A good question to ask in this market with unemployment expected to reach 10%, redundancies in the paper every day, expats returning and corporate consultants positions not being renewed, all points these people towards the possibility of business ownership. My post of a couple of weeks ago talked about what the options would be for these people but I thought it would be wise to expand on the question of suitability for business ownership.

An old mentor of mine used to say to me: “Being in Business isn’t for everyone because if so everyone would be doing it” and I think it is very true. I remember selling a Hire a Hubby franchise to a guy whom I thought and he thought, would be the perfect prospect for self employment. He was a builder who had good experience, ran teams of builders, dealt direct with customers and suppliers and was young enough to still be hungry, he lasted 6 weeks and then called me to say he had applied for his old job and could I sell his business! There was nothing wrong with the business and it sold quickly with little loss on his behalf but he couldn’t handle the thought that there was no guaranteed income coming in each week. He stayed awake worrying about it and after 6 weeks he had had enough.

The moral of the story, as I see it, is that if you are contemplating business ownership, before you go out and look at opportunities you should firstly look within!

One of the key drivers that anybody contemplating business ownership should investigate is their personal appetite for risk, and whether their personal situation allows them to take on risk. Are you comfortable taking on risk? There are no guarantees in business! I have put together a couple of suggestions below to help you identify whether you have an appetite for the risks associated with business ownership.

Things to think about before you take the leap:

1. Get the buy-in of your family first. Spouses often look at these situations differently than the party in question.
2. We all know people who already own a business and you should speak to as many business owners as you can. Ask them to explain the pros and cons, what they believe are the necessary traits and experiences required to make their business a success and if they know you well, ask them if they think you could make a go of business ownership. Don’t be shy because it is better to know now.
3. Talk to your Bank and ask them to allocate you a Business Banker. Meet with him or her and explain your personal situation and then get their thoughts on whether your financial situation will allow you to get into business. All of the big four banks have programs designed to help small business so ask them to enrol you in whatever program there is available. If your Bank thinks you can’t finance a business or you are too highly geared, it is better to know at this stage than once you have spent money with Accountants / Lawyers / Consultants etc.
4. Ask ‘Google’ for other people’s experiences in business ownership. I entered ‘Business owner’s experiences’ into the Google search engine and 112 million pages were available. Read what other people in your position have done before.
5. Look for websites that can help buyers prepare personally for business ownership. I personally recommend Richard Parker at bizquest.com in Miami. He has a number of NZ hits on his website because we as a country are very aware of business ownership as an option.

At this stage you haven’t needed to spend any ‘real’ money. Maybe a little on subscriptions to web-sites and a few lunches for people whom you might know in business. It is the time though to ask yourself what you have learnt and do you want to take the next step? If what you have learnt highlights to you that business ownership is not for you is has been a very cheap lesson, there is no shame in it, but it is certainly better to know now than when you are 6 weeks into owning a business and you have a paralysing case of Buyers Remorse.

If you believe that you still wish to continue then the time spent up to this stage gives you a great grounding for what you will need to bring to the party. Meet with an accountant, a lawyer and start meeting with brokers to see what businesses are available is the next logical step. Ask your contacts if they can refer you to a good modern business accountant. Try to avoid using a tax accountant because a good business accountant will help you with all the financial compliance issues involved in your business not just doing your tax return at year’s end.

My previous posts talk about the process from here so please look back on them because they will be a good reference point for your search for a business. If you are reading this and wonder should you bother with this process please remember buying a business is not like buying a new couch, if you don’t like it you can’t just put it on trademe and hope to get your money back.