The ‘when?’ of business ownership

Owning a small business is no easy task. Starting a business from scratch, however, requires a mental deficiency or youth. My own excuse decades ago was youth.

There are advantages to being young. Young adults usually bring with them optimism, energy, and the ability to live on a relatively small budget. Two of those attributes can be disadvantages for business startups, but the ability to live on a small budget is always an advantage to any business owner.

You have to be an optimist to start or buy a business, a believer. Not a believer in a religious context, but a business owner and entrepreneur without a mental deficiency has to be convicted that his ideas are good, better than what is available in the marketplace and that his ideas will be valued by the market over his competitors’ offerings. A rude awakening for many new business owners occurs when the market fails to see the “true” value of their service or product offering as quickly as they expected, if at all. For a business owner, optimism is a necessity, but it is best paired with caution.

A young business person has energy and the ability to behave like the Energizer bunny. This energy allows them to work hard, sleep less, stay out late with their colleagues and friends on a work night, and to even create and raise babies, i.e., to have a “balanced lifestyle.” But a person in their fifties can see what a person in their twenties can’t. Youthful energy allows you to go further up the wrong road, sometimes too far. There is much more required to succeed in business than energy.

The advantage that most young business people bring to a new business, that ability to live with a smaller budget, that ability is an advantage for any business owner at any age. Growing companies need capital to finance growth and a business owner willing to leave the company’s profit in their business will generally grow faster.

In our culture starting or buying a business in our youth makes sense. It appeals to our sense of logic. When you’re young “you have your whole future in front of you.” If you “screw up there is plenty of time for you to start over.” It is just as logical for the 50-and-over crowd to think thoughts like, “I’ve worked too long and hard for what I have to risk taking on a business venture at this point in life, although if I could do it over again…” Or, “I can’t believe those idiots can’t see that it would work better if they [fill in the blank]. I could show them how to make a lot of money.”

I find it intriguing that the time in life a person is best equipped to own a business and operate it successfully is the same point in life when they allow fear of failure, social pressures, or their lack of youth to prevent them from engaging in life and creating and building something they would love to do.

There are definite advantages to starting or buying a business later in a person’s life rather than in a person’s youth: they are battle tested, their children are more likely to be self-sustaining, their spouse is generally more patient and understanding, and they have a savings account balance and much less consumer debt. But the greatest advantage, one that a young person can’t fully understand, the older entrepreneur has experiences that have developed his understanding of life and of commerce creating within him a higher skill level to make better decisions.

Over the next decade, as the first of the baby boomers begin to move on to other realms, an increasing number of businesses will either sell or close. For those businesses available for sale, the majority will be selling in a buyer’s market. What does that mean for an individual on the back side of mid-life who prefers significance and accomplishment to wasting time while observing their declining age?

For a person who doesn’t own a business, there is still time to start or buy a business where you can generate and implement your ideas and build a business that is significant, both for what it provides the market economy and in monetary value that adds to your present estate. Owning a business is possible without becoming its slave and forfeiting all freedom of time and movement. Buying the right established business with the right people in place will most likely be the best option to get into business, if it is an available option.

If you own a business that you will want or need to sell in the next 10 to 15 years, you need to make sure you are building your business with good people and documented systems and processes. Make sure your business is an asset and not just a job you own. Buyers are risk averse and their aversion can be measured by the amount they are willing to offer to buy a business. In the coming buyer’s market, it is likely many businesses for sale will go unsold because the owner failed to focus on building a business while other businesses did.

Whether you are a 20-something or a 50-something or a 60 something, business ownership is still the one of the best ways to have a significant life and add substantial wealth to your family estate.