Golden Girl Finance - The Financial Voice for Women.+Add.Feed Info1000FOLLOWERS
Launched in 2008, Golden Girl Finance is Canada’s media leader in financial content for women. We create original and unbiased financial content to educate and inspire Canadian women about investing, personal finance, retirement, philanthropy, and the psychology of money.
Great art invites comment, inspires new perspective and even incites controversy. When Fearless Girl appeared in March 2016, proudly confronting the famous Charging Bull of Wall Street, she did all of the above.
What many casual observers did not realize, was that Fearless Girl was commissioned by State Street Global Advisors. The bronze statue was one element of a larger campaign to encourage board diversity for US public companies; promote gender balance in the corporate sector; and, mark the one-year anniversary of its SSGA Gender Diversity Index ETF – known by its ticker symbol, “SHE”, on the NASDAQ. A plaque next to Fearless Girl was inscribed: “Know the power of women in leadership. SHE makes a difference.”
SHE does. And SHE is not the only one.
In 1994, the Neuberger Berman Socially Responsive fund (“NBSRX”) was launched. Nearly all the companies in which it invests include women on their boards and have well-established diversity programs. The fund has returned 14.42% a year over the past 10 years.
Pax Ellevate Global Women’s Index (“PXWEX”) is a gender diversity focused index fund, similar to SHE, with a five-year average return of 11.5%.
On the high heels of SHE, two more cleverly tuckered new funds were launched this fall: Evolve North American Gender Diversity Index ETF (“HERS”) and Lyxor Gender Equality ETF (“ELLE”).
Perhaps more important than the investment products, is the important work these firms are doing to elicit social and corporate change. Pax Ellevate has pushed the Securities and Exchange Commission to make the disclosure of gender pay differences a required filing, while using shareholder activism to motivate the companies themselves. According to Barrons’ Apple, Amazon and eBay have all participated as a result.
Naturally there is enlightened self-interest on the part of the investment funds. Social change is laudable, but the reality is: the more great gender diverse companies that exist, the more choices these investment funds will have for their portfolios. And better performing choices at that.
“From the investment side, our research tells us that more gender balanced companies perform better,” Clarisse Djabbari, deputy head of Lyxor ETF said in an interview with ETFstream.com. “Over six years, the Global Gender Equality strategy (underlying Lyxor’s ETF) outperformed the MSCI World Index by 10.7%.”
According to a study by Veris Wealth Partners, companies with three or more corporate directors who are women (in at least four out of five years) outperformed those with no women on the board by 84% on return on sales (ROS), 60% on return on invested capital (ROIC) and 46% on return on equity (ROE).
The law of free markets suggests that whither goest the profits, there goest demand. As gender balanced investment products continue to rake in assets and produce great returns, even more investment capital will flow toward them. More companies will want to qualify, getting in shape to ensure they have the diversity and gender balance that investors want.
After awhile, if all goes well, gender balanced companies will no longer be a source of niche investing, they will be the norm.
So, are these investments a passing fad or a factor for success? Let’s hope the answer is: both.
Last week my quarterly investment statement arrived. I flipped to the last page and there in italicized mouse-type was the tally. Given the recent performance of the markets, I was not surprised by the soggy number.
It’s foolish to expect investments to only go up. Pundits say that for accumulators, a down market is a boon. Your favourite mango now sell for 75-cents instead of a dollar. But emotionally it’s a downer. And, like fighting a bout of melancholy, a sluggish stock market invites introspection, not only about mundane things like asset allocation, but also about the hazards of tying one’s personal worth, or at least daily mood, to the volatility of global finance.
I have an unproved theory that people who are prone to melancholia may be better equipped to withstand the ups-and-downs of the market. Maybe it’s because melancholics don’t expect the world to always be filled with unicorns and cotton candy. Thus, while down market days are not exactly welcomed they’re tolerated like old friends bringing sad news.
