The best time to start a business
This article is a excerpt from Franchising Without Fear, Six Steps to Successfully Buying a Business
By Trish Benedik
The best time to plant a tree was 20 years ago. The second best time is now.
— Chinese proverb
It’s important to understand how the timing of a decision affects your outcomes — especially when starting a business or franchise. The cost of inaction can lead to the loss of revenues, territories, lease options, and financial rewards. When I owned a retail gift shop, I needed to have my holiday items purchased by June or July to have them in time for the Christmas season. If I waited too long, I would not receive the inventory, and I would miss out on fantastic sales. Seasonal businesses all run this way. If you are opening a landscaping company, for instance, you will want to open before the mowing season begins.
There is an opportunity cost of waiting
Rushing into a decision such as starting a business or buying a franchise should not be taken lightly. However, there are times when expediency is your best friend. If you have recently been laid-off or displaced, the sooner you make your decision the better. Give consideration to the opportunity cost of waiting. Each day, week, month, and year you go without opening your business is lost time and revenues.
Conquer only one important decision at a time
There are times when it may be best to wait. Making too many life changes at one time only creates stress and confusion. For example: buying a house, moving, or getting married while starting your business makes it hard to focus and stay on track.
Set deadlines to maintain timeliness
Once you have decided that you are going to buy a franchise or start a business, it is best to put a timeline on your opening. Using a step-by-step process will help you stay on task. Break it into doable parts. Give yourself deadlines for each step. Do not try to take on too much at one time. This decision is a significant life choice, so making it in haste is not advised; However, not providing yourself with a deadline is like planning to procrastinate. Without a deadline there is a danger of running into analysis paralysis, information bias, and complacency. Deadlines for each step will help you stay on task.
Delay limits options
If you delay your decision to open a franchise, your options become limited, you may be left with options that would not have been your first choice. With franchises, the territory may sell out or the ideal location may be leased to someone else. Your franchise developer may cease to think of you as a good prospect if you delay your decision for an extended period of time. Franchises want leaders who can make sound, timely decisions.
Don’t wait for the perfect time
If you are thinking, “now is not the time to start a business,” I’ve got important news for you: There is never a perfect time to get started. Hundreds if not thousands of businesses have been started during the worst of times and thrived. The Kauffman Foundation sponsored a 2009 study that found more than half of the companies on the 2009 Fortune 500 list launched during a recession or bear market. Examples include:
- John D. Rockefeller invested in an oil refinery in 1863 during the Civil War.
- General Electric started in 1890 during a global economic recession.
- IBM started in 1896 during a U.S. economic slump.
- Walt Disney Productions reincorporated in 1929 right in the middle of the depression.
- Microsoft was founded in 1975 during a time of rising stagflation.
These examples prove that there is no “perfect” time to go out on your own. If your dream is to own your own business and you have the skills and have prepared for your venture, the best time is now. Do not put off till tomorrow what you can do today. Tomorrow may never come.
Procrastination is costly
Procrastinating comes at a price. The longer you delay, the longer it will be before you start seeing a return on your investment. Every day you put off making a choice is one more day till you can open your business and begin to reap the rewards. Sometimes people put off their decision because they feel they may be more prepared if they delay. However, it can be like an artist when they paint a picture or an author working on a story; it will never be complete or good enough, but you have to decide when it’s time to put it out there in the world.
Push yourself to move forward and open the doors to your dreams.
According to the Business Dictionary, opportunity cost is defined as “an alternative given up when a decision is made. A benefit, profit, or value of something that must be given up to acquire or achieve something else”. When trying to make a decision you need to weigh the opportunity versus the alternative. What are you giving up in order to attain another alternative? Putting off a decision to start a business until ‘the time is right’ has an opportunity cost. There is also the cost of continuing on your current path and not creating your destiny.
Change does not come automatically, there is an action that needs to take place. People who are looking to open a business want to change their situation. Yet, they procrastinate for various reasons and sometimes they never realize their potential. If running your own business is your dream, you must motivate yourself to move forward and see your quest come to fruition. Committing to make a change is paramount for your dreams to come true.
That said, there is a kind of art to timeliness, or waiting just long enough but not too long. Keith Tenbrook of Decision Innovation.com helps understand the importance of timing:
The image below helps visualize the competing forces at work when trying to find the best time to reach a decision.
Too little time and the decision is made without knowledge that could have enabled a more informed choice, generally reducing risk. Too much time and the benefits from the alternative solutions are delayed,. If in the case of a problem, losses or pain continue to increase.
If you decide too early, you may rush into a decision and choose a franchise that is not suitable for your goals or lifestyle. There are some who get excited about a franchise just because someone else is buying it (operating on the herd instinct) . On the other hand, some who buy the newest brand and later regret their hasty decision.
If you are considering a seasonal business, what is the best time of year to grow revenues? Will you be queued up at the beginning of the season? If you wait to start at the end of the season, are you prepared for a few lean months before seeing a return on your investment? (Benedik, 2019)
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