How Serious You Are About Business Ownership

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drjohn11aDr. John Psarouthakis, Executive Editor at  www.BusinessThinker.com;
Founder and former CEO JPIndustries, Inc., an industrial acquisitions growth group. For CV go to  http://linkd.in/1AF7El7

One way to establish the seriousness of your intent is the amount ofeffort you expend toward your new venture. In general, bankers and others assume that you are more serious about the project if you are working at it full-time. This is not to say that you must quit your present job to get a loan, but it does contribute to a banker’s opinion of how serious you are about the project. A banker is likely to view you differently if you have two years of income saved up and are planning to look for companies full-time than if you are simply between jobs, or you are still working at your present job.

If you do plan to quit your job, you must plan for this step very carefully. You should be ready to live on savings for up to two years until you have made the transition to your new company. You also need to make plans with your family so that they are prepared and willing to make the appropriate sacrifices.

Your Business Qualifications for Running the Business
Though not necessary, it is helpful to have an master of business administration (MBA). During the acquisition process, having the MBA does have some impact. With or without the MBA, it is important to have good advisors. Your familiarity with the industry is also very important, not only to the banker but to the seller too. Many sellers feel uncomfortable with the “whiz kid” from Wall Street and would often rather deal with someone with past operating experience in the same or a related industry.

Your Strategic Thoughts
The banker will also want to know what you plan to do with your company. Do you know how you are going to improve value of the company and what you plan to do with the company in the long run? Why do you feel that an investment in this industry is a good move at this time and what changes will you make to assure that your company will be successful? Strategy doesn’t need to be complicated, but it should be clearly thought out and communicated, preferably in a written business plan

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