Are you in the right business? print Print

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It’s hard to be successful at business if you don’t like what you’re doing. If things are not going the way you imagined or would like them to go, it’s possible that you are in the wrong business. This guide will help you decide if you really are in the right business and if not, what steps you can take.

Some basic questions

Start by asking yourself these questions:

  • Do you enjoy your work? Do you look forward to getting to the office every day or is the passion gone?
  • Can you do your work excellently?
  • Are you making a reasonable living?
  • Is your business going anywhere, or is it stagnating or declining?
  • Does your business reflect your core values?
  • Is there a reasonable balance in your life?
  • Are the stress levels acceptable in terms of your own health and the effects on your family life?
  • What level of risk are you comfortable with?
  • What levels of debt are you comfortable with? Can the business generate enough to clear or reduce this debt?

 

A quick self-assessment test

Now try this quick test to identify your business preferences:

  • What's your education level and job experience?
  • What can you do well (your skills)?
  • What do you enjoy doing? (Your talents might be different from your skills.)
  • What do you do in your spare time? (Your hobbies and activities often give a clue to your real interests).

Now consider this profile against your present business and ask yourself if your business really suits you.

 

Warning symptoms

Can you identify with any of these warning signs that you might be in the wrong business?

  • A feeling you're 'in over your head' or lacking all the skills to run the business.
  • Sleeplessness and constant worry about money owed to you or payments due.
  • High stress levels affecting your health.
  • Family and relationship problems becoming more apparent.
  • Being told your personality is changing - perhaps revealing shortness of temper or intolerance.
  • Loss of motivation and pleasure in the business. Feeling 'burnt out' and reluctant to face the day when you wake up in the morning.
  • Your business is in decline or barely limping along.
  • Your debt burden is increasing.
  • You feel isolated and constantly under pressure, and doing too much yourself.

        

A checklist of undesirable business situations

Businesses with high stress levels

Some businesses are far more stressful than others. For example, businesses with a high level of responsibility can be stressful, as can businesses with tight schedules and deadlines. Businesses that extend a lot of credit to other businesses are far more stressful than cash-only type businesses. Businesses than take you away from your family for lengthy periods can also cause stress and depression.

In the end, you only have one life and one chance to lose your health. You must ask yourself whether the (possibly irreversible) damage that a high-stress business can do to your health and relationships is really worth risking.


Unsuitable businesses

The business you are in, or are contemplating entering, might simply be unsuitable. For example, courier type businesses are best left to the young and fit. Other businesses such as the building trade or carpet laying that require significant physical exertion also fall into this category.


Lack of experience

If you have bought a business, or are thinking about buying a business in a certain industry, and have no experience in that industry, the results could be unsatisfactory. In the worst case the business could deteriorate sharply through such inexperience. In theory, you could employ someone to cover for your lack of skills, but in practice a business does not always produce enough revenue to pay for this.


Case study 1

George bought a restaurant mainly because he liked food and liked the idea of owning his own restaurant. He had no experience in the hospitality industry however, or knowledge of its complexities. He soon realised it took a lot of experience to buy the right food in the right quantities at the right time and that a good part of a restaurant's goodwill (in the form of its customers) can walk out the door with the former chef. He also had little idea of health and safety regulations or of the profit margins needed to make the business a success. Trade and profits deteriorated rapidly.


Marginal businesses

Sometimes the business just isn't capable of providing a reasonable living. Many of the 'business opportunities' created by large corporate downsizing and outsourcing work are really jobs in disguise - with the risks and downside passed on to the new owner. These 'opportunities' can be structured in such a way as to make a really profitable business unlikely.


Case study 2

Simon was offered the opportunity to buy a driver-operator cartage business. At first glance, the opportunity seemed to have merit. The truck looked tidy with its smart signage, there was a fixed cartage contract with a large business, and the net income for the previous year was $35,000, which was $4,000 more than Simon was earning in his job. However, Simon's accountant pointed out that the business required Simon to work far longer hours (including weekends) than his existing job, taking him away from his family. In addition, the truck was nearly 20 years old. It could not last forever, and Simon would have to put money aside for a replacement. In the meantime any mechanical failure or major maintenance would wipe out the small difference between his present salary and the net income of the business. In sum, the supposed opportunity meant far more work and stress for potentially little more, or possibly far less, than Simon's present income.

        

Undercapitalised businesses

Many businesses are undercapitalised to some degree - some more seriously than others. Many businesses start with inadequate capital because the business owner was too optimistic or underestimated the start-up and working capital requirements. The consequences can be a long struggle to meet commitments and repay debt, or to find funds for new growth or for replacing essential equipment. Some businesses struggle along for years under these conditions, providing inadequate returns for the owner and generating a lot of stress along the way. Your accountant and your ANZ Business Specialist are best placed to advise you about the capital adequacy of your business or proposed business.


No clear competitive advantage

Does your business have a clear competitive advantage? Sometimes competitive advantage can be eroded by the fact that there are just too many of the same kind of businesses in an area. Some streets or areas simply can't absorb another coffee shop or another restaurant. Other businesses have had their competitive advantages eroded by new forms of competition. For example, dairies have mostly lost their advantage (convenience and long opening hours) to supermarkets and convenience stores attached to petrol stations.

 

Sunset industries

Is your business in a sunset industry with a limited future? The clothing industry is under threat from lower tariffs and intense competition from cheap imports. Traditional typesetting businesses have all but vanished from New Zealand -victims of desktop publishing revolution. Is technology or changes in the marketplace affecting the viability of your business?


Businesses needing entrepreneurial flair

Some businesses require vigorous entrepreneurial action to survive. For example, an apparently 'sunset industry' type business, like clothing or footwear manufacture, might do well if driven by a strongly entrepreneurial owner who is able to market with flair and keep the business in the public spotlight. However, business people with good administrative skills rather than marketing flair often do far better in structured situations such as franchises, where operational procedures are clearly laid out and marketing is largely taken care of by the franchisor (the company controlling all the franchises).


Businesses lacking entrepreneurial scope

On the other hand strongly entrepreneurial business people who buy franchises often get frustrated by the lack of opportunity in such tightly controlled structures for their initiatives and ideas. A clear sign of 'the wrong person in the wrong businesses is the amount of conflict they get involved in with the controlling franchisor.

 

What can you do about it?

The first and most difficult step is to realise that often you cannot properly assess your own situation. You do need help from outside advisors who can stand back and view the bigger picture. These might include your accountant, your ANZ Business Specialist or a mentor who can help you assess the suitability of your business. In addition your doctor can provide advice on your health and family issues. Remember, your health is paramount. No amount of money can compensate for its loss.

        

Changing direction

Your options for change include:

  • Preparing your business for sale and planning to buy a more suitable business (or return to employment).
  • Retraining or gaining more business skills through workshops and seminars, or through working for a business in the industry you want to enter (for example, a Bed & Breakfast business).
  • Calling in a mentor or consultant to help you change or rescue the business.

 

Resources

Other useful ANZ Biz Hub articles:

Worthwhile reading:

  • Michael Gerber: The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It


Training and workshops

For business training information review the www.business.govt.nz website.

Also contact your local industry or professional association and/or Chamber of Commerce (www.nzchamber.co.nz).


Rescuing your business

If you feel your business needs help, you may qualify for coaching from Business Mentors New Zealand (phone 0800 103 400).

 

Further information:

To talk to an ANZ Business Specialist:
Call 0800 269 249
Visit anz.co.nz/business
Visit your nearest ANZ branch

        

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