Venture & Risk Assessment

Blog 2. Venture and Risk Assessment

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​Ok, you and your spouse have discussed the key issues of making the leap from unemployment, for whatever the reason, to starting a new business; be it a ground floor vision or a franchise purchase.
 
Now you are about to enter a confusing and often complicated world of “Due-Diligence,” exploring start up ideas or buying into an existing business and not necessarily a franchise; perhaps a partnership in an existing business?
 
You are there, feeling pretty good about taking CONTROL of your life, determining your own DESTINY. Now what?
 
HELP: Please take my advice and seek experienced counsel at this stage or your information gathering will over-whelm you to the point you may be making wrong decisions with information much like the metaphor “Can’t see the forest through the trees.”
 
STOP! Start interviewing Business Consultants to help you through the “Forest” and take your time in the selection process and hire the right Consultant or you will soon double your problems not cure them; nevertheless, a good place to start is selecting a firm or individual with plenty of BATTLEFIELD EXPERIENCE.
 
Question: Who would you rather take orders from in a real battle to engage the enemy; a West Point graduate, who never experienced a BATTLE or a Sargent, who has the BATTLE SCARS from real COMBAT that proves is survival skills and understanding of the situation?
 
Answer: The Sargent!
 
Analogy: The Sargent has been there and can “Walk the Walk and Talk the Talk” the West Point graduate is a novice with no actual combat experience and I will take experience over theory any day of the week.
 
In keeping with the “Battlefield” example, I am also amazed at how many entrepreneurs start a business before they are ready or qualified, either by training or self- evaluation like taking a personality inventory test to see if they have the RIGHT STUFF.
 
My advice to those aspiring entrepreneurs is to take a good long hard look at themselves, even taking the TEST in Chapter two of my book “Entrepreneurial Decision Making” available on our website (www.mitchelletteandassociates.com) first to make the above assessment; then start a CHECK LIST consisting of:

• Have I discussed my entrepreneurial ambitions with my spouse and what are the results?
• What available capital, if any, do I have to invest in my venture?
• Who would be an acceptable lender to my venture; such as, family, friends, banks, other?
• What would my timeline be to start and/or kill my venture idea?
• Who would be, if any, my partner or associate?
• Have I done my due-diligence on the business/industry I intend to start or buy into?
• What legal structure should I consider (DBA, LLC, S-Corp. C-Corp)
• Who do I want to be an officer in my company?
• Where will I locate my business (geography, house, building rent/lease/buy)?
• Have I put together a budget including financial projections (Balance Sheet, P & L Cash flow etc)
• Should I test market my venture/product/service “Proof of Concept?”
• When do I prepare a Business Plan and who should do it?
• Should I hire a professional to prepare my Business Plan

 
The more inner-perspective you can be about yourself, the better prepared you will be. The time and money you spend to prevent a sometimes irrevocable mistake the better the chance of success or you may face years of HELL trying to extricate yourself from the horror of going into a business that fails without proper preparation including but not limited to:

• The loss of any pledged collateral; such as, your home, cars, jewelry, investment instruments and very important, and usually the case, is the loss of your SPOUSE (I have seen this situation so often).
• A tainted history of poor credit and inability to re-borrow
• Personal bankruptcy

 
Note: There are few humankind-mind blowing disasters as watching the Sheriff armed with a “Writ of Replevin” march up to your business and home to remove all assets of each and every kind, stripping you of any honor or possessions you ever had or have and may have! 
 
Think about the following before you JUMP
 

• How do I structure my new business?
• Where can I find initial start-up capital?
• How do I negotiate the best terms without pledging personal collateral (unsecured loans) and where do I go to accomplish this task?
• How do I deal with initial funding? 
• What is the best approach in negotiating with an equity partner?
• What financial vehicles are available to me?
• How can I blend Synergy Partnerships into my business in lieu of cash?
• Other business opportunities?

 
 
I have a client, who is practicing what I have been recommending in the above title as she wants to open up an eyelash treatment salon and here are her options:

1. Buy a Franchise
2. Buy a Business
3. Partner in an existing business
4. Start a new business

 
We still have not decided which option would be the best for her and are searching for the right choice through extensive due-diligence.

​Good Luck!!