Starting your own business makes you rich, right?Unfortunately, that fairy tale does not always end happily. You are probably aware of the statistics on just how many companies fail before reaching their five year mark. It is just not true that owners take home the big bucks. Too often they are paying everyone else first and when it’s time to pay themselves, they find the cupboard bare.
Many entrepreneurs also discover that a mortgage, a pension plan, a medical plan or other long-term benefits provided to employees, are not available to them because of their status as “self employeed”.and also out of reach of their budget. After a couple of years of that reality, the entrepreneur stops dreaming and decides that working for “The Man” looks pretty good, particularly if it entails union wages or a government pension plan.
Business entrepreneurs are crucial for the future wealth of our country but are often given little thought (look at the last Ontario provincial election – need I say more?). Now with the alarming question of “Is this a recession?” even the news headlines have turned away from Hollywood celebrities and toward the economy” – although CNN did still make Heath Ledger’s death their top story the same night that every stock market on the globe was falling off a cliff. But what the heck, I enjoyed looking at Anderson Cooper’s blue eyes and his combination of Wall Street pinstripe suit with purple and gray striped tie!
With this incoming tsunami of trouble, our provincial governments are turning their attention to SMEs and pondering how to help them. If you buy the life-boat theory - you cannot save everyone from drowning - you need to answer the question of just who does get to climb into the life boat. Rather than encouraging any and every start up, government can focus on assisting industries with high growth potential. If you start a computer industry-based company, your chances of growing far exceed those of starting a hotel, a clothing store or a consulting company.
What is missing in the economy are those growing companies finding a financial investment of $1M to $10M. Supporting those investors ploughing money into growth companies would be a smart move. Venture capitalists and private equity funds investing amounts under $10M tend to excel in filtering out which businesses and owners are most likely to grow our Canadian economy.
As an entrepreneur, you know economic change is upon us. You no longer have time to point the finger at China, India or our government policies. Right now, you need to make decisions to get ahead of the global crowd. Scott Shane, professor of entrepreneurial studies at Case Western Reserve University and author of The Illusions of Entrepreneurship, says, “the typical entrepreneur makes decisions that lower the chances for success. Part of it is that they're in a hurry and don't have time. So to give you a good example -- a business plan. We have lots of evidence that all kinds of performance measures of startups are enhanced if you write a business plan” [www.businessweek.com, 1/7/08]. Why doesn’t the average owner write a plan? Besides being busy, owners just don’t see the benefit.
If you want your business to be more than a lifestyle, write that plan. Take this weekend to break out your laptop, Google “business plan” and you will find a plethora of templates to use. Then share it. If your only employee is your dog, tell your mother. “Tell everyone,” says Tony Griffiths, one of Canada’s top investors in growing entrepreneurial companies. Tony, who invests in growing companies, recalls how years ago, while he was watching his wife play tennis, a young man sitting next to him struck up a conversation. The subject moved to business and the young man shared his business plan with such enthusiasm. Tony made the decision there and then to become an investor.
Business entrepreneurs are crucial for the future wealth of our country but are often given little thought (look at the last Ontario provincial election – need I say more?). Now with the alarming question of “Is this a recession?” even the news headlines have turned away from Hollywood celebrities and toward the economy” – although CNN did still make Heath Ledger’s death their top story the same night that every stock market on the globe was falling off a cliff. But what the heck, I enjoyed looking at Anderson Cooper’s blue eyes and his combination of Wall Street pinstripe suit with purple and gray striped tie!
With this incoming tsunami of trouble, our provincial governments are turning their attention to SMEs and pondering how to help them. If you buy the life-boat theory - you cannot save everyone from drowning - you need to answer the question of just who does get to climb into the life boat. Rather than encouraging any and every start up, government can focus on assisting industries with high growth potential. If you start a computer industry-based company, your chances of growing far exceed those of starting a hotel, a clothing store or a consulting company.
What is missing in the economy are those growing companies finding a financial investment of $1M to $10M. Supporting those investors ploughing money into growth companies would be a smart move. Venture capitalists and private equity funds investing amounts under $10M tend to excel in filtering out which businesses and owners are most likely to grow our Canadian economy.
As an entrepreneur, you know economic change is upon us. You no longer have time to point the finger at China, India or our government policies. Right now, you need to make decisions to get ahead of the global crowd. Scott Shane, professor of entrepreneurial studies at Case Western Reserve University and author of The Illusions of Entrepreneurship, says, “the typical entrepreneur makes decisions that lower the chances for success. Part of it is that they're in a hurry and don't have time. So to give you a good example -- a business plan. We have lots of evidence that all kinds of performance measures of startups are enhanced if you write a business plan” [www.businessweek.com, 1/7/08]. Why doesn’t the average owner write a plan? Besides being busy, owners just don’t see the benefit.
If you want your business to be more than a lifestyle, write that plan. Take this weekend to break out your laptop, Google “business plan” and you will find a plethora of templates to use. Then share it. If your only employee is your dog, tell your mother. “Tell everyone,” says Tony Griffiths, one of Canada’s top investors in growing entrepreneurial companies. Tony, who invests in growing companies, recalls how years ago, while he was watching his wife play tennis, a young man sitting next to him struck up a conversation. The subject moved to business and the young man shared his business plan with such enthusiasm. Tony made the decision there and then to become an investor.
The young man had no idea that there was private equity interested in his size of business, but since he had completed a step toward a higher level of success – writing a business plan – he accidentally gained access to capital. According to Tony, the company went on to grow all the way to a public listing on the stock exchange. The young man is now much older and does own a mansion. One answer to surviving the looming economic storm is remembering the fundamentals: make sure your business plan is in great shape and perhaps you will reach the level of entrepreneurship that earns you the big money.
