A lot of people long to own their business. These people focus on the benefits they can enjoy such as freedom, ownership pride and potentially large profits.
According to Innovation, Science and Economic Development Canada, 97% of start-ups that have less than 100 employees die within the first year. Only 85% of new start-ups survive for at least three years while 70% are able to last for up to five years. Each year there are around 7000 cases of bankruptcies in business.
Even professionals with years of experience and licenses from universities can still struggle to make a business case if they lack the right business skills. Although it may appear that psychologists, accountants, lawyers and dentists are the most successful professions in America, it is not. Their fees are not paid directly to their savings accounts.
Consider the following:
1. Credentials: Apart from the university registration fee, books, and living expenses over many years, there are many unpaid practicums or supervised practice scenarios. A practice license and degree parchment are not only a sign of success. These degrees can also be used to repay Student Loans, which could amount to thousands.
2. Yearly fees- I pay close to $3,000 each year to my professional licensing bodies and an insurance agent.
3. Furniture and Equipment – Anyone who starts a practice needs to not only have an office but must also have the appropriate furniture and equipment.
4. Personal – Take a look around the doctor’s office next time you make an appointment. What percentage of the income received by the doctor goes to families? Are they paid when the doctor is away on vacation? What is the amount that they receive for benefits employees?
5. Supervision – The more employees, the more time it takes to mentor, meet and work with system.
6. Monthly expenses: In addition to the interest paid on office loans, rent, or mortgage payments, as well as staff salaries, utilities bills, office supplies and janitorial costs, as well as any technological costs for operating an office.
7. Professional development: Most licensing agencies require professional to complete an annual number of training hours in order for them to have the latest skills and knowledge.
8. An expert usually charges per hour for accounting – This includes income tax filing costs and requirements of government programs. Professionals may also need to be patient for payment from clients or chase cheques if they don’t have cash. You will soon notice that Accounts Receivables begin to build quickly.
9. Income and Taxes – Professionals do not get paid vacation or sick time, unlike employees. They don’t earn income if they aren’t working. But, personal and income taxes must still be paid.
10. Paperwork – Many times what might be considered billable hours are taken up with paperwork, admin, or any other non-paid task.
11. Don’t be fooled by the lack of time. It takes time to start and run a business. Many hours are spent by successful entrepreneurs, and many of these hours are not visible to the general public. You might not be aware that the same person was at work until midnight on Monday night when you meet them out on the course.
12. Accountability- Your staff and you are accountable for providing ethical services to the public. If there’s a problem you need to address it.
I know from experience that there are pros and con’s to every career. If you are wanting to open a business, consider the above so you are not naïve and vulnerable.
Consider your options when seeking professional services. Keep in mind that only the fees you receive will be shared with the professionals around you. The remainder goes to business expenses.