Small business is big business in the U.S. According to the Small Business Administration (SBA), the 28 million small businesses in the U.S. account for 54 percent of sales, 55 percent of jobs and 66 percent of new jobs.
As we celebrate National Small Business Week (May 1-7), let's recognize the vital role small companies play in our economy. But it's also important to understand that small business ownership isn't for everyone.
If you're a buyer preparing to enter the business-for-sale marketplace, it's time for a reality check: Are you really prepared for everything that is involved with owning and operating a small business?
Must-Have Requirements for Small Business Ownership
At BizBuySell.com, we have been privileged to watch scores of business buyers convert their investments into highly successful companies. Across the board, the most effective owners are self-motivated and dedicated to providing real value to their customers.
But drive and passion only go so far. In today's competitive markets, it takes more than enthusiasm to survive and thrive as a small business owner.
- Organization. Organization and planning go hand in hand with owning a small business. Right out of the gate, you'll need to develop a business plan describing your goals and how you intend to achieve them. If you're not a very organized person, you may struggle to adapt to a vocation that demands multiple layers of organization on a daily basis.
- Funding. Funding can be a significant obstacle to small business ownership. The surest way to fail as a small business owner is undercapitalization - launching or acquiring a company without enough resources to execute a growth strategy. So as a buyer, it's critical to make sure you have adequate reserves in place before you pull the trigger on a small business acquisition.
- Family Buy-In. First-time owners are often surprised to discover how much small business ownership impacts their families. The amount of time it takes to build a successful company can be overwhelming, especially during the early years of ownership. To avoid damaging personal relationships, you'll need to have a heart-to-heart conversation with family members and make sure they're onboard with your decision before you commit to an ownership scenario.
- Sales and Marketing Focus. You're fooling yourself if you think you can completely outsource sales and marketing activities to employees or third-party vendors. As a business owner, sales and marketing responsibilities come with the territory. You don't have to be a professional salesperson to succeed, but you should be prepared to serve as the face of the company in sales cycles and marketing events.
- Industry Exposure. The small business sector is filled with many different kinds of companies. But experience in one industry won't necessarily prepare you for success in another. To grow your new company, you'll need industry exposure. If you don't have firsthand experience in the industry, plan on stacking your team with seasoned industry veterans.
- Leadership Experience. Great leaders aren't born great. Over time, they develop the skills to motivate, direct and develop groups of people to achieve common goals. As a small business owner, you will use leadership skills every single day - and it helps if you have leadership experience under your belt before you take the helm.
- Decision-Making Skills. Decision making can be one of the most challenging parts of being a small business owner. At the end of the day, responsibility for the big decisions will fall on your shoulders, so it's important to consider the processes you will use to make business decisions as you begin to explore opportunities in the business-for-sale marketplace.
It's a great time to own a small business and the right opportunity can be the gateway to an exciting new career path. But like any new venture, it's important to look before you leap. By understanding what it takes to actually own and operate a small business now, you can increase the odds of success later - when you're the one sitting in the driver's seat.