Do you really have a business?

What shall I do?

Leaving jobs

I see many small business owners during the course of a year. Some are ongoing clients and others need advice but not a continuing service.

In the current economic climate there are many people who have been made redundant. Some have received quite substantial redundancy payments in recognition of long service, or they have been able to draw down a considerable amount of cash from their pension pots. Many recognise they will not be able to get another job if they are over 45, or at least they will not get another job they will feel comfortable taking.

Fields of dreams

So many of us, and I include myself, have had dreams of running our own business. We may have some cash from our former employer. Now must be the time to start a business, surely, if we have just finished employment? Even with a recession, there must be an opportunity to realise those dreams?

Often there is a niche if we can just find it. Perhaps it is something which has not been done before. It may be something which can be done from home, such as drop-shipping in a particular specialised product. Such a business is capable of expanding considerably to the extent that it may need premises, but the business will not be limited by the premises themselves. If we have the knowledge and skill, we can make a lot of money.

Confined spaces

However, some businesses are limited by the premises; that is the shop or retail outlets they have. In particular, catering businesses have particular challenges. If a café is in a busy thoroughfare, the rent is likely to be high and the competition fairly fierce.

I was once consulted by the owners of a sit-down diner in a seaside town, but with many other cafés in the immediate area. There were very obvious problems:

  • The rent was considerable because of the location and the size of the unit.
  • The heating bills in the winter were large because of the size; they were on two floors.
  • They were not getting in enough people because of the competition and because they were not better or different from the others.
  • They had to employ a number of staff because of the requirements to wait on tables.

The café was losing money fast and their current model couldn’t survive. The solution I offered was to sub-let their first floor as an office for which there was already planning permission in place, and to get rid of most of the tables and (unfortunately) their waiting staff. They needed to run as a fast food and sandwich bar for the many people walking past. There was only one potential competitor doing that.

Train wreck

Sadly the café proprietors ran out of money before they could follow my recommendations and they went out of business. They lost their life savings. It need not have been that way if they had thought in advance about their business model. They didn’t need a sophisticated plan. All they had to do was to add up their outgoings and do some research as to what sort of café would have been most lucrative with a higher margin. In busy business and seaside streets that is generally sandwich bars and hot food takeaways. At the seaside you can combine the two if you do it right.

Planning is everything, isn’t it?

Photo credit: seq Jehane

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Redundancy at 50 or even 45 – Part 1


Goodbye to all that?

Hard times

There was a story published recently in the Daily Mail about an unemployed accountant who has fallen on hard times. He seems to have lost his employment in his late forties. That is an all too familiar story. It has happened to lots of people in the professions; accountants and lawyers and architects. It has happened to financial services professionals. It has happened to engineers. It has happened to so many skilled workers.

In the Daily Mail story we hear of all those job applications, the financial problems with the income disappearing. The accountant has a professional qualification; a well respected one. The problem for forty-plus applicants seeking a job is that qualifications matter rather less than they did when they were in their twenties.

Recruiters’ insecurity

Every employer is eager to take on newly qualified staff in their twenties. The fact that someone has passed exams is at least an indication that they have some ability to understand how to do the work. It is an indication of potential and of intelligence.

For an older applicant, the employer is more interested in their experience most recently, and generally the sort of work they have been doing, and the level of difficulty of that work. Often someone has become specialised in a particular area, which is no bad thing because niche workers are invaluable if that specialism is a requirement. It is also a difficulty in persuading an employer that someone can adapt to a different role.

The experience of an older job applicant can work against her or him in other ways. Many interviewing business owners of managers may be younger. They may feel uncomfortable at the thought of taking on someone older than themselves. They may worry how an older worker will fit into their team. They may worry that an older worker will know more than they do and embarrass them; “show them up”. So the older job applicant is really up against it in getting new employment.

Cut adrift

Just the same, if someone has been unemployed for a while, they have no recent experience to impress recruiters and that will be a major negative factor for their job prospects. Being seen as being out of the loop is even worse than being seen as a threat to that younger manager.

What would you do in that situation? Should our unemployed 50-year old accountant get on his bike?  I will leave that on until next time.


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Budding entrepreneurs should take care of their redundancy payments

Cheque sample for a fictional bank in the Unit...
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With many firms downsizing there are many people, often in their late forties or into their fifties who find themselves unexpectedly with time on their hands and also a fat cheque as part of their compensation package. Some may have several tens of thousands in their bank accounts.

Few are happy to retire and put their feet up. Spending more time with the family may be a convenient euphemism for politicians who have been kicked out of office, but actually for people with active minds, boredom soon sets in. It is then that there is a danger of being lured into something which may eat some or all of that redundancy payment without any lasting benefit.

There may be an attractive offer for a franchise with “guaranteed income”. There may be an alluring advert in a weekend newspaper offering training as a “consultant”. There may be an offer of high returns from a property business. All should be viewed with perhaps not suspicion, but at least with healthy scepticism.

If you are looking at an opportunity to start a business:

  • Think whether it would suit your skills
  • Consider whether you can meet the demands on your time
  • Ask for references from other people who have gone down that road
  • Check that the income suggested in the blurb is being received by those other people (they may be embarrassed but if they are you have your answer).
  • Consider whether any turnover-based levy from “Head Office” will eliminate any profit unless you work 24/7.
  • Remember that if something seems too good to be true….

You may find just the right thing, but do be very careful and choosy. Keep your money until you are absolutely sure you are doing the right thing. Remember that very plausible scammers roam amongst us. Have you tripped over any?

(C) Jon Stow 2010

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The right business to start up?

People start businesses for different reasons. It might be to fulfill a dream such as running an art shop or an old-fashioned confectioners, or because they have been made redundant and think they are good enough at what they do to have the same type of business on their own.

There should always be certain factors our budding business people should think about. Will there be a demand for their product or service? If they are redundant from a company in which they used a similar skill to that which they will be using in their own business, the market may not be there; that would be why they were made redundant in the first place. In the latter scenario it might not be hopeless in that often larger corporates waste a lot of money which they reflect in higher charges so a small business run efficiently may be able to cut in to their remaining market. It needs thinking about.

Running a small business is hard at times. Small business owners have a lot of responsibility. Unlike in a larger corporate environment there are no safety nets if the owners can’t work I would not want to put people off, but all small business owners need to be able to deal with problems and think on their feet.

So, if we really want to run our own business, maybe we need to turn away from what we did before. Do we have an interest or a hobby we could turn into a business? Are we ex-insurance salespeople who are good at carpentry or kitchen installation? Are we former bank employees who are already into property letting and could become a letting agent? Are we tyre and exhaust fitters who know all about making and selling scale models of railway locomotives, aircraft or boats and could be a full-time EBay dealer?

DC3 Scale model - Photo by O-VMikkel

I have started businesses myself; several of them. I was good at tax and started my own tax consultancy. It took a lot longer to be successful than I had thought it would. I learned to be flexible and start other businesses too, based on my “life skills”, to ease the pain.

Starting a business takes a lot of thinking about and I learned from my mistakes. I hope it can help to learn from my mistakes too rather than have to learn from your own.

© Jon Stow 2010

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