For so many of us, owning our own small business has been a lifelong dream. I know it was for me. Although I have always loved to work and to learn, I had no idea what a passion for work owning my own business would bring. Summit and our clients are never far from my mind. Knowing that I am not alone in the desire to pursue this dream, we asked Ray Nasser to write a column for this edition of our newsletter. Ray had a long career in banking, moved on to start his own small business, and currently volunteers for SCORE, which assists small business owners and those who want to start their own small business, to succeed. To learn more about SCORE and the services they offer, click on the link below.
Jennifer Luzzatto, CFA, CFP®
What are the things that you should consider and what are the reasons that make you want to do this? Look in the mirror. What do you see? Ask yourelf…Are you unhappy with your present job, employer or boss? Do you think you can make a lot more money as your own boss or think you will have more free time? Do you think the grass will be greener in your own business? Do you see a person in the mirror that has experience in the business you want to start? Can you afford to lose invested capital if the business is not a success?
The reality of owning and running your own business is that you will work 12 hour days most likely 6 or 7 days a week and you will be thinking about your business 24 by 7! No kidding. Ask anyone who owns their own business what it was like when they started up. You may end up scratching having more free time and it is tough to coordinate a new business with family events and vacations. Is it worth it though? Yes, it can be because running your own successful business can be the most fun and rewarding thing you might ever do!
Next question: Do you have some money to put into your venture? You are going to need cash to support the business until you become profitable and you have positive cash flow. Most businesses do not become profitable until their second year and do not become cash flow positive until after that.
Haven’t scared you yet? I think the next step is to think about where you would like your business to be in 1, 3, and 5 years. So sit down, uninterrupted and think about your business vision: What do you see in 1,3, and 5 years? What is happening, what are you doing as far as business activities, how big in terms of revenues, in terms of employees and where is it located, etc? Do you like what you see?
After you have this vision firmly embedded in your mind, you need to write a business plan. What is this really? A business plan is a roadmap for your business over the next three years. It covers such things as a financial forecast; who are your customers; how you get customers; who is your competition; who are your suppliers; what is your market and how big is it: what piece of the market pie do you think you can get; and many other things. You can find a good business plan template at www.score.org; click on “business tools”. There are others you can find on the web by “googling” “business plan template”. A business plan will be required if you plan to obtain any loans. Even if you don’t need outside financiing, the process is crucial to forming your business. It provides the roadmap for you to judge the success or failure of your business. It provides the template for you to make adjustments and changes in the business over time.
Now you are at a major evaluation point. After all this study and information gathering, you probably have enough information to make a decision. What will you do? Your financial future hangs in the balance. Not only that, your health can be affected by business and financial problems. You will work harder than you ever have in your life. On the positive side, owning your own business can be one of the most rewarding things you ever do. You have to want it very badly and be willing to work extremely hard to make it a success.
Good Luck!
Ray Nasser
Ray Nassor is the a voluneteer counselor with SCORE. He can be reached at raynasser@comcast.net. SCORE is a national organization with over 400 chapters thoughout the United States. They are resource partners with the US Small Business Administration. The volunteer counselors of SCORE offer free one-on-own business coaching to help you develop your business plan and help you address other business issues.
