Buying A Small Business Vs Climbing The Corporate Ladder

Should you even consider buying a small business? Nope, never thought about it? Well, you should seriously give this a thought. But, do I honestly think that buying a small business is an easy way to make money as my blog implies?

Many brilliant young people aspire to climb to the highest rung of the corporate hierarchy. Some fought hard and made it to the C Suite but there are others who are not so fortunate. Instead of waiting for that opportunity, why not create that position yourself? Not starting from ground zero, but by buying an ongoing business.

1. Good Business Without A Successor
There are a lot of opportunities if you search hard enough. There are many good entrepreneurs who chose to keep their businesses small. In my own experience, there are a few observable traits in this kind of entities. For one, they are in a niche and usually quite well known in the community. In 2008, when I took charge of a medium sized bakery, we had an ingredient supplier who supplied to us various kind of colloidal gums. The owner was a lady in her late 60s.

She did not have a successor to take over her small trading company. She managed a small team of operators. Having sold off the retail asset and maintained a number of profitable customers, she offered us the opportunity to buy over her business. We inspected her financials and found them to be in order except for a few questionable receivables. To me, everything looked great. But our headquarter’s CFO decided that it would be better for us to start a similar business from scratch…(many young corporate punks thinks too highly of themselves in starting everything from the ground up!).

I know of another smallholder of a picture frame maker. The owner runs the business with her husband. She takes care of retail that offers services like framing and acts as a gallery for artworks that she brings in from neighboring countries. Her spouse takes care of the workshop that produces the frames. The owner voiced her interest in selling the business to me once. However, I have yet to identify a suitable partner to run a small business with me. The couple’s children are reluctant to take over the business at this point in time.

2. Small Businesses Are Stable
Running a small business is easier than running a multi-million dollar company. They are stable and unexciting. There is something about a well-run small business.

A small business does not mean that it is low in revenue and profit. Due to their unusually lean business model, these companies have a high business margin. And if you are fortunate enough to come across rare gems that deal with essential niche materials (although you need specialized skills to deal with these “gem”), by all means, grab them!

If you value your time with your family, buying a small business fits this requirement perfectly. Growth is more often than not organic. Unless you perform some of those “magic tricks” you learned from the MBA, you seldom get to see any major upheaval in your business life. Customers are reluctant to switch away from their services due to sentimental reasons and to personalized service rendered.

3. Your Small Business is Private
Many public listed companies will die for the opportunity to deny public scrutiny on their books and business model. God blesses me an opportunity to run a subsidiary of a public listed company from 2014 to 2016. As the head of the company, you need to document your action plan with a supporting budget 6 months before the coming financial year. I have little choice but to focus 50 % of the time into planning and documentation. The rest was broken down for operation, engineering, coaching, etc.

In His Grace, He leads me into another business adventure in 2016. This time, His provision came in the form of a small business. A business vendor of my former company offered me to run his business as a proprietor in another my home state. Believe it or not, we seal the whole business arrangement through the word of mouth. (Friends advised me to make a proper contract. But to me, if God has brought me into this journey, then I don’t need any human contract to see His Glory for me.)

The thing about privately run business, you don’t need to divulge your business plan to anyone. You keep the revenue and the profits all to yourself. Your sales manager doesn’t need to know how much you are making despite you paying him $ 100,000 per year. Although, if he sees your Profit and Loss as a public listed company, he might want to set up another company to run as your competitor.

4. You Boss Yourself From Now On
No need to punch card anymore. The HR can’t issue you a warning letter for coming in late. If it’s your wife who is holding the HR position, she could do some damage to you but…

When you decided to run your very own small business, you are the system. Everything that runs in the little shop of yours now orbits around you. You decide which department get the most attention today. You might want to do prospecting in the morning, call a few customers in the afternoon and do dinner with a big client in the evening. Or you might just decide to sleep in tomorrow because you want to save on fuel.

You see, there are people who are not suitable to run their own business. These folks prefer to follow (or even unfollow sometimes). In fact, you will see certain communities that lack the slightest discipline to report to work punctually. Therefore, if you are one of those who can keep a strict regime like picking and following up on a job, owning a business might be your cup of tea.

5. You Get to Stretch Time Like Neo
I love my business. Sometimes, I get to rest for the whole week. On the other hand, I could be working 2 weeks straight without any break in between if my clients needed me.

I recalled a business owner complaining to me about her staffs, “If I can work on weekends, they should also work on weekends”. To say the least, I did not empathize with this boss. No business owner can ever expect his or her employees to be as committed as herself. When you choose the entrepreneur road, you allow your personal life to mix with your work. An employee carries the right to separate them but not us.

You became Neo in Matrix that gets the privilege to travel between the dimensions of work and rest. I remember the stark difference when my wife invited me for a date before and after I own a small business. Before I became an entrepreneur, I looked forward to the date. I hated my boss when he wanted me to work at my family time. Now, if my client needed my service I will just tell my wife ” Honey, follow me. We head for coffee after I deliver these!”

6. There IS No More Sales Target
This is my view. I think KPI or Key Performance Index is an insult to human beings. When I was the General Manager, the board sat down with me to discuss the company’s sales target and other KPIs like efficiency matrix, etc. In return, I would grill these figures (with a few figures I calculated) into the mind of my managers. If they didn’t meet the targets, …..

As a small business owner, things are different. Really different. I run my company as a smart human being. In fact, I wish I could run my last companies as I do now. I will never sell my products cheap just to make up the numbers. I dare to interchange my portfolio of products according to the needs of my customers, not by the cheapest item or by the easiest to sell. When you sell by adding value to your clients, you get to sell at the best value for the customers and yourself. Nobody feels shortchanged.

7. You Are Still An Entrepreneur but with Higher Success Rate
Who said you ain’t an entrepreneur when you buy a small business. You still create values according to needs, albeit at a higher ground. You need not worry about the problems faced by new startups like those nightmarish uncertainties.

Buying a good business entity allows you to take a bigger risk because of the cash flow availability. Manage the existing staff with respect and avoid making any drastic changes to the status quo. With the support of your existing team, take baby steps in organic improvement when you understand the business well enough.

God bless us!

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