OPTIONS

 

 

            Looking for a full-time position may be the best thing for you to do, but you may want to explore some other options as well. Those options include starting a business, buying a business, consulting, working part-time, and taking temporary positions. For the right person, any one of these choices could be excellent.

 

Starting Or Buying A Business

            Starting a business can be fun and exciting, but it is always a serious, risky venture. It is generally believed that 65% of all new businesses close their doors within five years. Some go through bankruptcy, while most quietly close up, with the owner eventually paying off whatever debts have been incurred.

            Despite the risks, starting or buying a business may be just what you need. Before you start or buy a business you should determine whether you are prepared to handle the risk, whether you can afford to lose the money you are planning to put into the business, whether you are willing to put in the long hours that all startups require, and whether you have the skills to make the business succeed.

            The big question is, are you an entrepreneur? You need stamina, high energy, sound marketing ideas, a desire and willingness to sell yourself, a nose for business, and an ability to get people to trust you. You need to be willing to take calculated risks. You need to be decisive and act quickly when an opportunity arises. You'll probably need to devote 55-65 hours a week to your business for the first two years.

            Despite all of these cautions, business ownership can be great. There is something special about owning a business that is summed up in the words independence and freedom. In one sense a business owner is neither free nor independent, after all there are customers and employees to keep happy. But it's an entirely unique feeling to know that you will succeed or fail based on your own efforts. It is that freedom that causes people to take risks, to put in those extra hours, and to knock themselves out to satisfy a customer. There is also the matter of knowing that "this business is mine." Ownership causes an entrepreneur to view work very differently from an employee. The difference is almost magical.

            Even if you possess all the key qualities I've discussed, the odds are that your business will no longer exist five years from now. You need to believe that you have that something extra that will cause your business to succeed.

            Before you think of starting a business, read two or more books on starting a business. While you read those books, you should also be aware of the reasons businesses fail. The Small Business Administration has researched the causes for business failures. The Big Three are: 1) inadequate capital; 2) bad business decisions; and 3) lack of knowledge of the field or industry.

            Inadequate capital. Almost every business is started on a shoe string. If everything goes as smoothly as the business owner hopes, the business will succeed despite the shortage of money. But usually things do not go perfectly. A recession that no one had anticipated hits right as you are getting started. A major customer goes bankrupt, leaving you with invoices that will never be collected on. There are hundreds of things that can go wrong, and some of them will probably go wrong for you. With more capital you could weather such storms, but those problems often prove too much for the fledgling business.

            Even successful new businesses run into that ancient problem called cash flow. Sometimes people say they have a cash-flow problem when the real problem is that they can't sell enough of their product.

            The following scenario illustrates a classic cash-flow problem. The young business gains some excellent customers and begins to sell to them. If the customers are other businesses, they receive invoices which are expected to be paid within 30 days. The problem is, these businesses may have problems of their own, and may not pay the bills for 60 or 90 days. But the suppliers of the new company may demand payment within 30 days. Because the new business does not have a track record, the supplier is unwilling to extend payment to 60 days and begins shipping on a COD basis. Although the young business is successful in that customers want the product, the business doesn't get paid fast enough. Then the owner, or owners, go to their friendly bank assuming that the bank will be very understanding and loan them enough to tide them over until a steady cash flow occurs. But the bank refuses to lend the business more money. Unless cash can be raised from other sources, this firm will have to be sold or go out of business.

            Bad business decisions. Bad business decisions include selecting the wrong location, choosing the wrong business partner or employees, selecting the wrong product or service to sell, or starting with too much overhead.

            For a retail business, for example, the wrong location might be one where there is little walk-by traffic. The rent will be cheaper, but the lack of customers will likely hurt the business more than the higher rent would.

            Choosing the wrong business partners or employees is one of the most common mistakes made by young businesses. Sometimes a partner is brought in because he or she brings some much-needed capital to the business. But if the person lacks the necessary skills or the desire to make the business succeed, that extra bit of capital won't make up for these defects. In the worst horror stories, partners or employees make off with the cash or steal from the business over a period of years. A young business cannot afford to have anyone on the payroll who is not a strong contributing member, so care in staff selection is absolutely critical.

            Sometimes a business starts up selling a product or service that does not have a strong market. I had a client who started a business with a product that oil companies were very desirous of. The problem was, the oil industry was in deep depression during the mid 80s, and companies were simply unwilling to try this exciting, but unproven technology. In a case like this, the product is ahead of its time. Without the perfect marketing strategy—and the dollars to promote it—it will never get off the ground.

            Starting a business with too much overhead is another classic mistake often made by young businesses. For a manufacturing company, it may mean that the equipment purchased to start out is unnecessarily expensive state-of-the-art equipment or equipment with too much capacity. Sometimes, of course, the business must start with state-of-the-art equipment if that's the company's competitive edge. Usually, however, such equipment is not necessary from a business standpoint, it merely seems necessary from an ego standpoint. Equipment with great capacity is nice, but it also costs a lot. If the business won't realistically generate enough orders for six years to warrant state-of-the-art or high-capacity equipment, the overhead may eat the business alive.

