risks and rewards copy

Topics for Discussion

1. Risk and Rewards.

2. Why business ownership?

3. Starting a business, buying an existing business, or starting a franchise

4. Simplifying the search.

If you knew you could be a successful business owner, would you rather work for

someone else?

HOW WOULD LIFE BE DIFFERENT???

Survey:

Why Own Your Own Business?

Control Financial Security No More Layoffs Money

Fulfillment Flexibility Independence

SUCCESS

What is it for you?

Why do most people choose

to work for someone else?

Why?

The Question:

Some of the Answers

Risk:A job is safer than a business

I’ll wait until the economy is betterMoney:

A business costs a lot of money to start and run

Knowledge: I don’t know where to start or find

what I’m looking forSkills:

Running a business takes specific talents and skills

800 LB Gorilla

FEAR OF FAILURE!

Dealing with the Fear of Failure

• You will feel fearful – It’s normal!• MANAGE AND REDUCE FEAR• Doing Research – Making FACT based decisions• Minimize the leap of faith• DO NOT allow fears to drive decisions• DO NOT make judgments based on perception

and uneducated opinions• “Is that what I think, or know for a fact?”

“Sure I’d like to own my own business but it’s too risky.”

Perception of Risk: Job

Is working for someone safe? Short term yes, but …

Can you be sure your job is safe?

Can performance determine security?

Will you meet your long-term financial goals of security and retirement?

Risk

TimeJob (Then) Job (Now)

Risk Increases

Business Ownership

At first, owning your own business can be scary, but ...

• No one can take it away. You can’t be downsized, transferred or fired.

• You can grow the business at the pace you want.

• The longer you own your business the safer it becomes.Risk Decreases

How To Fail At Business

Ownership

How to Fail at Business Ownership

• Under capitalization• Emotions for product/service are the main

decision criteria• Misplaced Passion• Not giving your all

Suggested Reading

Rich Dad, Poor Dad Series by Robert Kiyosaki

E-Myth Revisited by Michael Gerber

Business Ownership Options

1. Create a start-up business

2. Buy an existing business

3. Buy a franchise

Is this a make or buy decision?

Start Up Business

Advantages Disadvantages

• Must create systems• No one to turn to for

help• Limited financing

options• Years before you

make money• Highest failure rate

• Must create systems• No one to turn to for

help• Limited financing

options• Years before you

make money• Highest failure rate

• Total control• Make all decisions• Keep all profits• Biggest upside

Buy an Existing Business

Advantages Disadvantages

• Cash flow & good will• Actual historical results• Attractive to lenders• Established location &

customer base• Employees in place• Systems may be in place• Owner financing

• What is the real cash flow?

• What is the good will?• Hidden seller motives• Employee defection• Higher Debt Service• Poor training/support by

the former owner

Starting A Franchise

Advantages Disadvantages

• Easiest to evaluate• Systems in place• Training• Support• 4 Times the success rate• Quicker ramp up time• In business for yourself, not

by yourself

• Less Control• Franchise Fee• Royalties• Compliance• Minimums

Determine Your Business Model

What do you want from the business?• Challenge, recognition, prestige• Build equity for retirement• Time for family and interests• Independence and control• Financial security

Determine Your Business Model

Business Preferences• Employees• Budget • Business environment• Full or Part-time & Hours• Number of units• Type of customers

What does the Solution Look Like?

Something StableSomething SafeSomething AffordableSomething I can Plant Roots withSomething I can GrowSomething I can rely onSomething where my Job won’t disappear simply because of a corporate makeoverMost Importantly… Something I Know I Can Do, and Do Well!What else should be on that List?

Plan Your Strategy

When you are thinking about being a business owner, you should develop a:• Short-term strategy• Long-term strategy• Exit (Destination) strategy

Short Term Strategy

Find a business you can get into where you will not fail

The more research you do the more you improve the odds of success

Long Term Strategy

The most important element:

The business must give you the lifestyle you want and allow YOU to meet your goals

Freedom, Recognition, Achievement, Control, Money, etc. (the things that YOU value the most)

Questions?Remember, if you don’t have a dream, the

person you work for does...