Many people are intrigued and excited about the prospect of owning their own business, for a variety of reasons. Breaking away from the grind of Corporate America, becoming their own boss, and owning their time are some great reasons. That said, it’s more important to know what you’re getting into before making the leap…
As a successful multi-unit franchisee over a twelve-year period, where I’ve started, scaled, and successfully sold all three units with a significant profit, I have proven out the formula I’m about to share with you. So, I consider myself a “product of the product”, having “street-cred”.
Seven of those twelve years I ventured into small business ownership while concurrently managing a very demanding corporate career, which undoubtedly added to the challenge!
I am going to break down these ten essential ingredients into three categories:
- Before you get started…
- Conducting your due diligence…
- Starting up and growing your business…
BEFORE YOU GET STARTED
1. Know your “Why?”
What is your motivation behind wanting to own your own business?
My “WHY” in the health and fitness Franchise business was to help others achieve confidence and happiness through physical and mental well-being.
2. Passion
Passion fuels success! Connecting to a business or cause you are passionate about will make a tremendous difference in creating a successful outcome.
I have always had the best results when passionate about what I’m doing, both in life and in business. I was so passionate about helping to change the lives of others in my business, that served as the “fuel” for driving the great success I had as a business owner.
Research indicates that entrepreneurs who are passionate about their work are 3.6 times more likely to succeed than those who are not.
A significant number of entrepreneurs are driven by passion. Specifically, 16% of business owners cite the desire to pursue their passion as the primary motivation for starting their venture.
3. Mindset
Your belief system (in yourself) must be SO strong, unwavering! Not only must you be willing to do whatever it takes, which includes overcoming adversity, but you must believe “I can and I will”, and find a way NO MATTER WHAT. BOTTOM LINE: BET ON YOURSELF, ALWAYS!
For me, I’ve been blessed with having confidence in my abilities, but the root of it is my mindset.
The strength in mindset is most beneficial when you face adverse conditions, like I did when the COVID pandemic hit the gym business in New Jersey right between the eyes! We were immediately shut down and had to immediately pivot to a new model to serve our members. Without that mindset that I could and would overcome this, I don’t believe we would have survived.
4. Lifestyle
Does it fit into the lifestyle you have, or are willing to accept, to give the business the attention it demands to drive success? Owning a business requires more than most people think it will take, and you need to be willing to commit to giving it all you got!
My experience, in coaching and speaking to so many other business owners, is that they underestimate the commitment necessary and are not willing to sacrifice where needed to make the business successful. The words don’t matter; the actions win the day…
CONDUCTING YOUR DUE DILIGENCE
5. Develop a business model – minimum 5-year plan.
It is essential that you map out a plan that includes financial assumptions and necessary investment of resources (people, technology, cash) to determine if you have a business that can thrive and meet your financial objectives.
Are you planning to run it day to day?
Does it require additional resources, that you can support financially?
Does it create the cash flow necessary?
How long will it take to become profitable?
What is the compelling reason that consumers need what you are offering?
What will be your marketing strategy?
What are they willing to pay for it?
What is the complexity of your business (what overhead, such as rent, inventory, staffing, etc.)?
Statistics indicate that a common reason for small business failure is running out of cash, often because owners do not have adequate funding from the beginning. Many owners underestimate how much it will cost and how long it will take the business to become profitable.
6. Research the industry and market / consumer demand
Gather as much intelligence as you can to understand the industry and potential demand for the product or services you will be offering. Knowing the competition ties into this as well, and this includes the geography that you will be competing in. Finally, what differentiates you from the competition?
I did extensive research before jumping into the Franchise model for the health and fitness industry. Such things as average household income, the demographics of the territory, the overall population, and more.
Further, I knew that my Franchise offered differentiation and uniqueness to the customer / member that would make it more attractive.
7. What are the skills you need to possess or obtain to run your business?
Here are a few of many to consider…
· Business Acumen
· Financial Acumen
· Customer Service / customer facing experience
· Leadership skills (decision making, being able to connect and communicate with people and employees, motivate and influence them, and build trusting relationships)
· Time utilization and organizational skills
· Legal support to create your business entity and prepare any necessary legal agreements
Possessing ALL these skills is near impossible. I was very fortunate in that I had more than twenty years of corporate leadership experience to draw from, so I came into business ownership from a position of strength.
NOTE: If you are lacking any or some of these skills, make sure you are getting external resources necessary to close any gaps you may have, and that you can support that financially. For example, if you are not savvy with business and financial acumen, you will want to have a bookkeeper or financial analyst to help you read and evaluate P&L performance and balance sheet effectiveness.
STARTING UP AND GROWING YOUR BUSINESS
8. Starting up your business:
Make sure you have the right people in the right roles and develop a set of business metrics that you can track regularly.
Don’t settle on a hire that you are not highly confident is the right person for the job. This includes not only competencies but soft skills. Take a pass on hiring the wrong person, instead, find a way to do it yourself or fill the gap another way.
Having a core set of business metrics that you consistently measure will guide you and your team to better performance. These metrics are the barometer for how you’re doing, and it will drive you to take corrective action proactively.
9. Set short AND long-term goals:
Make these goals very specific and include numeric measurements. Set monthly, quarterly, and annual reviews to assess business performance so you can course correct where necessary. In the spirit of continuous improvement, you should be asking yourself: what do we need to do MORE OF, LESS OF, and DO BETTER?
Set one year, three year, and five year goals.
I have consistently done this year after year, and this has been without a doubt a driving force behind continued success!
10.What is your long-term plan, or exit strategy?
ALL businesses need an exit strategy. This long-term plan must include answering the following questions:
Are you in a business that can be scaled and sold?
Can it be sold at a profit and multiple that satisfies you?
Is there any relevant data that you can reference to prove the above points?
How long do you intend to own your business?
In closing, while starting a business can be exciting and OH SO appealing, take the emotion out of your decision by following these steps.
Business ownership offers no guarantee of success, but following these essential steps can certainly put you on a path toward success!
According to this article from the U.S. Chamber of Commerce: Why Small Businesses Fail 20% of small businesses fail within the first two years and 45% fail within the first five years. The article lays out the many causes of business failure, many of which I outlined in the essential steps.
If you’re planning to start your journey or simply looking for guidance, I can help!
Go to my website and hit the “schedule now” button!
