When I was younger I wanted my own business, but I didn’t know how to begin. Should I buy a franchise, join a multi-level marketing company, or start my own business?
I went to seminars, presentations, and sales pitches on selling everything from milk additives to fuel additives, from soap to jewellery.
A lot of the presentations were very high-pressured. They were designed to get you to buy, sign, and commit. It was all about selling the dream of a life of leisure; you could live like a king and enjoy life without hard work. You could be different from the average Joe—no longer serving the man but living the dream.
Having started and run three successful businesses myself and spoken to hundreds of small business owners I can look back over 35 years and say, “Yep, that was definitely a bunch of crap!”
These are the three great myths:
MYTH 1: You will have more leisure time with your family.
When this statement is made, the PPT slides in the background show families happily milling around huge Winnebagos, small airplanes, and large boats. They are on one long beach holiday with an endless summer and they appear to have no shortage of money, time, or staff.
REALITY: You may have the flexibility to have holidays and time off when others are working, and after many, many years of working your butt off, 80-100 hours per week. You may eventually be making enough money to buy nice things but the reality is that nobody I know, while they are running a business, has been able to go off and take long extended holidays without a major effect upon the business. In fact, one of the challenges of having a small business is the fact that you need to be there to drive the ship because nobody has the passion, drive, and determination that you do.
MYTH 2: You will have money flowing in as you sleep.
This myth seems to imply that money will just come into your life day and night once you put your shingle up, with no assistance from you or any employees.
REALITY: Cash flow is the No. 1 reason that small business fails. Business owners never stop business developing to bring in revenue. Sales and marketing are part of every employee and the moment you snooze, you lose. I have a home in Byron Bay, one of the great hippy surf towns of the 70’s which has become a trendy and expensive place to live, and one of the things we see all the time up there are people who come up and buy a business for more than they should and have their children run it. The parents think that money is going to flow like a river, and the children think that they are living in a hippie heaven where work is a dirty word. RESULT? One day the parents get a call: “We are leaving, and the business is all yours!” They arrive to find that the business has been run down to the ground, and nothing has been done for years.
MYTH 3: Your business will continue to grow in worth and one day you will sell it for millions.
Many people think that starting or buying a business is like buying a house. If you sit on it long enough, the price will keep going up.
REALITY: Most small businesses peak after 5-7 years and then start dropping off. Needs change and people change. You thought buying that franchise bakery meant you could sell it for a profit, but today, people no longer eat that sort of bread. You thought that franchise fast-food store was going to sell for millions, but today, people want to eat healthily. I have a friend who took over a small law firm from hid dad and sold it for $45M but he never stopped working, reinventing, going to seminars overseas to learn and grow. Small businesses must continually reinvent themselves to meet the needs of their customers; otherwise, at the end of your time, you will have a worthless shell.
In spite of the challenges involved in starting and growing three successful businesses without any venture capital, I love what I do and wouldn’t have done it any other way. I know it was the hard way, but it was the way I wanted to do it.
Author: Chris Gaborit