Some people, like the French, embrace melancholy in films, music and, even perfume. In an essay in The New York Times, Laren Stover writes about melancholy perfumes and how “rainy” scents can be matched to our moods. Given our society’s current fascination with happiness, (judging by the raft of books on the subject), it’s not easy to find one of these gems. One has to reach back to some of the Guerlain classics from the early 20th century like L’Heure Bleue, Jicky, and Mitsouko (my favourite), as well as some new-ish ones from niche “noses” Serge Lutens (Iris Silver Mist) and Frédérick Malle (En Passant). Stover neglects to mention Guerlain’s Après L’Ondée, literally, “After the rain shower”, a green fragrance with top notes of aniseed and rose and heart notes of violet and hawthorn.
Some years ago, I took a perfumery workshop in Grasse, the heart of France’s fragrance industry. I already knew the fragrance I wanted to create: the olfactory expression of looking out a window on a rainy day in London, a good book and a mug of strong black tea on the side table. It was to be a wisp of a scent composed of bergamot, chypre, licorice, lavender, lemony rose de mai, and a dash of iris root for that powdery, flinty touch.
As we were all novices, the instructor constantly praised us. Until he came to me. He took one sniff and immediately reached for the aldehydes to “brighten” the scent. It was the equivalent of a burst of fluorescent bulbs where previously there had only been soft candlelight. I’m sure he meant well but I believe he couldn’t tolerate that I was intentionally creating a “downer” scent.
This is like a lot of investors. We imagine that the market can only go up, up, up. When it pauses or reverses, panic sets in. You could say that quantitative easing, the US government’s program of printing money to buy bonds, was the financial equivalent of dosing perfumes with aldehydes, synthetic compounds that juice a scent giving it sparkle and fizz like popped Champagne. (It’s no surprise that the 1980s blockbuster, Giorgio Beverly Hills, was the Frankenstein of aldehydes.)
But there’s a season for everything. Much of the recent market froth was related to abnormally low interest rates, highly-leveraged trades and speculation. (Hello Bitcoin!) When the bubble bursts—and it will—say ‘Ciao, Giorgio Beverly Hills’ and ‘Bonjour, L’Heure Bleu’.
For young adults pursuing a university education today, costs can be prohibitive—up to $100,000 for four years of undergraduate study and anywhere from $30,000 to $100,000 more for advanced degrees. Enter RESPs: the perfect savings vehicle. Even better, you don’t have to be the parent to contribute. Any family member, including aunts, uncles and grandparents can contribute to a child’s RESP. There are some caveats though.
There are three types of RESPs: individual plans, family plans and group plans. Of the three, group RESPs—typically called scholarship trusts—aren’t a good choice for most families because they typically have high fees, pre-set contributions, more restrictions, and no entitlement to investment income if the plan is cancelled.
One of the great things about RESP are the top-ups through government benefits like the Canada Education Savings Grant (CESG). They can add up quickly, which is one of the main benefits of an RESP.
“Nowhere else can you get the 20 percent return on your money like you can with an RESP,” says certified financial planner and money coach Annie Kvick. To maximize the basic CESG, you need to put $2,500 into your child’s RESP annually. If you don’t max out your annual CESG, the eligibility room carries forward, but $1,000 is the maximum grant you can receive in any one year. There is no annual limit on what you can contribute each year but there is a maximum lifetime contribution of $50,000 per child. “That means if you don’t have the money to start contributing right away, you can catch up when the child is older by putting in more money later.”
If you are in a lower-income bracket and unable to contribute much, it’s still worth it to open an RESP. Doing so makes your child eligible for the Canada Learning Bond (CLB)—a government grant to help lower-income families save for their child’s post-secondary education. Qualifying for the grant provides your child with access to $500 at birth and an additional $25 to cover the costs of opening an RESP. Based on your income tax return, an additional $100 will be deposited annually in the RESP until your child turns 15. This can add up to more than $2,000 in grants. “This is free money for your child and every low-income family should claim it,” says Kvick.
Instead of setting up a scholarship trust, which comes with more stringent regulations, Kvick recommends opening a self-directed RESP at your financial institution. “Then set up an automatic monthly deposit to your RESP,” says Kvick. Ideally, you should aim to max out the grant every year, she adds.
