Once you’ve owned your home for some time and start making dents in that principal, you’ll see all the advantages of having equity and might even want to start putting some of that hard-earned cash to work for you in a small business.
It’s a tough road and you can use the know-how you brought to looking at historical mortgage rates and other factors that helped you decide to buy a home. When you do, you’ll see how important putting together a business plan is. Statistics tell us there are around 50 thousand new startups in Canada each year and, of those, only about 5,000 will see their fifth anniversary.
A good business plan is essential to help you sort through and temper enthusiasm with facts. For example, you needed to learn how to spot bad neighborhoods when you were looking for a place of your own. You’ll need those deductive skills again to avoid picking the wrong people to work for you in your business plan.
Both endeavors take good old fashioned time and effort.
Getting a good business plan up and running requires about 100 hours of hard work. You’ll need to start planning for all the analysis, research, review and documentation about nine to eighteen months in advance.
Here’s a few other ways the path to having your own business is like the road to your own home.
- The realities are very different from the image. Think about how you imagine a business owner and someone who owns a house. Both are happy and relaxed—the homeowner relaxing with his feet up on the railing of his front porch and the business owner with shoes up on a mahogany desk. In the real world, both require long hours of sacrifice and financial strain at the beginning.
- The returns are small at first. Even with the attractive historical mortgage rates we’ve been enjoying for some time, the payments are almost all interest for the first few years on any mortgage. Small business owners generally need to get over an initial hump to start seeing profits too.
In the end, both small businesses and houses pay off when you put the work in.
