In the Great Recession, I went from being an employee in banking to being an employer and launching my own business. Upheaval has become the new normal as the pandemic led many to reevaluate their jobs and more. In the Great Resignation, 4 million workers have quit their jobs so far. This could signal a change in thinking, which might lead many to transition to being their own boss.
Currently, I’m working with a 4-person management team who have been together 15-20 years; they know, like, and trust each other. The owners, Baby Boomers, are ready to retire and are looking for an exit. This 4-person team is looking to make the shift from being employees to employers.
Not every employee wants to become an employer. So, what motivates someone to become a business owner?
A survey conducted in 2021 said that 29% of the responders stated that they were ready to be the boss. 17% were satisfied with their previous corporate employment and another 16% were ready to pursue something they were passionate about. No matter what your motivation is in owning your business, it isn’t always easy to transition from being an employee to being a boss.
80% of businesses that start will fail in the first five years. Of those failures, 50% were under-capitalized. So, it takes more money to start than you might think. Your business should solve an unmet need or make people’s lives easier. For more on developing an entrepreneurial mindset, check out the full blog.
If you’re buying an existing business, not starting one from scratch, financial management is where most new owners struggle. You didn’t learn it in school and there’s no on-the-job training when you’re the owner. The knowledge you need is in:
- budgeting (predicting the future with accuracy)
- accounting (making sure all your revenue and expenses are properly categorized)
- cash flow management (making sure you’re collecting money that’s needed to pay purchases and/or operating expenses)
Finally, any owner needs to understand their financial reports like the balance sheet, income statement, and cash flow statement. Some self-teach these and others hire a business coach to help.
Whether you’re buying a business or starting one, your mindset has to shift from being an employee to an employer. You begin thinking about financial decisions that impact the company, how to drive revenue and profit forward, and managing employees, among many other things. So it’s important to consider mindset first, then skill set, before you start your business or buy an existing one.