When I attended Rice for my MBA, my favorite class was entrepreneurship. I quickly realized that I loved talking about profit and loss, analyzing financial statements, and making business plans. However, as every newly minted MBA, I pursued the traditional path and landed a dream job in Houston’s oil and gas sector.
I spent five years working on rolling forecasts, preparing CFO to call notes for quarterly earning calls, traveling to Brazil to work on the South America budget, and so on and so forth. So, what made me leave this world and take the plunge into business ownership?
Working on your own terms: When you own a business, you learn quickly that time is your most precious commodity. You must have very good time management and prioritization skills. Yes, I get to choose which of my children’s school events to attend. However, that does mean that I spend an extra hour or two sitting at my computer, making up for that time. Who wouldn’t want to be their own boss, right? Nevertheless, one does need to be razor-focused and driven to be an entrepreneur.
Risk appetite: To truly succeed in business, at some point it will be necessary to step out of your comfort zone. If you are risk-averse by nature, then owning your own business might not be for you. A corporate job gives you a bi-monthly paycheck regardless of how the company is performing. Whereas, when you own your own business, there might be several months when you are unable to draw an earning, as the business might be operating in the red.
80-20 rule: Establish an 80-20 rule and spend 80% of your time on the things that grow your top line. As a small business owner, it is very important to know your core competencies and strengths. A lot of times, I hear small business owners say, I could have done that job way better than my employee. And that might be the case, but your time is worth a lot more than the employee that works for you.
Establish processes: You should know that owning your own business does mean that you are responsible for it at all hours of the day and even weekends. I owned several retail stores and we had set protocols in place on how to deal with a minor vs. major emergency. For example, when a teacher called in sick, the staff knew to call their on-call manager and find someone to cover their shift. This is where the trait of establishing processes ahead of time plays a major role.
Managing failure: Our society focuses on successes rather than failures. However, as a small business owner, you might have more failures than successes, and you need to have the gumption to be able to deal with this. The key I live by is knowing when to cut my losses. I had a non-performing retail store, and after a few months of the store’s performance being in the red, I calculated how much more I would have to invest to keep the lights on vs. how much of that money could be saved by closing it down. While it was a very tough decision, sadly, one that had to be made.
Ego and empathy: You are responsible for motivating your team more than in the corporate sector. This applies to people in corporate and the entrepreneurial world alike. I do believe it plays a bigger role in small businesses. If you have low empathy skills or your ego prevents you from truly listening, then starting your own business might not be for you. Research has shown that “people don’t leave jobs; they leave bad bosses”.
So, the next time you think about owning a franchise or starting your own business, ask yourself some of the above questions and you might conclude that the small business world is not for you.