If you've been watching you know that when I find useful information I believe it's only fair to pass it on. Today, I have an article I highly recommend. You may look at the title and go, what? That's not for me--I'm not buying a business. I still suggest you download & read the article. Since it's not very long, so you've got double-the-reason to get this information. If you're into reverse engineering or at least willing to consider the concept, you'll learn what to avoid so you don't end up an unhappy entrepreneur.
You absolutely need to know:
This article highlights quickly and specifically some of the common pitfalls you can meet on the Entrepreneur Path. While Dr. Hollerbach writes from the perspective of someone buying a business, she describes the situations that are serious problems whether you stand on the seller or buyer side of the transaction. And often, if it's your business with these problems, learning see them clearly can be very painful. Each big "OUCH!" on this list has a direct connection to something you don't want to do in your business.
The article is from the Taku Group. How to Not Buy a Business--Unless You like to Overpay for Risky Businesses with a Cloudy Future. In the article you'll learn three basic arenas where you need to be well informed and specific symptoms of when you don't know enough.
- The real cash flow in your business based on appropriate accounting principals
- Market conditions that relate to the value of your business
- How personality impacts the success of your business
WHY are these things valuable to you?
The cash flow situation is basic survival. If you don't know, you're lost without a map in a dark, lonely place. You could end up without a business, facing bankruptcy, or worse with perhaps no idea how you got there. In addition, borrowing money and managing credit become an impossible thing. Please don't let that be you.
The situation with market conditions is far reaching: if you stay on top of how and when things move you can make changes before it becomes a painful problem. Minimum wage changes are a great example. Not preparing for this kind of adjustment can be devastating. If you only have 1 or 2 employees and you rely on them extensively, something this small can bring a small operation to it's knees. Likewise, someone new may come into your market segment--knowledge may not be direct power today but being informed is clearly how you can choose a powerful direction!
The personality piece is the least obvious to most new business owners. I cannot tell you the number of small businesses I'v watched struggle with this factor failing to achieve additional success and growth. Your successful business may be a big boost to your sense of self. Most people who grow something from nothing to any level of success heavily invest their own blood, sweat and tears (and money). Or maybe you and a key employee have done so. If you want more time off, want to reach more clients, or simply want to make more money, you must sidestep the reality of a 1 to 1 relationship between you and your business.
Shifting or maintaining your internal, personal reality so that your business is NOT your identity is a large key to succeeding. Furthermore, it's the path to finding your way to more free time along with more focus on what moves you. If you are sure your business cannot survive without you, you're right! That model is not sustainable for anyone. Just as Dr. Hollerbach's article reflects how hard it is to deal with this kind of business owner during a sale, I promise you it's hard for everyone else to deal with your lack of separation between the business and your personality on a daily basis. Just as a hyper-involved parent suffers when a child breaks free, you're setting yourself up for hardship and more likely failures if this is the only way you know to relate to your business.
So? Are you going to download the article? Of course you are: Go on! Have a great day! Dr. Hollerbach's style is easy to read and direct. You'll find it well worth your time.
Wishing you Success & Heart,