No matter how successful you’ve been in your previous work life, becoming a first-time small business owner can be tough.
As perhaps half of business buyers in Canada were born in the baby boomer era, it’s worth taking a closer look at the typical challenges from their perspective.
But first, some background. Earlier this year, BusinessesForSale.com ran a survey of thousands of business buyers, sellers and agents across Canada, the U.S., U.K., Australia and South Africa. They found that almost most 30% of buyers in Canada were in the 44-55 age group and another 20% were over 55. BusinessesForSale.com attributes this age distribution as partly a reflection of Canadian demographics. And, in case you’re wondering, some 78% of buyers were male.
The survey points to many prospective business buyers wanting to capitalize on low interest rates and a perceived buyers’ market for business opportunities. Canadians seem slightly more positive cautious about the economy, with more declaring it a good time to buy than the worldwide average, particularly regarding the current window of opportunity to buy a business at a low price.
By far the most common reason given by the 82% who believe it’s the right time to buy a business is that continuing economic uncertainty promises low prices, with about half (49%) citing this reason.
Male or female, in Canada or globally, their top reason for buying was the independence of owning their own business. That was followed by those looking to expand or move into a new area of business and people with a dream of escaping the rat race.
Now let’s go back to our tips for baby boomers buying a business as their second career.
Look 360 degrees before stepping out
Many first-time business buyers who have worked in government, NGOs, or mid-sized to large companies do not realize how much energy is required during the first few years of owning a small business. As a new business owner you will have to put in the effort and failure is not an option. It is important to eat well and exercise to keep your energy level up.
On the plus side it is much easier to put in the effort when you are enjoying what you do. That said, it is important that you purchase a business that you will enjoy. To make that decision you need to realistically assess what you do enjoy, your personal goals for the coming years, your personal strengths and your weaknesses. Make sure that the day-to-day effort in your business will be fun for you. Getting up every morning and being excited about the coming day makes the work load seem light.
During the first few years while you are paying for the business you may not be able to afford the lifestyle you are currently living. Do a financial plan and make sure that you will have enough cash flow to live in an acceptable style during those first few years. Make sure that after your purchase you still have some cash available. Things during the first few months may be a little bumpy. Sometimes buyers fail to anticipate the need for working capital or capital expenditures as they grow the business and they fail to arrange sufficient financing to deal with this.
Baby boomers are often “sandwiched” between competing demands from children, grandchildren, and aging parents. Make sure that in planning your business you allow time to meet the demands that family put on you. After all, the business is there to support your life style. Too often owners do not realize this. Stress is largely caused by over committing your time.
An owner’s role is to focus on the future while bringing in the money (revenue and profits) for today. This is a balancing act and you need to be doing it from the initial purchase. As time goes on less of your time should be required to bring in the money.
As you start out in your business build a strong and reliable team of professional advisors. If you do not have great trust in an advisor, change them. You need a team you can trust.
You must be able to seek out and take advice and keep learning. As a small business becomes larger, professional services advisors such as accountants, lawyers, financial advisors, insurance agents, HR specialists, marketing specialists and business coaches increase in value.
All of the above points are representative of the issues we cover with potential buyers as we work with them to assess their skills, interests, financial resources and experience as well as their personal and financial goals. That lets us pre-screen businesses to find the ideal fit.
Look for an existing business with a proven track record of success, with trained employees, an existing customer base and an immediate cash flow. But it must be a business you will enjoy.
As theologian Howard Thurman put it, “Ask yourself what makes you come alive and go do that, because what the world needs is people who have come alive.”
What stage are you at in your quest? Can we help? Find an office near you.