What Seminar Attendees Always Want to Know
In my monthly seminars that I have been giving for over 15 years the attendees always want me to address “What’s a good business to go into?” and I on the other hand want to address another equally important question. That question being, “Should I start or buy a business?” I have addressed the first question in detail in my article of the same name. I am addressing the second question here.
I have been a business broker since 1992 and based on looking at the thousands of businesses for sale, and their asking prices, I was always a believer that buying a business was the smarter action, then starting an action. The reason was that most business buyers are manager oriented not Entrepreneurs. To understand my response requires a closer look at my statement. Let’s look at the differences between these two categories. It is important for you as a business owner or business buyer to understand where you are going to be the happiest. Live is a journey. There is the end goal, but more important is the path you take and the obstacles you overcome. Lets talk about the starting obstacle. “Do you spend your cash to buy a business with operations in place, or spend your money on marketing and starting from scratch?”
First let’s look at Entrepreneurs. Entrepreneur’s do not like to follow the well warn path, developed by others. They want to create their dream from scratch, but they are also happy doing a turn around. In my business buying seminar I ask the question, “What kind of person usually buys or should buy a franchise?”
To answer that we must look at what the franchise does for you. They have training and instructional manuals for every step of the business. They give you the menu and the prices. The do bulk advertising. They design the location and hire the contractors. There is no room for creativity with a franchise, but this approach also reduces risk. The franchise buyer is risk adverse. This buyer is willing to take the path taken by every other franchisee of this chain. What kind of individual is this, that wants the risks lowered and is happy to follow the path laid out for them? This person is the engineer. Engineers love franchises. They love training manuals and “How to do manuals.” Engineers develop systems, that is what they do.” That’s how they put a man on the moon.
Given that engineers want everything laid out and organized what kind of person does not want everything pre-organized, for him? What kind of person wants to figure out the whole plan with every detail step along the way? This is the entrepreneur. When an entrepreneur own a restaurant, they want to create some of their own dishes. They want to pick out the decorations and design the location. They want to create the promotional material and write the ads. If they were in Glendale, which has a large Armenian community, they would absolutely want Humus on the menu. A franchise would not allow that alteration of the menu, even with such a strong ethnic consideration.
After an entrepreneur runs a new business for a while, he starts dreaming again. How can I open another location, or expand into a franchise with 25 locations? This entrepreneur is off and running in a new direction. In order to go into that new direction, but first, he must turn the daily operation over to a manager to continue to keep the creation going. Let’s look at some billionaire entrepreneurs.
First let’s look at Tesla. Automated cars that will change the face of Ubers and Yellow Cabs. Pizza delivered by a man less automobile. They are now selling electric trucks that will cut down the consumption of gas. This will lower transportation costs and even more important lower the US demand for fossil fuels and then change the political makeup of the world. The middle East will not control the world money supply, because their oil income will crash. Next let’s look further at the same famous entrepreneur. He has just sent up the first private flight to a space station, using experienced astronauts.
Top notch managers are experts at handling people and like doing the same work week after week. This is consistency and it gives a manager a sense of competency. They do not mind following the path laid out by others. In fact, they love it. They spend their time and energy making the operation more and more efficient. They automate, they train staff, they negotiate to get better prices and they watch the weekly production reports for changes.
In summary, you can see that the mentality of each type is much different. One wants to go where no one has ever gone before and the other one wants to keep the show on the road. Which are you? Figure this out before you take your next step.
In my most recent seminar to business buyers, the question asked once again was, “What kind of business is a good business to go into?” My answer was “Any business that is making money today and will still be in business making a profit in 20 years.”
