I rarely recommend that certain books are a "must" because different people have different taste, and I wouldn't presume to think that just because I like it everyone else will. But the E-Myth by Michael Gerber is different because it revolutionised the way people think about business. In my book (ah c'mon, it's been awhile since I threw in a bad pun), it actually is a must for business owners.
The crux of Gerber's E-Myth theory is that very few people are "born" entrepreneurs, instead what he suggests happens is that we have an entrepreneurial seizure. One day we decide we don't want to work for anyone and we just have to be our own boss.
Naturally, most people that go into business are really good at what they do - so a good technician - but not necessarily good at running a business.
So then it's up to us to develop entrepreneurial skills to GROW our business. Gerber was the one who coined the phrase that you need to work "ON" your business, not just "IN" it.
Now to truly be an entrepreneur and grow your business, it's critical that you "begin with the end in mind", which is a concept invented by another business brain, Steven Covey. He said, and I love this, "If your ladder is not leaning against the right wall, every step you take gets you to the wrong place faster."
When we start out in business we expect to be in it for the long-term right? We have goals. Some of them loftier than others. One important goal that's often neglected is how we want it to end.
If you're planning a trip you need to know where you're going before you can plan the route yeah?
In order to achieve any goal you need to set it, visualise it, and plan for it. This includes ultimately exiting your business.
As business owners we take significant risks on board, in anticipation that we'll be duly rewarded in the future. For most of us, we expect the prize to come in retirement (with some lifestyle rewards along the way of course), but it doesn't just magically happen. We plan for it.
Do you want to sell your business for a profit? Are you hoping to cease the physical work, but remain a shareholder with a regular income? Will you simply wind down the business? Do you want a family member or staff member to succeed you?
Starting with the end in mind helps you build not only the type of business you want, but also the business you need to reach your ultimate goals. And that's what it's all about - achieving goals you've set for yourself and your family.
One of the most important roles of a Business Adviser is to help their clients achieve those goals, and this means regularly measuring how you're tracking towards them.
Note you'll often hear me harping on about how important it is to review your business and I think most business-owners realise this and even agree with it (even if they don't always do it), but not a lot of business owners think about valuing their business to determine how they're tracking towards their goals. In fact, most business owners don't consider doing this unless they're about to sell.
If you missed Michael Moschetti's article "Why value your business?" in our latest "4 Ways Bulletin" click here because it may give you some interesting food for thought.
If you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You & Your Business" radio segment on 98.1FM Radio Eastern.
Talk soon,
Caren
Showing posts with label your business. Show all posts
Showing posts with label your business. Show all posts
Wednesday, June 11, 2014
Monday, May 12, 2014
What if you can't sell your business?
As business owners we take significant risks on board, in anticipation that we'll be duly rewarded in the future. One of the traps many business owners fall into is ploughing everything into one asset - their business. But what if something unforeseen happens and your exit strategy doesn't pay off?
Let's consider the worst case scenario whereby you can't sell your business or can only sell it for a significantly reduced price. Let's face it, that's going to be a fairly devastating situation. Not just from a financial point of view, but personally as well.
But time and time again this is exactly what happens - business owners are surprised to find themselves being forced to sell their business for a lot less than expected, unable to find a buyer, winding down a business they hoped to sell, or without appropriate succession. It's a reality we can't afford to ignore.
A serious threat to a lot of industries these days is technology. Consider how technology has and is impacting the following industries:
Video/DVD rentals
Newspapers
Printing
Retail
Engineering
I even read a Michael Pascoe article in The Age recently on how internet-enabled "ride sharing" is threatening the taxi industry.
And it's not just about technology - look at what global competition is doing. We're watching almost entire industries pack up and head overseas!
Ok, the purpose of today's blog is not actually to scare you, but this is an area where no business owner can afford to be complacent. We've invested too much to "hope for the best".
So what can you do? Well you probably can't stop change. And you absolutely don't want to put your head in the sand about it. And you most definitely don't want to end up on some current affairs program saying technology changed and now I have to work until I'm 80...
You need to at least manage some of the risk by diversifying! We all know the cliche - don't put all your eggs in one basket. Well it's a cliche for a reason - it's true. This is one of the fundamental risk management tools for any investment, including your business. You need to have other assets in your portfolio aside from your business - if nothing else it's a plan B.
It's not going to stop the disappointment that I mentioned earlier and you won't necessarily be looking at the same financial position you'd planned for, but it will look a whole lot better than if you'd simply put everything into the business and didn't have assets elsewhere.
So where exactly should you diversify?
This is a question you need to ask us. Our job is to look at your overall financial position, including your business, and identify any risks and how they might be mitigated.
Some typical diversified assets might include:
And a great way to achieve this diversification is through superannuation. Super is an absolute monty when it comes to tax savings and I don't know a single business owner that doesn't like to save some tax.
By contributing some of your business income to super, you can mitigate some of that risk and take pressure off your business to provide everything for you in retirement.
Self Managed Superannuation can be particularly attractive to business owners and I have a theory that's because most of us are control freaks, or what I prefer to call management enthusiasts. So it stands to reason we'd like to be in control of our retirement savings through super as much as we are through our business.
