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Yaneek Page | Flipping a business with $1m

Published:Sunday | April 28, 2019 | 12:21 AM

ADVISORY COLUMN: BUSINESSWISE

QUESTION: I'm 25 years old and I've been wanting to start a business but I'm not sure what to do. I've been contemplating a liquor/beverage store or a restaurant since I already have a certificate in restaurant management but I can't seem to choose between the two because I'm afraid to take the risk and end up losing everything. My partner and I together have $1.3 million in hand and we are ready to flip it quickly.

My other questions to you are: What kind of business do you think we can start with that amount of money without going to the bank for help? How do I get over my fear of taking risks? What steps should I take in starting a business?

My mind is open to any other business as long as it is profitable I need your advice on how to become a successful business owner.

– Andy

BUSINESSWISE: It is difficult to provide fulsome answers to all the questions and issues you have raised in a single column, so my focus will be on the most fundamental points from my perspective and experience as certified entrepreneurship trainer and global business coach.

The greatest lesson I can share with you here is that there’s no legitimate risk-free business you can start to quickly ‘flip’ the $1.3 million your partner and yourself have saved in a free market economy.

In fact, you would start a business with that money only if you could afford and are prepared to lose it entirely, not when you are desperate to flip it. Business is most risky in the earliest start-up phase, which also happens to be the period that may require the greatest investment in capital, time, effort and resources for founders of small businesses.

In direct response to your first question, if your motivation is purely profit-seeking then it may be better to invest in established businesses via the stock market, which, ironically, is still among the highest risk category of investments. The rule of thumb is that you should be prepared to leave those funds, once invested, for at least three to five years.

Quick returns in this regard are most likely with initial public offerings – which are relatively infrequent – or foreign exchange trading, both of which are high risk. Any business or investment opportunity that promises a quick flip of your money is usually a scam.

You may find a list of the most profitable local industries and businesses in my column of August 7, 2016 titled “Most Profitable Businesses You Can Start” – www.jamaica-gleaner.com/article/business/20160807/businesswise-most-prof....

The financial, distribution and construction sectors were among those that topped the list in our local context.

The fear of failure when starting a new business is completely rational – especially when you consider our challenging business environment, market size and dynamics and still precarious economic position. Overcoming the fear of taking risks involves careful planning and risk management.

Any investment you make in a business should be equivalent to what you can reasonably afford to lose, formally referred to as your risk tolerance, and must also be based on sound financial projections and a viable business plan.

Given your lack of business experience and financial savvy I strongly recommend you seek professional guidance from a financial planner and a business strategist or adviser. Separate your personal financial goals from that of your business and learn the discipline of treating them accordingly.

Let me emphasize a point many entrepreneurs need to learn: Your financial fortunes do not have to be tied to the success of your business if you pay yourself a fair salary, diversify your income streams, maintain a pension plan and have adequate insurance, invest wisely, and so on.

Once you are better educated about financial management and planning, and entrepreneurship generally you can read my column titled “7 Essential Steps for Business Start-Up” previously published in the Sunday Gleaner for the steps you should take before starting a business.

You mentioned that you considered starting a restaurant or liquor store because of your certificate in restaurant management. The restaurant industry is highly competitive and is notorious for start-up failure. Only launch a business in that area if you can satisfy the steps, conditions and fundamentals outlined in the articles I recommended.

Remember, it is far more costly to close a business in Jamaica than it is to open one so include the likelihood of failure in your planning process.

One love!

Yaneek Page is the program lead for Market Entry USA, a certified trainer in entrepreneurship, and creator and executive producer of The Innovators and Let’s Make Peace TV series.

yaneek.page@gmail.com