Remember to keep investing simple. A low-cost mutual fund or ETF is all you need to get good, stable returns. “Once the money is in a self-directed RESP, you can invest the way you like and have the flexibility to make contributions when you want,” says Kvick. Investments in a self-directed RESP keeps fees low, helping to boost total returns that are enhanced thanks to the government grant programs.
It’s often said that “no good deed goes unpunished”.
A recent study asked participants to evaluate the performance of employees who offered to stay late to help a colleague prepare for an important meeting. When a man volunteered, he was rated 14% higher than a woman. If they both declined, the woman was rated 12% lower than the man. Saying ‘no’ meant the man was “busy”; the same response from the woman meant she was “selfish”.
Women had to give extra help just to get the same rating as a man.
This is the “office housework” that’s expected of women, whether she’s the receptionist who also bakes cupcakes for staff, or the manager who is expected to be the “office mommy”, placing her staff’s needs over her own. It’s no wonder that in an analysis of 183 different studies in 15 countries and multiple occupations, women were more likely to report feeling emotionally exhausted.
A few years’ ago, I came across a business memoir. In it, the writer, shared the best piece of business advice he ever got. He was told that, as a manager, people will come into his office and most of them will want to leave their problems with him. His job was to avoid taking ownership of others’ problems.
Office Mommies, (they can be men too), want to help and they may too readily acquire the responsibility for their colleagues’ tasks. I fell into this trap over-and-over in my own career and it easily—and unnecessarily— tripled my workload.
“Office housework” is a huge hidden drain on women’s productivity. As much as policies on child-care, maternity rights, access to higher education, and pay lift the glass ceiling, societal changes in expectations on women’s behavior are also necessary.
Much progress has already been made. For example, women’s enrolment in higher education is almost twice that of men, although their return-on-investment is typically lower than men’s. As a group, women are better qualified than men, yet earn three-quarters as much. Part of this may be attributed to different areas of specialization.
Women dominate education, social work and the humanities, whereas men choose higher-paying professions in computer science and engineering. Still, the traditional definition of gender behavior likely also plays a part. And, by the way, don’t you wonder that if men dominated social work it would pay a whole lot better?
You can’t consistently give your all at work as the “office mommy”. Those behaviors may be friendship builders but they’re not career boosters and, eventually, they’ll lead to burn-out. So, while we all want to be seen as “team players”, saying ‘no’ takes even more courage, and kindness—to ourselves.
As an economist, I can tell you that forecasting is easy – it’s the accuracy part that’s hard! When there are so many different views on where the markets are headed, how does an investor know how much they need to save to achieve their goals?
If we look at the Canadian investing landscape from 1900 to 2016, stocks have been by far the best investment, returning close to 6% per year in real terms (after inflation), compared to real returns of only 2% per year for bonds. This is the traditional risk-return trade-off investors are accustomed to: Hold bonds for steady, but not spectacular returns, hold stocks for higher long-term gains.
Even though that relationship held true over the period as a whole, the past few decades were an exception. Bonds actually outperformed stocks during both the 1980-1999 and the 2000-2016 periods. These were years of dramatic declines in interest rates, which boosted the return on holding bonds. During the past 16 years, stocks returned 4% annually in real terms, while bonds earned 5% as interest rates dropped.
As all bondholders know by now, that party is over – as bond yields are hovering around 2% currently. The good news, however, is that inflation has been truly tamed. In Canada, our central bank has been very successful at keeping inflation low, and it’s a safe bet that inflation will stay near the midpoint of the central bank’s target range of 1-3% over the longer term.
As an investor with a 20-year time horizon, what rates of return would I count on for planning purposes? Taking a look at the entire period from 1900 to 2016, not only in Canada but globally, stocks outperformed bonds by a wide margin, and I’d expect that long-term trend to hold. Would I count on real returns of 6% per year on stocks to continue? Perhaps not, but 4-5% annual real returns for stocks seems reasonable. For bonds, I’d plan on long-term real returns of only 0-1%. Bringing these numbers up to nominal terms, building in an inflation rate of 2%, this would mean nominal returns of 6-7% per year on stocks and 2-3% per year on bonds over the next 20 years.
