what is it really like to own a business?

In America many people dream of business ownership. For others, it scares the daylights out of them and they’d never take the leap. I’d like to take you behind the scenes and tell you the truth about business ownership.

We’re going to explore several areas in different blog posts. I think the key areas will be the fear of failure and paralysis that overcomes some people, I’ll talk about the financial components, I’ll talk about the impact good and bad on family and friendships, the issue of hiring people in the business, and lastly the skills necessary to do it year after year building value and an asset.

So let’s talk about finances to start. In my opinion especially for your first business, you don’t want to ‘bet the farm” so to speak. Now, going it on your own makes it tough to gauge how much you’ll need to actually start and get through the first 6 months. Buying a franchise makes this very clear. And under capitalizing your business from the start, as I’ve said before, is one of the top reasons for business failures. So be sure you can handle this. Be sure that if it fails you still have a house and can recover.

If you aren’t great with numbers and spread sheets, and again if you’ve never owned your own business before, get some help. Accountants are great in this area. Business coaches can also help. Put together some proformas or estimated profit and loss projections, see how much you’ll need to start. How much ongoing working capital will you need? Can you fund it all or do you need a line of credit? Do you have your personal expenses put aside for a few months so that the family isn’t impacted? All part of considering the financial side of starting up your business.

Lastly regarding finances, do you understand the basics like a balance sheet and a p&l statement? Can you run QuickBooks or other financial software to track your business numbers? If not, you need to either budget to hire people who can do this OR you need to get some basic financial training so you can handle it yourself.

So part 1 of the series of posts on what its really like to own a business is about understanding the basics of the numbers in a business, costing out what it’ll take to start it up, and then having skills and software to properly track it.