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  • 23 May 2018
  • Gene Marks

Dreaming of Opening a Business? Three Things to Consider Before You Do

According to a new study from The UPS Store, a lot of people are dreaming about opening up their own business. The company’s 2018 “Inside Small Business Survey” found that almost two-thirds of Americans have the entrepreneurial dream. Why? For most, it is all about being their own boss and having financial security.

I get it and these are good reasons to go out on your own. I have been running my own business for more than 20 years – my ten person firm sells software and other technologies to fellow small and medium sized companies. Ask any business owner like me and we will likely tell you that we not only have no desire to work for someone else, but that we also enjoy much more control and financial independence over our lives. Gene Marks

 
 
 
 
 
 
 
 

But make no mistake about it, realizing this “dream” isn't easy.

Many small businesses fail within just a few years of starting up. An equal number of business owners I know struggle with the daily realities of running a company – collecting invoices, finding good people, managing cash, dealing with problems that can only be solved by the person in charge. So if you are dreaming of starting your own business, you need to be prepared for the realities of life as the boss. 

Please – coming from this business owner – take these three things into consideration.

1. Have enough capital.

In a capitalistic economy, it's important to have…well…capital.

Capital comes in two forms: money and time. Make sure you have plenty of both. Regarding money, you will likely need twice what you think you will need. You will need to pay your bills for at least two years when you start up a business. You need money to buy equipment, rent space and hire people. Don't ever bet the farm (i.e. use all your savings) to start a business – no smart business owner I know takes those kinds of risks. If you don't have enough to finance your company and also keep enough in reserves, then wait until you do. Talk to your accountant. Do a very conservative, realistic two-year projection. Save up and then look at your time.

Small Business Finances

 
 
 
 
That’s because time is just as important as money. Starting a business is a 24/7 job. It will fail without the right amount of time invested. Make sure you have plenty of this capital too. Make sure your family is fully on-board with the enormous commitment you are about to make because they are a major part of this decision. If you think that spending too much time on your business will harm your relationships and your personal life, then you may want to reconsider your priorities. I have met plenty of wealthy business people that are miserable in their personal lives. Don’t be one of them.

2.  Be comfortable with math.

I'm not saying that you should have a PhD in mathematics from MIT. But I am saying that my best clients know their numbers. Running a business doesn't require the knowledge of complex algorithms.  But it does require a knowledge of math. Addition. Subtraction. Multiplication. Division.
For starters, you need to understand how to read a financial statement. This is not your accountant’s job – it is your job because it is your business. You should know your margins. You should be familiar with all of your costs and your overheads. You should be able to project your cash flow, estimate your liabilities, calculate your taxes and decide on the right price that will make you the right amount of money. You should be getting reports every day on revenues, backlogs, pipeline, cash flow, productivity and collections. Boring? You bet. But it is these details that separate the successful business owners from the failures. You can dream all you want, but in the end a good business has sound financials and a competent manager who's very familiar with them.

3.  Know how to sell.

To grow a business, you need revenues. To get revenues, you need customers.  That is easier said than done.  It's a cold, hard world out here and no one is just going to hand their money to you. You have to be ready to convince, cajole and persuade complete strangers that your product or service is worth it. You have to be prepared to compare what you do to your competitors and prove that you are better.  You have to have ready responses for objections and rejections. You have to be used to dealing with fires, floods, customer complaints and other calamities. You must have a mindset of always looking for new leads, bigger transactions, better opportunities.

You are the face of your business, which means you are the chief salesperson. Everyone wants to talk to the boss and when they do, they want to get a warm and fuzzy feeling that the boss is going to solve their problem. As a business owner, you will be constantly selling. Not just to customers, but to prospective and existing employees on the benefits of working for your company and to suppliers on why giving you a lower price will benefit them in the long term. You will be selling your company to potential partners, investors, financiers and the media. Are you ready to be the chief salesperson?

Even after all this time I'm still battling, still scrambling for more customers, dealing with tough situations, working the numbers, juggling cash demands and selling, selling, selling. I’ve learned – the hard way – that you can't sit still or your competitors will eat you up.  For some - like me - this is the kind of challenge that I'll never have working for someone else and I enjoy it.  For others, this kind of pressure and stress is not enjoyable. Think about who you are and consider some of the things I've mentioned above before chucking that job and taking the entrepreneurship plunge. If you're still excited after reading this, then see you in the market!

About Gene Marks

Gene owns and operates The Marks Group, PC, a highly successful ten-person firm that provides technology and consulting services to small and medium sized businesses. Prior to starting the Marks Group PC Gene, a Certified Public Accountant, spent nine years in the entrepreneurial services arm of the international consulting firm KPMG in Philadelphia where he was a Senior Manager.

Gene writes every day on business, politics and public policy for the Washington Post and weekly on tech, management, and cash flow strategies for Forbes, Inc. Magazine, and Entrepreneur. Gene has written five books on business management, specifically geared towards small and medium sized companies. Gene frequently appears on Fox News, MSNBC and CNBC discussing matters affecting the business community.

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