What’s the lesson for investors? Thinking about what is sustainable over the longer term makes us temper our expectations. After a long stock market rally, history tells us that we are due for a correction, but history also reminds us that there will be a rebound before too long. That’s the closest this economist is getting to forecasting the stock market!
In her memoir The Woman I Wanted To Be, Diane Von Furstenberg recounts the time in 1978 when she was on a flight from New York to Cleveland for a personal appearance to promote her iconic wrap dress. The plane was packed with businessmen and, except for herself and the flight attendants, there were few women passengers. That very morning, January 28th, the Wall Street Journal ran a front-page feature on Von Furstenberg and her fashion empire. Her seat mate spent the first few minutes of the flight ogling her legs. Finally, in an attempt to get a conversation going he said, “What’s a pretty girl like you doing reading the Wall Street Journal?”
Her anecdote reminded me about the time in the mid-80s when I was at my neighborhood bookstore (remember those?). I had stacked The Economist and Vogue on the counter and the male cashier said, “Wow, I’ve never seen the same person buy these together!”
This was before there were a lot of role models showing that women could be investors, wealth managers, and yes, even tycoons and that fashion and finance were not mutually exclusive. There was the unspoken belief that, if a woman was interested in money she was either a gold digger or kinda butch.
I encountered the same kind of sexist thinking—from women themselves— when I worked as the editor-in-chief of ELLE. When, after six months as a senior editor, I was offered the top job, I eagerly accepted and began to negotiate my new salary, benefits and perks. You know how women are always being told that the reason we don’t earn as much as men is because we don’t negotiate? (Is that really true or is that a convenient excuse for the sexism that’s baked into the corporate cake.) I negotiated on every point with my female publisher. And I was shut down on every, single one.
The kicker was she tried to make me feel ashamed of being focused on compensation, as though landing the editorship should have been reward enough. After all, this job was going to be so much fun that the pay should be secondary. I wonder if the same attitude applied to the guys who worked in marketing and advertising or the male fashion director?
It’s fitting then that Diane, named for the Roman Goddess of the moon and the hunt, would create a business empire whose motto is: Feel Like A Woman, Wear A Dress. She leveraged a great name and juicy Rolodex into a multi-million-dollar lifestyle brand. She followed her impulses and made some killer deals. (Like buying property in the Meatpacking District when it was still pretty dodgy for $5 million and selling it a few years later for $20 million.) And, best of all, she did it wearing a dress.
Happy contrarian Valentine’s Month! Here is a little divorce trivia to get things started.
In the UK, the first working day of January is dubbed ‘Divorce Day’. Inquiries and filings significantly increase immediately following the rollicking winter holidays giving family lawyers and relationship mediators a salary bump. Closer to home, a recent US study found that women are more likely than men to set things in motion initiating almost 70% of divorces. Food for thought.
Regardless of the reasons for separating, divorce is a real wealth killer. We consulted family law experts* to find out how you can protect yourself financially during a break up.
Hayley Cairns, who practices family law in Toronto, stresses the importance of seeking legal advice as early as possible. This way, you’ll have a good understanding of your rights, as well as the steps to initiating a separation or divorce.
Marriage grants certain built-in protections regarding division of assets, spousal and child support. For example, the matrimonial home, (and there can be more than one), is considered to be held jointly. Each party is entitled to an equal share in the growth of your joint net worth from the date of marriage to the date of separation. The primary breadwinner will likely need to pay spousal support and child support, if applicable. The amount will be determined by length of cohabitation, ages at separation and income. If you are in a common-law relationship, you need to understand your legal rights within your province.
It’s important to have a good understanding of you and your spouse’s finances before initiating any discussions. “One thing everyone needs to understand is that enough money to live a nice lifestyle in one household is often not enough to maintain the same lifestyle in two households,” says Cairns. “And everyone’s lifestyle is going to change.”
