you |
| and using shared resources. A few years on and the | | | | want things done. Your employees are not |
| machine might look completely different to the one | | | | stakeholders in the business, so they do need some |
| you started with; it may be bigger and shinier and | | | | other level of motivation. That is best achieved by |
| hopefully will be generating a lot more money too! | | | | setting an example of what is required and rewarding |
| Delegate legal and accounting issues | | | | those who perform well. |
| If you are buying then don't try and go it alone. Be | | | | Guerrilla marketing |
| careful about choosing your advisors. Go for an | | | | In a way marketing is the most important part of |
| established company of professionals, with a great | | | | your business. Many assume if they create a great |
| track record of providing services to business people. | | | | product, or set up a fantastic restaurant they are |
| Most importantly, ask for several documented | | | | done. The work hasn't even started. You need to |
| references, and check them! | | | | grab people's attention and sell them on your product |
| Trying to skimp and save on this issue is going to | | | | or service. You need to make them feel compelled to |
| cost you more in the long run. You will need to get | | | | buy from you. Marketing is not the same as |
| the best help available to make sure your business is | | | | advertising - an advert to the wrong market is a |
| legal, stays legal and that you retain complete control | | | | waste of money. Advertising is just a way of |
| of it! It's tough and it's going to cost you, but this is | | | | delivering one part of your marketing message. |
| not optional. Try to circumvent professional advice in | | | | Always look at novel ways to market your business. |
| buying a business and you could come unstuck pretty | | | | Freebies are good and needn't eat into the profit |
| quickly. | | | | margin. Just let your imagination wander a bit. Point is |
| Getting Capital | | | | some things you try will work and others will not. |
| This is where many businesses fall at the first hurdle. | | | | You just need to be prepared to try new things. |
| Common problems are getting into severe debt to | | | | Always get feedback from customers too. Treat any |
| go into business, or selling a stake in the business for | | | | complaints you get as if they were gold dust. They |
| seed capital. Many people who go this route live to | | | | clue you in to how you can make your business |
| regret it. If you have a profitable business you wish | | | | better. |
| to expand then maybe borrowing is necessary, even | | | | You also need to spot opportunities for joint |
| sensible, but starting out in debt is to be avoided if at | | | | marketing ventures - "you scratch my back I'll |
| all possible. The problem with selling a stake in the | | | | scratch yours". What businesses provide a |
| company for seed capital is that you lose a measure | | | | compliment your own? Contact them, work with |
| of control. Which brings me on to my next point. | | | | them on joint marketing. |
| Retain control | | | | It is important to figure out new, low cost ways to |
| Your number one priority has to be retaining | | | | make sure people spend money in your business. |
| complete control of your business. It will be very | | | | Conclusion |
| hard to make the tough decisions that will need to | | | | In this article I have touched on a few points that |
| be taken for the benefit of the business if you have | | | | should be considered when buying a business. They |
| to have a committee every time you need to | | | | should also be of use of you are thinking of starting |
| change some aspect of the business. | | | | a new business from scratch. Do your homework, |
| If you are taking out a lease, such as for a shop, | | | | study and always put your entrepreneurial glasses on |
| then the details of the lease need to be gone over, | | | | when out and about. Find an experienced business |
| with the help of a trusted professional, in microscopic | | | | mentor if you can. Start small and build from there. |
| detail. There are no stupid questions when it comes | | | | Good luck! |
| to lease negotiation, so don't be afraid to ask | | | | |