More than half of all executives considering becoming entrepreneurs after being laid off from their last position never pursue the opportunity. Not because the idea was bad, but because they felt overwhelmed by the options available and didn’t have anyone help them through the process.
This article is written to change that. There are three primary ways to become a business owner, and one of them will most likely fit perfectly into your current situation.
Path One: Start from Nothing
Starting a new business from scratch is the way to create your own vision. You will control everything — your brand, your business model, the culture of your organization, how you want to market your products/services, and the people you hire to work with you. If you have an idea, a validated market insight, or a deep understanding of an area you wish to turn into money, then this is the best path for you.
The Upside: The potential for growth is unlimited. Your knowledge becomes ownership. You get to build exactly what you envision.
The Reality Check: Out of the three paths, starting a business from nothing has the highest amount of risk. You should plan on taking longer to become profitable, spending a lot of time developing systems and processes from scratch, and having to find ways to obtain financing without a proven track record. For those of you who have worked at large companies throughout your career, the uncertainty and pace of early-stage businesses can be both exciting and confusing.
This is Good For: Executives with a clear vision, who enjoy taking risks, and who are willing to take a slower road to generating income.
Path Two: Purchase an Existing Business
When you purchase an existing business, you are given an immediate advantage. You have existing revenue streams, a customer base, existing suppliers/vendors, and existing employees in place. Often times, sellers are willing to remain employed during a transition period, allowing them to train you as the new owner and provide you with institutional knowledge that would otherwise take years to develop. Although purchasing an existing business is a great option for executives making a career transition (especially those with operational, financial, or general management experience), it is often overlooked. Since you will be taking over a functioning business, your leadership skills will apply directly — you will be leading an established business, not building one from nothing.
The Upside: You will generate revenue sooner than if you started a business from scratch, you will have a proven business model already in place, and you will enter an established marketplace. Before purchasing an existing business, you will be able to review the company’s past performance before writing a check.
The Reality Check: Performing due diligence is essential. You must examine all financial records carefully, understand the legal aspects of ownership transfers — including items such as customer lists, intellectual property rights, and lease agreements — and understand your responsibilities toward existing employees. Remember that when you buy an existing business, you are purchasing both the decisions made by the previous owner (good and bad) as well as the previous owner’s assets.
This is Good For: Executives who prefer to lead and grow a business rather than create one from nothing, and who possess sufficient capital and analytical capabilities to perform due diligence prior to acquiring a business.
Path Three: Buy a Franchise
Franchise ownership provides a middle ground — you are an independent business owner, but you receive the support and guidance of an established system. You are not creating something brand new; you are operating under an established system within a specific geographic region and set of guidelines. Most franchisees receive training, marketing support, access to supplier networks, and sometimes even financing assistance from their franchisor. This type of structure is particularly attractive to executives who are strong managers but may be entering an industry that they are unfamiliar with.
The Upside: You benefit from built-in brand recognition, lower marketing costs, operational assistance from your franchisor, and a network of other franchisees whom you can contact for advice. The timeframe for going from signing a franchise agreement to opening your doors is generally shorter and less ambiguous than either of the other two alternatives.
The Reality Check: You will have fewer choices and less control. You will operate under the terms dictated by your franchisor — and these terms can vary greatly based upon which franchise you choose. You will continue paying ongoing royalty fees and meeting compliance requirements set forth by your franchisor. If you are an individual who thrives on autonomy and innovation, then franchising may not be the best option for you.
This is Good For: Executives who desire structure and proven systems for generating revenue quickly and who do not mind following a predefined plan.
Deciding Which Path is Right For You
Before you commit to any one option, consider running each option through these three questions:
- How much capital do you have available? – While starting from scratch may require less initial capital than purchasing an existing business or franchise, it will likely require more time. Purchasing an existing business or franchise will likely require substantial cash reserves or access to financing.
- What are your strengths and how do you envision living your life? Be honest with yourself about whether you are a creator, a scaler, or an operator — and which type of leader you naturally gravitate towards.
- What is happening in the economy? Research current economic trends, industry trends, and local competitive environments prior to committing time or money toward any option.
A Final Thought For Executives in Transition
At WiseForce Advisors, we assist senior professionals who are not merely transitioning from one job to another — they are redefining what their professional lives will look like in ten years. Becoming an entrepreneur — regardless of which form it takes — is a viable and often very rewarding alternative to working for another company.
The key is finding the right path for the right person. Regardless of whether you are interested in starting from scratch (a clean slate), acquiring an existing business (momentum), or buying a franchise (structure), the most critical first step is self-awareness: knowing who you are as a leader, what you want to create/build, and how much risk you are truly willing to accept. Developing this self-awareness does not always come easily for individuals who have spent their entire careers working for large organizations.
This is where we come in. Would you like to learn more about pursuing entrepreneurship as your next career move? Contact WiseForce Advisors to begin discussing your possibilities.
Who is WiseForce Advisors?
WFA is pioneering a new standard in peer-to-peer strategic transition advisory for senior executives through bridging the gap between lived executive experience and discreet strategic guidance. The firm’s unique approach is powered by a collective of former C-suite executives who have navigated these complex transitions themselves. WFA is the partner of choice for leaders strategically shaping their next chapter. www.wiseforceadvisors.com
