Good Reasons Not to Be
Just as there are many reasons to start your own business, there are some good ones not to. Here are a few examples.
A Brand-New Idea
Let's say you have a brilliant idea that's never been done before anywhere. Maybe it's setting up a store with an endless variety of buttons so home sewers can find every possible one they need. Or maybe you love chocolate, and you believe chocolate lovers will flock to a store specializing in pies, confections, and all manner of things chocolate. Whatever your idea is, if it's never been done before, don't be the first.
Instead of finding a business new to the world, find a business new to your area. Unless you're a research scientist, engineer, or computer wizard or you have rights to a scientific breakthrough, never, never, start a business based on a new idea. Find someone, somewhere, who has already done it. Then do it better, or do it in a different place.
Do a Favor for Your Spouse
Perhaps, as a favor, you want to provide your spouse a project. Over the years I have seen doctors, lawyers, executives, and other busy breadwinners who felt guilty because they weren't spending enough time with their spouses. The answer? Assuage guilt by buying a business.
It always fails. Why?
As an example, let's assume a husband buys a business for his wife. It's not the wife's motive to make the business succeed. It's not her idea. It's his. She is simply appeasing her husband one more time.
The point is, whoever is going to run the business should be a person who really wants it, a person who wants it enough to find a way to pay for it on her own.
Perhaps you're bored. You want something to do, but you don't like the confines of working for someone else. Maybe the kids have grown up. Possibly, you just retired. However, unless there is no investment, unless you are doing it for fun, please do not start a business. Go into charity work instead. You'll benefit yourself and the world far more.
Don and Betty had been married thirty-five years. Their son and two daughters were grown, and Don and Betty were grandparents of four. A year ago, Don retired from his position as human resources executive for a major automaker and moved from Michigan to the snow-free climate in southwestern Florida. Betty grew up when mothers raised kids full-time. Other than participating in volunteer projects at school, homemaking was her only career. Don and Betty were not well off, but between Don's pension plan and Betty's frugality over the years, they accumulated $130,000 in savings. With conservative investments and Social Security, they could live modestly, mortgage-free in an attractive manufactured home community.
After a year of the quiet life, Don was getting restless. At the same time, Betty began thinking it would be nice if they could afford a small camper and travel occasionally. At first, Don thought about getting a job, but opportunities were limited in Florida for men over sixty.
Why Not Open a Business?
After talking it over together, Don and Betty decided to explore the possibility of a small business of their own.They knew what they didn't want: long hours in a shopping center, a huge inventory, or high cost overhead. Yet, they were unsure about what they did want. They spent weeks scouring business opportunity advertising, franchise magazines and library publications. Finally, they decided a small print shop might be the answer. They considered franchising but dismissed the idea. The monthly minimum fees seemed to require a larger business than Don and Betty wanted. Instead, they talked to an equipment supplier who assured them he could provide all the tips and ideas they needed to build a successful business.
Don figured that by eliminating the franchise fee of $20,000, the equipment itself would be a solid investment, and in a worst-case scenario, it could be liquidated without too much loss. The $45,000 investment seemed reasonable. With a down payment of 50 percent, the lease on the equipment was only about $500 per month.
Their idea was to hire a pressman so that Don wouldn't have to get ink under his fingernails and learn the complexities of production. He planned to spend time meeting customers and promoting the business. Betty would work the counter and pleasantly greet customers as they came in the door. Soon, they found a location with rent at $1,500 per month.
Things Get Going
Things seemed to be coming together pretty well, although making leasehold improvements and installing the equipment were bigger jobs than expected and cost an extra $3,600. Within a few weeks, it was time to hire employees, and thirty days later, they held their opening. In less than sixty days, Don and Betty began to wonder if they had done the right thing. By the end of four months as new business operators, they knew they had made a disastrous mistake.
Their first pressman quit in less than six weeks but not before emptying the cash register on his way out. The second one showed up drunk on two occasions, frightening Betty so much she didn't want to be in the shop unless Don was there. Being inside more cut down on his time promoting business. When Don did call on customers, he found things he didn't expect. He called on large and small business in the community, and yes, there was a lot of printing being done. But Don never realized how many print shop competitors were already fighting for business. Some competitors operated out of their basements and charged low prices Don couldn't match. Others had classy well-established shops with well-known reputations. It was a lot tougher breaking into the market than Don thought it would be.
After the third time the pressman turned up drunk, and with overhead costs running $1,200 more each month than their revenues coming in, Don and Betty realized they couldn't afford to hire any more employees until their sales got higher. Don began running the presses in the afternoon and evening. It really wasn't his cup of tea. Sometimes he would have to run a job four or five times to get it right. The wasted paper and ink and the extra delays were torturous.
Nevertheless, Don and Betty decided to give it their best, hoping things would turn around as people got to know them. They longed for the leisure life of only six months ago. Now each day was booked from 8:00 a.m. to after 6:00 p.m. and at least half a day on Saturday. They struggled on for over a year. In the last three or four months, costs were being covered, but there wasn't enough to hire another person. They realized they would be chained to the business a long, long time. They just didn't want to live the rest of their retirement that way.
Time to Sell
Together, they decided to sell the business. Selling it as a going operation, they might recover the $22,500 paid down on the equipment but probably not the $18,000 lost in start-up and overhead expenses. That's when they discovered used printing equipment was a glut on the market and rarely brought over 30 percent of the original value. Don and Betty soon recognized they would be lucky to walk away without paying more on the lease.
It took another four months of struggling, but finally, Don and Betty liquidated the business and escaped their torture chamber. They tallied up the final results: gone were a year and a half of hard work, and their bank account was $38,000 slimmer than when they started. Instead of adding to their income, Don and Betty would have to get by on a lower income or find some type of work as a supplement.
Why didn't it work? Lots of reasons, beginning with the lack of careful investigation about competition and actual value of equipment. And they lacked know-how in the business. Possibly, they could have worked in a shop to get experience first. But beyond that, Don and Betty's entire decision making process was based on the wrong premise: the idea of just dabbling at something, expecting a nice income, without really working at it.
Is it possible for anyone to work at a business during retirement without being consumed by it? Yes, but even a part-time supplemental income business should be approached seriously because it is still a business!
There are some good reasons not to start your own business. You probably have a feel for which is the right answer for you. Just be sure it's not fear you feel. Everyone feels fear before starting a new venture, yet over 3 million entrepreneurs find the courage to do it every year. So can you.