Column: Dynamics Of Owning A Small Business

[Written by Carla Seely]

I come from a family of business owners, from my grandparents, to my father and more recently myself and my siblings. Some people are entrepreneurial in nature and are driven to open and run a business and some prefer the challenges of working for a larger organization which tends to have more structure.

A friend said to me a few years ago when I was about to open a business…”Yes the freedom of being your own boss is great, but the safety of working for someone else and earning a paycheck can be far more rewarding”. At the time I didn’t quite understand why she said this to me, but after being a small business owner for a few months I got it, your finances do change drastically!

Cash flow and minimizing expenses are key for any small business, and especially for those just starting out. The failure rates of new businesses continue to be extremely high, but the rewards for those who do their research, plan methodically and execute their plan perfectly can be significant.

My observation in recent years with the changing of business cycles, mergers, and redundancies is that more and more people are recognizing the potential rewards of starting their own business. It has all of the attractions that have always been there: independence, testing your own theories and the potential for significant reward.

As a whole I think we have all become more and more savvy about finances and it has become increasingly obvious that working for a wage is generally no method for achieving wealth. Though the risks of running your own business are high, the potential gains makes more people prepared to have a go.

Where I have noticed the biggest change is where families choose a middle ground. They acknowledge that one person needs to have a steady income to pay the utility and food bills at home while the entrepreneur seeks the speculative gains from the private business. What is also clear is that the ideal time to set up a business is when there are two incomes and no children to support. Expenses need to be kept to a minimum!

If you have decided to start your own business, chances are that you have already discovered some unexpected expenses / outlays. As a business owner you still need a company pension, whether it is just you or a team of staff; the law requires you to provide and fund a pension plan. If you are renting space you are going to require contents insurance. If you own the space you are required to have both property and contents insurance.

Perhaps you have gone into business with a partner – in this instance, having insurance on each other to protect the company is just good business. If your company has a key person whose death would negatively impact the business, insurance can be purchased to provide for this risk as well. Lastly, there are products such as liability insurance which provides coverage in the event something goes wrong as a result of the actions of your employees or the products you offer.

The most important aspects of any business involve planning and making sure you surround yourself with the right people, people who can offer unbiased advice and guide you in the right direction to execute your plan and realize your dreams.

Carla Seely is the Vice President of Pension and Investments at Freisenbruch-Meyer, if you would like any further details please contact cseely@fmgroup.bm or call 441 297 8686

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