January is when most people consider what their course should be for the coming year. Find out what questions you should ask yourself as a business owner this time of year.
So the Christmas selling season is over, post-Christmas sales have ended, and New Year’s resolutions are just kicking in. January may not be the busiest month for entrepreneurs, or would-be entrepreneurs, but it’s the month that the “Should I?” questions get asked more often — and considered more seriously — than at any other time of the year. These questions are:
- Should I go into business for myself?
- Should I expand my business?
- Should I close my business down?
- Should I begin to plan my exit as a business owner?
Of course, these questions are applicable throughout the year, but January seems to be the month when many would-be entrepreneurs ask themselves if this is the year to take the plunge into ownership, and when most business owners, especially the successful ones, begin to plan or finalize plans for the coming year. Regardless of who’s asking, though, these are serious questions that demand serious and well-thought-out answers.
Should I go into business for myself?
This is obviously a complex question, and would-be owners often get lost looking for the answer because there are so many factors to consider. The trick here is to ask yourself the right question, which is, “Is this the right time for me to start a business?” And the way to answer that is to ask yourself a series of related questions, specifically:
- Do I have the necessary experience to be successful in my market?
- Do I have access to the capital I’ll need to succeed?
- Do I have the mental discipline and toughness required to lead a business?
- Am I talented enough to create sufficient gross profits to make a great living?
- Do I understand the role a successful owner plays in creating success?
If you can’t answer these questions, or your answer to any of them is “No,” you should suspend your quest for ownership until you can honestly say “Yes” to all of them. And if you already own a business, and can’t answer “Yes,” you need to get some help, and soon, because you and your business are likely to be in danger
Should I expand my business?
If you’re thinking about this your business must have had some success, meaning your cash flow is continuously positive, and you’re making a profit year after year. Expansion, though, means taking your profits from past years and reinvesting them in the business, so you’re taking a chance not only with your future but, in effect, with your past as well. In deciding whether or not to make this move, there are three basic questions you need to answer before you do anything else:
- Will expansion generate more market share and leverage what I’ve already accomplished?
- Will my gross profit percentage increase or will it remain the same?
- Is this the right time for me to expand my business? That is since the skills I need to open a business and expand one are very similar, can I answer “Yes” to the questions I’d ask myself if I was just starting the company?
If you can provide positive answers to all of these questions you will have a foundation on which to determine whether or not it would be advisable for you to expand your business.
Should I close my business down?
The fact is that building and maintaining a successful business is hard — about 70% of businesses don’t last ten years. So this is a question that, unfortunately, many business owners have to ask themselves not just in January but throughout the year. If you’re in this situation, the most important thing to remember is that your first loss is your least lost. In other words, the sooner you recognize that you’re riding a dead horse and get out, the less it will cost you financially, and the less heartache you will have. Pretending things are going well when they’re not, or being overly optimistic, doesn’t work. You have to face the facts head-on.
Should I begin to plan for my exit as a business owner?
Sometimes it’s easy to answer this question — when you’re tired and worn out, and the thought of running the business isn’t as appealing as it used to be. Unfortunately, it’s rarely quite so simple, because, as with the decision to start a business, there are so many factors to consider. There are, however, two realities you should never forget when you’re thinking about exiting your business;
- The best time to sell is always when you don’t have to because that’s when you have the greatest number of alternatives and the most lucrative payout.
- If you don’t choose when to exit your business, something or someone else will choose it for you, and that’s never a good thing
This is extremely important because, if you don’t keep these realities in mind, you will be leaving everything you’ve worked for up to chance, and that’s the opposite of what you did to become and remain successful. It’s essential that you continue to control whatever you can control.
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As I’ve said, these are all questions that can be asked anytime during the year. However, January is the perfect month to begin thinking about them because your successes, failures, and frustrations of the past year (or years) are still fresh in your mind, and you’re more likely to be guided by reality. Again, though, you shouldn’t answer any of them too quickly, because, as with everything in business, they all require serious thought and careful planning.
© 2013 Bill McBean, author of The Facts of Business Life: What Every Successful Business Owner Knows that You Don’t
Bill McBean, author of The Facts of Business Life: What Every Successful Business Owner Knows that You Don’t, spent many of his nearly forty years as a successful business owner in the automobile industry where, among many other achievements, he purchased several underperforming dealerships and turned them into a successful business enterprise with yearly sales of more than $160 million. Since selling the company to the world’s largest automotive retailer, AutoNation, McBean has been involved in several new businesses, including McBean Partners, an investment and business mentoring company, and Net Claims Now, which provides administrative services and support to the restoration industry.
For more information please visit http://www.billmcbean.com and follow the author on Facebook