In Australia over 97% businesses are small to medium businesses. Roughly half go out of business in the first five years!
There is little reason to expect the world wide trends to be any different.
Its easy to start a business. All it takes is an idea, something to annoy you in your existing job, a market downturn, a moment of entrepreneurial valour, a touch of envy when you see someone making a killing at something.
Why dont most businesses make it?
One reason is that business owners lose sight of the importance of working ON your business and not in it.
Working on your business, means just that, spending time working on developing your staff, systems, business plan, budget, products, doing your own accounts, sorting out legal issues, vision casting, developing a marketing plan, and so on. It is strengthening the foundation upon which your business will sit.
Working in your business means doing work for your clients that generates income. It means attending to short term and urgent matters.
Its easy to talk about working on your business rather than in it. A lot easier than actually doing it!
Imagine you start a business as a lawyer, and you have experience. Since you know what you are doing, you can service clients and provide excellent services without much thought. Now imagine you are so busy you need to hire your first employee – a junior since that’s all you can afford. How do you ensure that the work they provide to your clients is up to your standard? What systems and procedures for work have you implemented? What about review procedures? It is at this point that many business owners, have an entrepreneurial seizure. They decide that every employee is an idiot, that they are the only person who knows how to do anything, and many decide to get small again, to have no more staff than required, and to do it all themselves.
That my friends, is what you call a job, and is very different from what I would call a business. After all, the risk of starting your own business is that you might find yourself working for an even bigger idiot than the one you thought you were working for before! and this time your stuck together!
When starting a business you should be honest with yourself about whether you are starting a business or simply starting a job where you are self employed but have no intention of building an organisation that will service customers and generate income primarily through employees and a system of doing business that you oversee.
The fact is that the fruits of business for people who have a self employed job are small. You will most likely find someone out there who also wants to buy a job if you want to sell, but the second you stop working you stop earning, and rather than increasing your freedom, you will probably end up increasing your working hours.
The fruits for people who build a successful business are abundant.
1) Selling the business
If you can build a business that profitably employs a number of people, you will most likely be able to fetch a very attractive sale price for the business.
At the moment in Australia, if you meet certain criteria, you can potentially sell your business and receive 75% of the sale amount tax free.
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