Exploring Business Ownership – Traditional Employment is Not Risk-Free (Part 4 of 7)

In previous articles we’ve talked about the personality types that have the best chance of business ownership success and helped you define your goals for wanting to be in business. Now we’ll explore how entrepreneurs, franchise owners, and employees generally think. Where will you find a match?

How You Think Vs Your Risk Tolerance

As I’ve shared previously, business success is far from guaranteed so it’s important that you assess your tolerance for risk before committing funds to any business venture. One very general way to assess your risk tolerance is by analyzing the way you think.

Generally speaking, there are three main ways to earn income in increasing order of personal risk; employment, franchise ownership, and entrepreneur business ownership. We’ll explore each to see which you identify best with.

The World of Employment

Employee think is:

I did what I was supposed (or told) to do and I can prove it.

If you’re most comfortable with a narrowly defined set of responsibilities, expect your desk (or tools or equipment) to be provided for you, want to call the IT department when your computer hangs up, crave regular working hours with paid vacation and holidays, and expect benefits paid by someone else, then you’ll probably be most comfortable in an employment situation.

When employment is a good fit you feel most comfortable when you do your part as a team member and leave the business consequences of your work assignment to others. If this describes you, take heart! There’s absolutely no shame in being an employee! In fact, most of the business world is made up of employees who willingly do their part and receive a fixed hourly or salary income in return.

Traditionally employment has also had the least amount of risk for loss of income, although that’s becoming less true. For several decades following World War II there was an unwritten social contract between large corporations (and even many smaller businesses) and their employees that went something like this:

If you come to work with us and work hard, then you are welcome to stay with our company as long as you like. We will retrain our loyal employees to take on new tasks and responsibilities because they are our most valuable asset. We will take care of you with good benefits and if you stay with us long enough we will also provide for your retirement.

Contrast that historic practice with the current social norm of viewing employees as a commodity to be hired when needed and laid off when not.

Risk Assessment

Employment and depending on others for income who may not have your best personal or career interests at heart carries the least risk of the three income earning options. But it’s not risk-free and is far more risky now than it used to be. Let me suggest the book The Disposable American: Layoffs and Their Consequences, by Louis Uchitelle, for further reading (I have no financial interest in this book).

Didn’t identify with “employee think?” Check out part 5 where we’ll explore how franchise owners think.

A Basic Guide to Small Business Ownership and Managerial Training

Business ownership is an extremely tempting form of income for many people. The idea of creating your own work hours and environment is great, and the constant opportunities for your ingenuity to be put to use would have any creative person asking, “where can I sign up?” Although there are huge perks to owning your own business, there are twice as many issues that come along with it. Between the training of employees, store financing, legal issues and many other things, A business owners head will almost always be spinning.

Depending on the amount of time you yourself will be able to put towards your business, managerial hiring and training will be one of the most crucial initial tasks. Any manager should be able to relay information quickly and efficiently. Additionally, solid leadership skills will also prove very helpful. Give managers insight towards your reasoning or train of thought for important decisions you have made. By allowing them to further understand how your business is run, employees will feel as if they are part of a team and begin showing more commitment and dedication towards improving your overall business.

Regardless of how much is put into the hands of your managers, the basic financing and merchandise purchasing will almost always be left in the hands of the owner in any small business situation. Deciding exactly where to allocate any capital money or earnings can sometimes be difficult. Consider offering short questionnaires to customers that might give you a better understanding of exactly who you are marketing to and which advertisement techniques are working the best. If you aren’t the sole beneficiary of your business establishment or received funding through various investors, there will be a large amount of people awaiting your success. Not only will you have to satisfy your customers, but you will also have to satisfy all your investors and colleagues.

During the initial stages of your business,be sure to work out all details and inform potential investors of realistic outcomes and results – any investor breathing down your neck will make it difficult to make the important decisions you will need to make as a small business owner. Issues that never crossed your mind are bound to arise as your business progresses, and these are only a few of the things that you should be aware of. Be sure to inform yourself of all information pertinent to your business field and location, including competition and consumer-base.

Exploring Business Ownership – So You Think You Want to Be in Business? (Part 1 of 7)

This series is dedicated to helping “wannabe” business owners determine whether they’re a good candidate to venture forth into the world of business ownership.

Many times those who have been laid off or downsized, or are in danger of that happening soon, begin to actively think about business ownership. Typically, they’re tired of the uncertainly of their present position, or simply have that entrepreneurial itch and are considering striking out on their own. This may describe your situation and you might be wondering whether it’s best to continue in the employment world or if it’s time to take the plunge.

So, how do you test the waters to know if you have the risk tolerance, level of motivation, and personal attributes necessary to succeed in the business world? Read on.

So You Think You Want to be in Business

Maybe you’re tired of working for “the man” and you want your own “gig”. Or you might have a great idea that you’re sure will work. Or maybe you want to build wealth by starting and building a business to sell at a tidy profit. Or maybe you dream of creating a “gentleman farmer” lifestyle where you simply hire someone to work hard in your business, while you collect an owner’s check at a retirement resort in another state (or country). There are many reasons people start or buy businesses. Most of them have a root in the dissatisfaction with their current situation.

What Kind of People Do Well in Business?

Conventional wisdom says you have to be a “sales type” to be successful. However, Bill Gates is the world’s most famous geek, is definitely not the sales type, and didn’t even finish his undergraduate degree at Harvard, yet few would argue with his success.

While there are some traits that serve owners better than others, in my experience nearly any personality type or style can be successful in business. Rather than focusing on whether someone is outgoing, the basic ingredients I find important to a candidate’s success are a clear understanding of what they want to achieve, a high level of self-motivation, the willingness to ask for help, and the ability to change when business conditions or market needs require it.

Typically, natural sales-types are not good at detail, yet successful businesses must deliver everything promised, when it was promised. So the challenge for the sales-type is to recognize that details are important in running a business and they must have a “dot the ‘i’, cross the ‘t'” person filling these functions.

Likewise, those who see themselves as “geeks” are great at detail, but are not comfortable with the self-promotion and personal contact necessary to create prospects and generate sales. So, the challenge for the geek business owner is to recognize the importance of the sales function and ensure a sales type is in it.

So, it’s far more important to recognize that a successful business requires all personality types working together than it is for the owner to posses a particular personality style.

Everyone wants to be successful in business! In part 2 we’ll discuss what your definition of success should be.