In fact there are 500,000 SMSFs set up in Australia and as far as the money is concerned, we're talking about more than $15 billion. That's billion folks!
Anyway, if this is an area of interest to you, I'm running a Q&A session with Taxation specialist Michael Moschetti and Investment specialist Michael Crowe, about Self Managed Super.
It will be PACKED with education information, including:
By the way, I read an article in The Age over the weekend about how people should be wary of seminars because the people running them are looking to stitch you up before you leave. That absolutely isn't the case at our education sessions and that's probably the reason they're so popular. Of course we hope you like what we do and will choose us to help you make sensible financial choices, but there is no hard sell, it's an education session open to everyone in the community.
Ok, so the people I deal with in my work as a business adviser and financial adviser are busy and don't have time to waste, so I have to keep my advice simple and practical. And at the end of the day, it doesn't really get more practical than being prepared - and I didn't even have to go to Scouts to learn that. If you haven't diversified your assets away from just your business, then it's time to do something about that and frankly you should do it fairly urgently.
Of course, we're here to help!
If you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You & Your Business" radio segment on 98.1FM Radio Eastern.
Talk soon,
Caren
Let's consider the worst case scenario whereby you can't sell your business or can only sell it for a significantly reduced price. Let's face it, that's going to be a fairly devastating situation. Not just from a financial point of view, but personally as well.
But time and time again this is exactly what happens - business owners are surprised to find themselves being forced to sell their business for a lot less than expected, unable to find a buyer, winding down a business they hoped to sell, or without appropriate succession. It's a reality we can't afford to ignore.
A serious threat to a lot of industries these days is technology. Consider how technology has and is impacting the following industries:
Video/DVD rentals
Newspapers
Printing
Retail
Engineering
I even read a Michael Pascoe article in The Age recently on how internet-enabled "ride sharing" is threatening the taxi industry.
And it's not just about technology - look at what global competition is doing. We're watching almost entire industries pack up and head overseas!
Ok, the purpose of today's blog is not actually to scare you, but this is an area where no business owner can afford to be complacent. We've invested too much to "hope for the best".
So what can you do? Well you probably can't stop change. And you absolutely don't want to put your head in the sand about it. And you most definitely don't want to end up on some current affairs program saying technology changed and now I have to work until I'm 80...
You need to at least manage some of the risk by diversifying! We all know the cliche - don't put all your eggs in one basket. Well it's a cliche for a reason - it's true. This is one of the fundamental risk management tools for any investment, including your business. You need to have other assets in your portfolio aside from your business - if nothing else it's a plan B.
It's not going to stop the disappointment that I mentioned earlier and you won't necessarily be looking at the same financial position you'd planned for, but it will look a whole lot better than if you'd simply put everything into the business and didn't have assets elsewhere.
So where exactly should you diversify?
This is a question you need to ask us. Our job is to look at your overall financial position, including your business, and identify any risks and how they might be mitigated.
Some typical diversified assets might include:
- Property - residential, commercial, business, retail, holiday let etc
- Shares
- Managed Funds
- Cash
- Term Deposits
And a great way to achieve this diversification is through superannuation. Super is an absolute monty when it comes to tax savings and I don't know a single business owner that doesn't like to save some tax.
By contributing some of your business income to super, you can mitigate some of that risk and take pressure off your business to provide everything for you in retirement.
Self Managed Superannuation can be particularly attractive to business owners and I have a theory that's because most of us are control freaks, or what I prefer to call management enthusiasts. So it stands to reason we'd like to be in control of our retirement savings through super as much as we are through our business.
In fact there are 500,000 SMSFs set up in Australia and as far as the money is concerned, we're talking about more than $15 billion. That's billion folks!
Anyway, if this is an area of interest to you, I'm running a Q&A session with Taxation specialist Michael Moschetti and Investment specialist Michael Crowe, about Self Managed Super.
It will be PACKED with education information, including:
- Why Australians have invested more than $15 billion via Self Managed Super;
- How Self Managed Super differs from standard super;
- What's involved in running a fund;
- How much it costs to manage a fund;
- Keeping up with the rules and changes;
- How to make decisions and where to go for advice.
By the way, I read an article in The Age over the weekend about how people should be wary of seminars because the people running them are looking to stitch you up before you leave. That absolutely isn't the case at our education sessions and that's probably the reason they're so popular. Of course we hope you like what we do and will choose us to help you make sensible financial choices, but there is no hard sell, it's an education session open to everyone in the community.
Ok, so the people I deal with in my work as a business adviser and financial adviser are busy and don't have time to waste, so I have to keep my advice simple and practical. And at the end of the day, it doesn't really get more practical than being prepared - and I didn't even have to go to Scouts to learn that. If you haven't diversified your assets away from just your business, then it's time to do something about that and frankly you should do it fairly urgently.
Of course, we're here to help!
If you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You & Your Business" radio segment on 98.1FM Radio Eastern.
Talk soon,
Caren
PS. Please don't keep me a secret. If you know someone who’d
enjoy this or find it useful, pass it on!
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