Being Your Own Boss

"I can't stand it anymore. It was another one of those days!" Stan Vernon proclaimed as he walked in the door.

"Well, stop complaining and change jobs," his wife Calley retorted.

"But it's been the same everywhere," complained Stan. "I think it's time to take a different approach."

Later that week, while looking through the classified section of the newspaper, Stan spotted an opportunity to buy a company that provided computerized accounting, payroll, and financial analysis services to small businesses. This investment would allow Stan to use his career skills while giving him experience in running his own company.

"This seems to be an opportunity for you to do what you enjoy and not have to answer to others," advised Calley. "Let's go over and talk to the current owner."

"That's a good idea," commented Stan. "But how much should we pay for the company?" Calley responded, "Start by asking how much they want for it!"

Questions

1. What might affect a person's decision to own a business rather than work for someone else?
2. What factors should Stan analyze when placing a value on the business he is considering for purchase?
3. If Stan can invest his funds at 6 percent and expects to have an annual profit from the business of $60,000 for 10 years, what would be the present value of that series of cash inflows? (See Appendix A.)
4. In addition to running his own business, what other employment alternatives could give Stan more flexibility in his career?