Alternatives To Select The Perfect Business Success in life and business comes from utilizing your natural talents
Author : Eva hukshorn, partner EFactor
With thousands of business ideas to choose from, how do you select the one that is perfect for you? It may not be as difficult as you think. In fact, it is a rather simple process of matching your personal talents with the right opportunity.
There is a fundamental truth that applies to almost everything you undertake in life, including starting your own business. Here it is‌.’your greatest successes and happiness come from utilizing your natural talents - doing what you love to do'. Typically, you are the happiest when you doing what you love to do, whether it’s sports, reading, building something, family activities, travel, teaching, art, music; and yes, for some of us it is business.
As you further analyze this principle, you recognize that all of the things that you love to do have one thing in common-: they utilize your natural talents.
Start from Scratch Using Your Own Idea
Start from Scratch Using Your Own Idea
The best definition of an entrepreneur is ‘a person who sees an opportunity, and does something about it.’ Many times your ideas for a new business may come from your existing job where you observe a need of your customers or suppliers that your employer is not filling. In some cases your employer may allow you to pursue the opportunity on your own. That can be an awesome opportunity to create a new business with an almost instantaneous market for your product or service. To add icing on the cake, you already have a substantial knowledge about that market that will substantially shorten your learning curve.
Start from Scratch Using Your Own Idea
Like anything else, there are pros and cons to be considered when determining the correct pathway.
Pros One of the primary advantages of pursuing your own idea from scratch is that it oftentimes has the highest upside potential – largely because you are often pioneering into untapped markets.
Cons On the other hand, that same advantage becomes the biggest disadvantage. Specifically, you may be in totally uncharted territory where there is a substantially greater risk of failure. But remember - the greater the risk, the greater the reward.
Purchase an Existing Business
Purchase an Existing Business For some folks, starting a business from the ground up may be terrifying, particularly if you lack confidence in your own ideas. In that case, purchasing an existing business may be the optimum approach.
Clearly, purchasing an existing company that is already profitable reduces the risk of failure because the bugs have already been worked out and the company is generating positive cash flow. However, buying a business that has minimal risk means that you can expect to pay a higher price.
Once you are comfortable that you understand your industry, compile a list of prospective companies to acquire.
Your next step is to make probes into each them to determine if any of them are for sale.
Buying a business is quite similar to buying a home. If you like a particular home that isn’t listed for sale, simply knock on the door to make an inquiry.
Purchase an Existing Business
If you are still feeling good about proceeding, your next step is to complete detailed homework on that particular company – which is commonly referred to as ‘due diligence’.
You can usually find a typical due diligence checklist through a Google search.
Your due diligence review will help you to identify any skeletons in the closet and adjustments that should be made to the asking price based on actual data. If things continue to look favorable, then turn the acquisition details over to your attorney and accountant to help you prepare a formal offer.
Acquire a Prepackaged Business Opportunity or Franchise
Acquire a Prepackaged Business Opportunity or Franchise
The third basic approach to owning a business is a hybrid of the first two alternatives. For some folks, coming up with their own business idea may not be appealing. Instead, they would rather grow their new company around an already proven business concept - without the bugs.
The legal difference between a business opportunity and a franchise is generally the extent to which state and/or federal regulatory agencies have been involved in the disclosure process.
Additionally, franchises usually require you to make a higher initial investment than a business opportunity.
Acquire a Prepackaged Business Opportunity or Franchise
Business Opportunities
Two of the more popular pre-packaged business opportunities in today's world are internet commerce and real estate. Internet commerce is especially attractive because many folks are very comfortable working with computers and enjoy using the internet. Additionally, internet- commerce companies generally requires a considerably smaller initial investment than other types of business. Although you may be very savvy about using computers, I would caution you that creating a successful business is largely dependent upon your marketing skills something that you may not understand. Several profitable internet marketers have created educational coaching programs that can substantially accelerate your learning curve with killer marketing techniques. Some of those educational programs are featured on my website (www.professorjimsolomon.com). Their cost can range from a few hundred to a few thousand dollars.
Business Opportunities
Real estate is another popular pre-packaged business opportunity because of the enormous potential for profits from buying low and selling high. Generally these business opportunities are centered around buying distressed properties as well as fixer-uppers. Some of the real estate experts have put together strong educational coaching programs that help people get up and running quickly, even if they don't have a lot of initial capital available to invest. The tuition for the coaching programs is generally a few thousand dollars.
Franchises Franchises can cost from a few thousand dollars to several hundred thousand dollars just for the upfront fee. You will also have to determine the average working capital requirements for a typical franchisee. The same steps that apply to starting a business from scratch or acquiring an existing company also apply to purchasing a franchise. You can find directories of potential franchises on the magazine rack or the internet.
Once that you have identified your top prospects, you can start your homework to identify those most suited to your personal requirements. Some of the more common questions that you should ask each franchise seller are…
– How long have you been in business? – How happy are your existing franchisees? – How many franchises have you sold? – What are the average revenues and profits of your typical franchisee? – What are the upfront investment and working capital requirements for a franchisee?
Franchises
Checking out the referrals of the franchise seller is extremely important. My personal preference is to ask my questions to franchisees other than the ones that the franchise seller has provided me. I seek owners who will give me open and candid answers that have not been prompted by the seller. The questions that I normally ask are…
– How pleased are you with the franchise that you acquired? – How successful have you been, and how does that compare with the initial projections given to you by the seller? – How much support does the franchise seller provide? – Has the seller met your other expectations? – If you could do it all over again, would you still select this franchise?
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Thank You!
This document was prepared by Eva Hukshorn. Several people and organizations have inspired her to write this presentation, amongst which are, but not limited to the Founders of EFactor, ABN AMRO/RBS, University of Groningen, Institute for Management Accountants, Paul Grant Founder of the Funding Game