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1. Look before you leap
I'll give two examples. Both are from the scuba industry. Similar considerations apply
to most other businesses.
A) My friend John was an electrical engineer and a keen sailor . In his late thirties,
he was taken off operational projects and transferred to administrative work. He hated
being stuck behind a desk and resolved to leave his safe job with an electrical supply
authority. In his spare time he built a large boat and set sail from his home in New
South Wales on his fortieth birthday. He put down anchor in Townsville in North
Queensland and earned a living taking divers out to the Great Barrier Reef. That's
how I got to know him.
John's switch from being a paid employee to a self-employed dive operator was far
from smooth but he made it. He skippered the boat, did all necessary maintenance
work himself and kept costs to a minimum. His family was staunchly behind him and
prepared to live in rented accommodation that was grossly inferior to their former
home. In time he traded his motor/sailing boat for a larger vessel and his business
prospered. When I last heard of him, he was a highly respected master mariner
running courses in marine safety.
B) The person who bought John's second dive boat was a former farmer. He was in
his early fifties and fed up with raising cattle. He sold the farm and used the proceeds
to establish his family in a nice house on the coast. The dive boat was intended to
provide a pleasurable lifestyle and source of income.
At first, everything went according to plan. The boat was in good condition. John
had acquired a solid reputation as a dive operator and the customers kept coming.
Skippers had to be hired but there was sufficient cash flow to pay them.
Then things started to fall apart. The new owner lacked an overall grasp of the
operation. He enjoyed going out on the boat but was not taking any affective part in
the operation. Worse of all, he relied on others to tell him what was going on.
Maintenance work was neglected and that led to serious and costly problems . The
reputation of the boat suffered and the supply of customers dropped off. He was
unable to judge the reliability of his skippers and dive staff . Good people deserted him
and he was left with a substandard crew. He sold the boat for a small fraction of what
he had paid for it.
2. Don't place undue reliance on others
Of course you will need an accountant and you will need a solicitor. I'm not suggesting
otherwise. You'll need them to give specialist ad vice. Accountants are good at getting
tax returns in order and advising on loans. Solicitors are essential when purchasing
real estate. But don't let them tell you how to run your business. You might have a
different breed in your neck of the woods . My experience is that accountants and
solicitors are hopeless in operational matters. They imagine that everything is
achieved at the stroke of a pen. In their world that might happen. You live in a
different world.
If you are building a hotel, motel, lodge or whatever, you'll need an architect. They
are great at making buildings look right and some win prizes . The latter are the ones
to avoid. Prizes come at the client's expense. If the client is a major company, that's
fine. But, you are not a major company and your building must earn money to keep
the bank happy. Give your architects a written brief and look critically at everything
they come up with. Hunt for ways to save money while achieving a pleasing result.