Whether you’re starting a business from scratch, buying an established business or entering into a franchise agreement, for the uninitiated, the process of establishing and running a business can involve a steep learning curve.
When I left my former job as a paramedic, I decided to buy a gym and while I was full of energy and quite ambitious, I didn’t have much experience in the business world which meant I made plenty of mistakes along the way. Now 11 years later, here are my top three takeaways from my time as a hands-on business owner.
1. Culture is king
No matter what industry you are in, if it involves selling anything, the culture within your team can make or break your business, literally. Good staff are as rare as hens’ teeth, if you find loyal, committed staff pay them well, give them frequent pay rises, maybe offer them a cut in a share of the profit? Whatever you do, when you find the right person, develop a level of trust and understanding and if the right person is ambitious in nature, contemplate offering them a slice of the action. Watch how much harder they work, when they get a legitimate piece of the pie.
2. Get qualified legal and accounting advice
This is a non-negotiable. Do not rely on “she’ll be right mate”, I can guarantee you, she won’t be right. Set your entities up correctly initially and this includes any partnership agreements and lease agreements. You cannot skimp on this important step. Ensure you have hired someone that specialises in the specific areas you’re involved in such as commercial leases and SME start-ups. Doing this properly the first time, will save you time, pain and money down the track. If you are entering a business partnership with someone else, ensure you have trusts and entities established, so when you fall out of love (yes it will happen), your business won’t fail, think of it as an SME pre-nup. Ensure your profit share is separated from the hours you are working in the business, pay yourself a wage for the hours you work if you are able, or you will quickly find yourself on the way to burning out.
3. Why are you in business?
This is a fundamental most business owners forget. What’s your overall goal? Do you want to purchase multiple sites or do you have expansion plans? If you do, how will you achieve this? Set some benchmarks within your business to enable you to take the next step. Having financial targets as well as cashflow forecasts will help guide you on the growth path. Most importantly, you need to have a plan to exit your business. Life can throw many curve balls, so you need a clear exit plan to ensure you aren’t left with debts, lease agreements and if you are involved in a franchise, franchise agreements. For franchise owners, how easily can you on sell your business to another operator? Will the master franchise buy your business back? Make sure you have the answers to these questions settled in your mind, as they could be crucial at some point in your business journey.