            The same thing happens when the owners of a service business believe that image is everything. They will open the business in the high-rent district, take more space than they need (this is justified because they "know" the business will take off), and fill it with beautiful furniture and art work. I saw a profitable business very nearly go under because all of the top managers felt they needed to drive Mercedes. When the business started having cash-flow problems, it was unable to adequately respond because the cash reserves were going to pay for the managers' cars and thus was unavailable to keep the business afloat.

            Lack of knowledge of the field or industry. Lack of knowledge has killed many businesses. The classic example is the person who opens a restaurant because all the friends say he or she is such a wonderful cook. Success in the restaurant business, however, is only about 30% based on the quality of the food. The rest is knowing how to create the right atmosphere, how to motivate employees, how to create a menu, and how to control costs. Yes, the food must be good or the people will not come back, but great food and lousy service will chase customers away as quickly as lousy food itself will. And lack of cost controls will put even a restaurant that is filled to capacity every night out of business as fast as anything.

            One reason franchises have been so successful during the last 30 years is that these businesses are designed so that the franchisee can be quickly taught everything necessary to be successful. The franchisor will have simplified the business and created all the systems that are necessary so that a hardworking, relatively intelligent person can succeed. During the last 15 years, franchises have had a failure rate half that of independent startups. That is not to say that everyone should buy into a franchise, however. Many people have been burned by franchises which promised great training and support and then failed to deliver.

            My advice to those considering buying or starting a business is to determine what type of business you want to own, then go to work for someone who runs that kind of business. Learn the business from the ground up. When you are learning a business so you can one day own such a business, you're willing to do the dirt work. Rather than feeling like a typical employee who wants to get by with as little work was possible, you're going to be asking the owner to teach you everything he or she knows. Employers are willing to share what they know because, as long as you're working for them, they are making an excellent profit from your efforts.

            While you're working for someone, you can observe what works and what doesn't. I once worked for a business that primarily taught me what not to do. With good businesses, however,  you will learn what works. And if you make mistakes while working for this business, it won't come out of your pocket. When you start your business you will have made most of your mistakes at someone else's expense, and you will know how to market and promote your business.

            By working your way up in such a business, you will be better able to find investors because you will have a track record. These potential investors will recognize that you know the business inside and out and that they have a reasonable expectation of an excellent return on their investment.

            Your library and bookstore will have many books on starting a business. Two good ones are Starting Your Business: A Guide For Entrepreneurs by Charles Martin, and How To Become Successfully Self-Employed, by Brian Smith. Both of them take you through a process of deciding whether you have what it takes to succeed and both walk you through the steps of starting and marketing a business. Smith's book also has a section on franchises. Both books also cover the causes of business failure, including the Big Three listed above.

 

Consulting

            If you have strong knowledge and experience in a specialty area, consulting may be the way to go. While many consultants do very well financially, they must constantly be selling themselves to gain new business. Consulting work can be very satisfying, however. Consultants generally report that they like the independence they experience doing this type of work.

            Consultants work primarily in two ways. Some work almost as contractors and come in to a business to work on a project as a team member. Then, when the project is finished, the consultant will seek another assignment.

            Most consultants, however, are selling their knowledge and experience. That is, they do not actually do the work, but advise the client and make recommendations. This can be both satisfying and frustrating. The satisfying part is that the consultant is able to influence and affect many different organizations. The frustration is that the consultant rarely stays around long enough to see the recommendations implemented. The consultant may return periodically to make sure the implementation is going smoothly and to resolve any problems, but that is not usually the case. This lack of closure is frustrating to many consultants.

            Another frustration is that consultants often get caught in the middle of corporate politics. Frequently, a manager or department will not cooperate in a project because it is believed that the recommendations may hurt the manager or damage the department. Those who are being uncooperative usually do it very subtly, but also very deliberately. Also, there is often a high level of distrust when a consultant first comes in. That trust must be gained over time.

            It is also well known that consultants are often hired to bolster the case of a CEO or whoever brought the consultant in. The person bringing in the consultant sometimes lets the consultant know what the desired findings are. If the research and data do not support the manager's position, the consultant is often placed in an uncomfortable position. A report contrary to what the manager wants will almost surely mean no future projects with that firm.

            There are many good books to read on consulting. Consulting: The Complete Guide To A Profitable Career, by Robert Kelley is one of the classics.

 

Part-Time Employment

            More people are working part-time than ever before. A high percentage are women with families, but every type of person is found in part-time employment. Part-time work is generally considered to be 10-30 hours per week. The advantages of part-time work are that you will have more time for family, volunteer activities, trips, or for starting a business. The major disadvantages of part-time work are lower income and less advancement opportunity.

