risks and rewards copy
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Topics for Discussion
1. Risk and Rewards.
2. Why business ownership?
3. Starting a business, buying an existing business, or starting a franchise
4. Simplifying the search.
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If you knew you could be a successful business owner, would you rather work for
someone else?
HOW WOULD LIFE BE DIFFERENT???
Survey:
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Why Own Your Own Business?
Control Financial Security No More Layoffs Money
Fulfillment Flexibility Independence
SUCCESS
What is it for you?
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Why do most people choose
to work for someone else?
Why?
The Question:
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Some of the Answers
Risk:A job is safer than a business
I’ll wait until the economy is betterMoney:
A business costs a lot of money to start and run
Knowledge: I don’t know where to start or find
what I’m looking forSkills:
Running a business takes specific talents and skills
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800 LB Gorilla
FEAR OF FAILURE!
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Dealing with the Fear of Failure
• You will feel fearful – It’s normal!• MANAGE AND REDUCE FEAR• Doing Research – Making FACT based decisions• Minimize the leap of faith• DO NOT allow fears to drive decisions• DO NOT make judgments based on perception
and uneducated opinions• “Is that what I think, or know for a fact?”
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“Sure I’d like to own my own business but it’s too risky.”
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Perception of Risk: Job
Is working for someone safe? Short term yes, but …
Can you be sure your job is safe?
Can performance determine security?
Will you meet your long-term financial goals of security and retirement?
Risk
TimeJob (Then) Job (Now)
Risk Increases
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Business Ownership
At first, owning your own business can be scary, but ...
• No one can take it away. You can’t be downsized, transferred or fired.
• You can grow the business at the pace you want.
• The longer you own your business the safer it becomes.Risk Decreases
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How To Fail At Business
Ownership
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How to Fail at Business Ownership
• Under capitalization• Emotions for product/service are the main
decision criteria• Misplaced Passion• Not giving your all
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Suggested Reading
Rich Dad, Poor Dad Series by Robert Kiyosaki
E-Myth Revisited by Michael Gerber
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Business Ownership Options
1. Create a start-up business
2. Buy an existing business
3. Buy a franchise
Is this a make or buy decision?
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Start Up Business
Advantages Disadvantages
• Must create systems• No one to turn to for
help• Limited financing
options• Years before you
make money• Highest failure rate
• Must create systems• No one to turn to for
help• Limited financing
options• Years before you
make money• Highest failure rate
• Total control• Make all decisions• Keep all profits• Biggest upside
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Buy an Existing Business
Advantages Disadvantages
• Cash flow & good will• Actual historical results• Attractive to lenders• Established location &
customer base• Employees in place• Systems may be in place• Owner financing
• What is the real cash flow?
• What is the good will?• Hidden seller motives• Employee defection• Higher Debt Service• Poor training/support by
the former owner
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Starting A Franchise
Advantages Disadvantages
• Easiest to evaluate• Systems in place• Training• Support• 4 Times the success rate• Quicker ramp up time• In business for yourself, not
by yourself
• Less Control• Franchise Fee• Royalties• Compliance• Minimums
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Determine Your Business Model
What do you want from the business?• Challenge, recognition, prestige• Build equity for retirement• Time for family and interests• Independence and control• Financial security
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Determine Your Business Model
Business Preferences• Employees• Budget • Business environment• Full or Part-time & Hours• Number of units• Type of customers
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What does the Solution Look Like?
Something StableSomething SafeSomething AffordableSomething I can Plant Roots withSomething I can GrowSomething I can rely onSomething where my Job won’t disappear simply because of a corporate makeoverMost Importantly… Something I Know I Can Do, and Do Well!What else should be on that List?
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Plan Your Strategy
When you are thinking about being a business owner, you should develop a:• Short-term strategy• Long-term strategy• Exit (Destination) strategy
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Short Term Strategy
Find a business you can get into where you will not fail
The more research you do the more you improve the odds of success
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Long Term Strategy
The most important element:
The business must give you the lifestyle you want and allow YOU to meet your goals
Freedom, Recognition, Achievement, Control, Money, etc. (the things that YOU value the most)
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Questions?Remember, if you don’t have a dream, the
person you work for does...