The fantasy small business

Let’s go to that fantasy world of small business perfection.  I spent some time and thought in developing the criteria for what I’ve called the IDEAL SMALL BUSINESS.  Unfortunately, this ideal small business doesn’t really exist and may never do so – but some do come close. 

However, if you’re about to start a small business or join someone else’s business or even if you want to buy an existing business; the following list is something you should think about. 

Obviously the more of the following criteria that are applicable to your business the better off you are likely to be.

The ideal business:

1. Offers a product which enjoys a very strong demand (It offers food to a hungry crowd) In other words it sells a product that people always want now and in the future. Food, clothes and shoes, for instance.
2. Has low staff requirements – the fewer people employed, the better. Today it is possible to have a company, where literally all the product manufacturing and services are outsourced to other companies.
3. Sells it’s products to the world, rather than a single area, city or country. In other words, it has an unlimited global market as potential customers.
4. Has low overhead costs – It does not need large amounts of high earning employees, energy usage, legal advice, advertising, high-priced employees, large stock, expensive location etc.
5. Sells a product which cannot be easily replaced or copied. This means that the product is either original or at least it’s something that can be protected by a patent or copyright.
6. Does not require a large capital investment. In other words, it does not tie up your capital in expensive machinery or stock.
7. Is almost free of all kinds of government or industry regulations, or depend on them continuing. Rules and regulations are continually changing, so building a business on them is building on shifting sands.
8. Enjoys fast or immediate cash payments.  In other words, you get paid quickly with no credit terms. Cash flow is king.
9. Satisfies your emotional and intellectual needs.  There’s nothing like being interested in what you’re doing.  Would you do it anyway – even if you were not being paid?
10. Allows you plenty of free time.  It doesn’t require your attention 12 plus hours a day (my doctor, who leaves the house at 6:30am and comes home at 7:30pm and often later, is well aware of this one).
11. Is portable or easily moveable.  Ideally you can move your business (and yourself) anywhere you want – Australia, South of France, the United States, or even Monte Carlo or The Bahamas.
12. Is one in which your income does not depend on your personal time (lawyers and doctors have this problem).  You should be able to sell to 100,000 customers as easily as you sell to one (publishing is an example).
13. Generates repeat income – You do the work once and get paid for a lifetime, or at least 10 years.

If you use this list it may help you cut through a lot of soul searching. Nobody owns or works in the ideal small business, but it pays to know what to look for.   You may not be a great chef but you should know what to look for in a great restaurant.

For financial planning or independent financial advice for small business owners, contact us on 01582 839280 or Email us.