I come from a family of business owners. My grandfather on Dad’s side owned a Newsagency from around 1905 through to the end of the Second World War. Two of his sons, my dad and his older brother (my Uncle) also ran a newsagency. I think my Uncle took over running Granddad’s shop in the mid 1930’s, but Granddad helped during the War. My father purchased his newsagency in 1934 just before he married my Mother, and with my mother’s help ran the business until as a family we left for Australia in 1952.
Why am I telling you this? To show in my blood there was a background to running a business.
Many people I have met over the years have told me they wanted to own a business. Generally, it is in the industry they are employed. A plumber or an electrician feels they can run their own business better than their employer. And I guess I was a bit like that with my cleaning business. I could see the faults the Agency I worked for was doing, and thought I could do better.
When you start a business, it doesn’t happen overnight. Even if you open a shop, just because you are there in the street, doesn’t mean people will automatically walk in the door and buy your product. This of course is where the likes of Franchising comes into its own. When a person buys a franchise there is a set successful formula that has been tried and proven by the franchisor. The franchisee is buying the right to use that system and the brand. The name is already established and once the new franchise begins it doesn’t take long for customers to use the service.
A plumber or electrician can usually find work, because once people who they have worked for, through their employment, know they are available, generally rings them with a job. But this is not the case with something like a dress shop. People need to know you and trust you before they will purchase from you. And how do you achieve that? This is the difficult part.
Say you are an excellent cook. You’ve put money aside for a couple of years with the intention of opening up a restaurant. You’ve found a smallish empty shop in a small shopping centre. There are a couple of other cafés in the centre, but you know three in the centre wouldn’t be too many. So, you pay a bond and sign an agreement, and hey presto, the empty shop is yours, to lease for six months.
Obviously, the shop has to be decorated so you will have kitchen facilities, and the café area where everyone can sit. A date is set and you put a sign in the window saying NEW CAFÉ OPENING with the date.
Now I am going to stop you here and ask a question. Do you know how much money you need to take each week to cover all your costs? Most people don’t know. It is something called cashflow. When you run a business, you have to know how much you have spent, how much you will be spending a week, and this includes the rent, electricity costs, insurance, and staff salaries if you are using them. Each week you need to make enough to cover all those costs. Most people who start up a business, don’t understand that. Also, the income that is taken belongs to the business. Although you own the business, the income from the business is not yours. To obtain some of the income you take a salary.
Are you aware that most new businesses close down within three years of starting? We all think we can do a better job than our employer, but I will guarantee you when they first started, they never got paid a salary. Many of the business owners I used to speak with at Franchise Exhibitions, didn’t really make money until they sold franchises.
The interesting factor of the word Business, is the first four letters. Busi. Replace the ‘I’ with a ‘y’ and that is what running a business is all about. So don’t be so hard on your employer who is making sure you get your salary every week or fortnight. It might seem easy to you, but there is more to starting and running a business than is seen on the surface. And if the boss is good to you, consider yourself very lucky.
If after reading all that you still want to give running your own business a try, then get started. But, remember the cash flow requirement. If you can be sure you make enough money every week to cover all those expenses then you are on your way to being a successful business owner.
Julie Finch-Scally ©
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