            For people with families, part-time work offers several advantages. A person working mornings and early afternoons can be home when the kids arrive from school. Those who work only two or three full days per week still have several days each week to do other things, including taking care of family matters.

            Fortunately, the labor market has become more accommodating to those who want part-time work. Some people are able to have children and keep their job by cutting back on their hours for one or more years. In this way the career is not put on hold—it’s just going at a slower speed. While one's professional advancement may be diminished somewhat, remaining at work on a part-time basis allows a person to keep accumulating years in the field and also to keep current with new trends and technology.

            With part-time work becoming more popular, job sharing has become more common. Job sharing occurs when two people, each working half-time, perform a job that was previously handled by one person. Job sharing opportunities are rarely advertised. They generally occur when someone who wants to reduce his or her hours seeks out someone either within or without the organization who also has the ability and desire to work part-time. Those who job share report that it typically works quite well, but it takes a tremendous amount of coordination between the two who share the position.

            While moving from full-time to part-time work will generally reduce your income, it may not reduce it as much as you would expect. For one thing, taxes and expenses, such as child care and automotive expenses, will be reduced. Before you assume you simply cannot afford to live on a part-time income, do all of the necessary calculations to determine whether it might be feasible.

 

Temporary Employment

            Many people have added flexibility to their lives by seeking temporary work. There are those who work temporary jobs to make ends meet during a job search, but others take on temporary assignments out of choice. While the bulk of temporary work is clerical, an entire industry has emerged that matches professionals with organizations who need temporary people to work on projects and other types of assignments. In the drafting, engineering, and computer programming fields, these firms have become known as job shops. Although it is not yet so common, there are even placement firms that seek out executives who are willing to take on temporary assignments.

            Job shops receive job orders from employers, and just like employment agencies, seek those with the necessary skills. Assignments in the clerical field can last from one day to six months. Assignments for professionals generally range from one month to one year. Typically, the job shops and temporary agencies will provide medical insurance and other benefits when you take on long-term assignments.

            In the Yellow Pages you will find such agencies under Employment Contractors—Temporary Help, with a few companies listed under Employment Service—Employee Leasing.

            The primary frustration faced by people doing temporary work is that there are periods during which one is not working. These breaks in employment are rather unpredictable and do not typically come when one might prefer. Although some who work temporary jobs report that they are virtually never without work (except when they choose to take time off), most will be unemployed at times which are not by choice.

            The key to working when you want to work is to provide high quality work and to be flexible. If you obtain your own assignments, your reputation within one large firm can often keep you busy. Or you may build a reputation among several firms. When you obtain your own work, it is generally referred to as contract work. You will be called an independent contractor and will be responsible for paying your own Social Security and income taxes on a quarterly basis.

            If you use an agency or job shop, your reputation for producing high quality work is just as important. You must also establish that you have the ability to fit into many different situations and build good working relationships quickly. The recruiters at temporary agencies also appreciate flexibility. They may understand your desire to do certain types of work and avoid others, but they will make greater use of you if on occasion, you are willing to take on an assignment which is not attractive to you. When you do favors for them, they will do their best to accommodate you. When you work as a temporary, you actually develop relationships with the recruiters because you will deal with them many times over a period of months or years.

            Most people who intend to do temporary work on a regular basis register with several temporary firms until they find one that is able to keep them fully busy.

            A good book to read if you're considering temping is  Professional Temping: A Guide To Bridging Career Gaps, by Eve Broudy.

 

 

Retirement

            Although it might not seem feasible at first, retirement may be an option for you. Rather than starting with the assumption that there is no way you could retire, consider first whether you would want to.

            Retirement does not mean one only engages in the stereotypical activities associated with retirement, such as bridge, golf, and fishing. Some people retire because they have goals they can't achieve if they work for someone 40 hours a week. If you are one of these people, you may want to retire as early as age 50.

            If this sounds like an intriguing possibility, you should first do your research. You need to know what impact your early retirement will have on your Social Security payments and when you can start receiving payments. Calling the Social Security Administration at 800-SSA-1213 will give you much of the information you need about what your payments will be.

            As you do your research, determine how the early retirement will affect you financially. Determine whether the lifestyle you desire can be supported financially by your early retirement. If not, will the advantages of retirement, outweigh the financial disadvantages?

            You should also learn about Medicare, which won't kick in until you are 65. You should learn about Medicare supplement plans and long-term care insurance. You may want to seek the advice of a CPA or a good certified financial planner to help you figure out how you're going to succeed financially if you opt for early retirement.

            Contact the American Association of Retired Persons (AARP) to get materials and advice about retirement. Comfort Zones by Elwood Chapman, Retiring Right: Planning for your Successful Retirement by Lawrence Kaplan, and Think of Your Retirement by AARP are both very helpful resources. Each covers all of the primary areas that you must be aware of as you consider retirement. Also, Reality of Retirement, by Jules Willing is helpful for managers who need to consider the psychological adjustments of retirement once the power they once wielded is gone.