NOTICE TO READER
The information in this article is a brief summary for informational purposes only and is only applicable in the Province of Ontario. It is not meant to be legal advice. If you require information or advice about buying or selling a business as it relates to your individual circumstances you are advised to consult with the Law Office of Peter Cusimano or speak to your own lawyer.
Are You an Entrepreneur?
by: Peter A. Cusimano, B.Sc., LL.B.; Toronto Business Lawyer
The success of a business depends on the personality of the entrepreneur. Ask yourself the following questions as a personal assessment to determine whether you have the character traits required to run a successful business:
- Do you have the people skills?
A successful business owner knows how to deal with customer complaints, suppliers, and employees. You must deal with each group of people differently.
- Are you physically and mentally capable of running a business?
It is important to have the right beliefs and attitude to run the business. It is a myth that a boss takes Wednesday afternoons off to play golf. Most business owners work long hours well beyond the typical 9-5 hours of most employees.
- Do you know how to negotiate?
All successful business people are very good negotiators. If you don't know how to negotiate, then buy a book or take a course on how to negotiate.
- What are your views about money?
Money must be one priority of your business because without money, your business will certainly fail. You must know how to read a balance sheet, income statement, and production reports. You must keep track of your accounts receivable and your accounts payable. Although money is a priority, it cannot be your only priority.
- Are you patient and persistent?
Most businesses (whether new or purchased) take a while before a reasonable return on investment will be realized. It is important to set conservative, realistic goals. It will take you at least 18-months before you know whether or not you will make it. And then it will take you at least another 3 to 5 years before you can call yourself a success.
- Are You a Risk Taker?
Entrepreneurs are willing to take moderate to great risks. If you are afraid to try for fear of failure then you most certainly will fail. There is no guarantee of success for any business. Successful business owners are able to make informed business decisions without necessarily knowing all the facts of a particular situation. The key is to manage the risks by preparing alternative options and by asking "what if" questions.
- Are you open to new ideas?
It is important to be flexible in your approach and be willing to learn new ideas and methods. Failure to adjust to the market place will result in failure. For example, no one would trust an accountant who does not have a calculator but still insists on using a slide-rule. Similarly manufacturers of mechanical-cash registers no longer exist. When the automobile was first introduced, the makers of buggy/wagons claimed the automobile was only a passing fashion. Many people today try to avoid computers at all cost. Basically, those who fail to adapt will simply fail. You should regularly visit your local bookstore and examine every book in the business section.
- Do You Know Your Limits?
You should know when to seek professional assistance. Do not try to be your own accountant or lawyer.
- Can you learn from failure?
No matter how great your ideas are, you will quickly learn from the marketplace that some of your approaches and ideas do not work. You should be willing to see what's not working and be willing to change your approach.
- Do You Know How to Deal with Ambiguity?
There is a constant pressure of uncertainty in running a business. You should speak with other business owners and find out how they are able to succeed no matter what challenges are facing them.
- Do You Have a Power of Attorney?
You should have a power of attorney for personal property in place to allow someone else to manage your business in case something should happen to you and you are incapable of making decisions.
- Do You Keep Proper Written Records?
Do you know how to protect yourself and your business? Do you know how to keep proper paper-trails of your business? Do not think that all the paperwork is a waste of time. You should properly record all business transactions and work orders, and keep track of all correspondence, telephone calls, and facsimile transmissions. Here are a few examples to illustrate why you need a paper-trail:
The tax department decides to audit your business because they think you haven't been remitting enough G.S.T. and shows up one day asking to see all invoices. You couldn't be bothered to properly record the transactions. Not only will you end up having to pay tax that you don't owe, but you will have to pay fines and interest.
You supply product or service to a customer but there is nothing in writing. If they refuse to pay, then do not be surprised if there is nothing you can do.
You provide a service to renovate someone's house. Later the customer comes to you claiming that you damaged an expensive rare heirloom or you installed damaged goods. It is your word against theirs. Where possible you should take a photograph or have your customer sign an inspection report confirming an inspection was conducted and that everything is satisfactory.
You never bother getting a receipt from your supplier or you are sloppy in keeping track of everything. They deliver the product, you pay them. One day when your supplier is in financial trouble, you get a rude awakening when you discover that he/she sues you for non-payment of some of the product that they delivered. Even worse, it is going to cost you big-dollars to defend yourself and even though you may be 100% correct, you could easily lose at court and end up having to pay the other side's legal costs!
The successful entrepreneur is always carefully examining what works for their business and what doesn't. The entrepreneur is always looking for new ways to improve their business operation.
There are many books in the business sections of most bookstores that deal specifically with being a successful entrepreneur and are worthwhile examining.
- Buying or Selling A Business In Ontario, Canada
- Are You an Entrepreneur?
- Various Professionals to Assist You in the Purchase and Sale of a Business
- Frequently Asked Questions when Purchasing a Dental Practice
Revised: November 11, 2015.
©Peter Cusimano, 1995-2018. (www.cusimano.com)