Your Business is an Investment, Run it Like One
Running a Business from the Shareholders' Perspective
Nov 4, 2008
Many entrepreneurs pour their heart and soul into their businesses. They invest their time, money, and other resources into making it a success. But this can often blind a person to whether they are making a reasonable return on their investment. Many entrepreneurs get so caught up in their businesses that they forget that their business is an investment. It should be treated no differently than if you had put your money into stocks or bonds.
You are a Shareholder
To give yourself a chance to honestly evaluate your investment you need to look at it as if you are a shareholder in a company. Because that is exactly what you are, a shareholder. Even if you are the only shareholder the company has you are still an investor and you need to look at things in that light. And to help you evaluate your investment you need to ask yourself some questions.
Has Your Company Been Performing Well?
The first thing you should be asking yourself is how well do you think the company has done and what you foresee in the future. Based on that answer you then need to ask yourself would you still invest in the company? And as best as you can you need to leave your own emotions out of the answer. Because your natural tendency is going to be to say yes.
Are You Happy with Your Return on Investment?
Because you are already an investor you will also need to ask yourself if you are happy with your return on your investment. You may or may not be taking money out of the company besides of course your salary. But you can still ask whether your company is growing in value each year and by how much? Have the sales, profits, and assets grown consistently each year? And by enough that it can compare to the kind of return you may have gotten elsewhere from your money.
Is Your Management Team Performing?
Also because you are a shareholder you should be asking yourself are you happy with how the company is being managed? You need to consider the performance of both the officers and managers of the company and yourself. Is everyone doing all that they can to make the company successful? Are there other things that your top people could be doing better? If so what are they exactly?
Are You Happy with Your Progress?
Last but not least you need to ask yourself about whether you are happy with what you are earning. Often small business owners take a hit by becoming an entrepreneur. At least initially they may. And you need to ask yourself are you happy with the overall progress and direction of the business. Remember, it can be hard to be the only shareholder on the block but you still need to try to be objective about it all.
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