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Wednesday, July 27, 2011
Butcher, Baker, Candlestick Maker?
As the 21st century job market
continues to constrict, working people are retooling their vision of how they will make a living in the years to come. This
is driving young people and mid-career types alike to pursue small business ownership as the career of choice. Creating your
own job is the new path job security.
As people seek business opportunities, it is important that they pursue options based on the right criteria. Too often,
people that are new to business ownership may think they know what they want before they are aware of what is available. As
children, we may have wanted to pursue a career as a cowboy or an astronaut. Both of these jobs sound pretty cool, but the
interest is based on both a limited knowledge of career options and little or no consideration of other life goals such as
where you will live, if you will have a family of your own and what type of skills or training will be required. When searching
for a business we need to carefully define the things that are important to us such as lifestyle and financial goals while
being realistic about our unique competencies.
Another big driver that defines our options is our investment capability. This is typically defined
through consideration of our net worth and our liquidity. A good rule of thumb is that you need about 30% of the total that
you will invest in liquid funds and then you can finance the other 70%, provided you have remaining assets to collateralize
the loan. I generally recommend that people not put more than half of their net worth at risk. This is a prudent guideline
and while sometimes it leaves people with options that don't fit their original vision, it is better to start small than to
be over extended when starting a business. Your first business doesn't have to be forever and you can graduate into a business
that requires more capital later, when you have the resources and experience to do it properly.
Finding the right entry point can launch you on a very rewarding career
as a business owner and allow you to perform at your best level. The good news is that today there are more business models
available to choose from than ever before, so choose wisely and don't be afraid to ask for help from a qualified advisor.
1:30 pm edt
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