How to Avoid ‘The War of the Roses’
“Mediation is more humane. You get two people talking. The goal is to get the best outcome for the family by preserving overall family wealth and not messing up the kids,” says Rosanna Breitman, a family mediator. “It can be difficult if one party is not ready for the process or is too emotional.” For mediation to be effective, both parties need to be committed to a fair and collaborative process with full financial disclosure.
With divorce and separation comes intense sadness, anger, and pain. Breitman advises if you are planning to initiate a separation, think about doing it as kindly as possible. As much as possible, try to time the beginning of the process so you are both are able to deal with it properly.
If you are unsure whether a traditional divorce or mediation is best course for you, Breitman recommends researching which process is going to protect you the most.
Paper Chase: How to get Started
Shanna Rosen, a chartered accountant, recommends that you gather all your information and documentation before initiating discussions around separation.
Here are your first steps:
Know your assets and their worth. Assets may include: house(s), RRSP(s), pensions, RESP(s), TFSA(s), investment accounts, pensions, annuities, insurance, family business, business partnerships, art, jewelry, collectibles.
Know your liabilities which may include: mortgage, lines of credit, an outstanding HELOC, car loans, credit card balances, tuition obligations.
Estimate your monthly and annual expenses, e.g. mortgage, taxes, utilities, cars, credit cards, school fees, camp fees, extra-curricular activities.
Locate and obtain copies of insurance policies (annuities, life, disability) and get a copy of your most recent will.
Get a copy of your spouse’s most recent tax return.
Traditional Divorce: $5,000 at the low end and upwards of $500,000 if you go to trial. Costs are per party.
Mediation: $4,000 at the low end and upwards of $20,000 in high conflict situations. Costs are shared by both parties.
It pays to think ahead as succession is something that can really sneak up on a business leader. Planning well in advance of when you plan or need to transition the business to someone else is key, particularly in terms of ensuring that a feasible and complete succession plan has been developed, as well as avoiding dangerous crisis situations, in the event that a business leader is unable to manage the Company for whatever reason, with no qualified successor in sight!
A good place to start when considering succession of a family business to children is to assess the level of interest and presence of the necessary qualifications in potential successors.
Ask yourself the following questions:
Are your children currently active in the business?
Do they have a long-term interest in remaining active in the business?
Do they have the necessary skills and experience to hold a position in the business?
Are they qualified to hold senior positions in the business, such as the important role of business leader?
Some family businesses operate on the basis that simply being a family member is sufficient qualification and for really basic positions, this may be acceptable. However, in the case of the business leader position, or specialized positions, such as the Chief Financial Officer, having the necessary qualifications is a must. In today’s competitive business world, the cost of not requiring family members to have the necessary qualifications can be significant, including costly mistakes and even failure of the Company, all to the detriment of the family.
If you determine that your children are not active in the business or do not have the necessary interest or skill level to do so, the best option may be to find another party to be your successor. Options include transitioning the business to your management team or someone outside of the business (i.e., sell the Company).
In the event that succession to your children appears to be a feasible option, you should next consider the role/responsibility and financial issues related to doing so. Every succession situation has role/responsibility issues and financial issues from the perspectives of both the departing business leader and potential successors. Key areas to address and understand in these areas include the following:
From the perspective of the departing business leader:
Role and Responsibility Issues
What are the qualifications for the business leader position?
Is specialized training or education required to hold the business leader role?
What are the skills that are expected to be required in the future?
Is an ongoing advisory or contract role in the business for a period of time after succession necessary to facilitate a smooth transition?
What are the post-succession income requirements of the departing business leader?
Is the departing business leader in a position to facilitate succession by receiving payment for their ownership position over a period of time (i.e., a “vendor take back”)?
What would be the financial impact on the departing business leader if the succession failed?
From the perspective of a potential successor:
Role and Responsibility Issues
Do potential successors have the necessary skills, experience, and qualifications to perform the roles in the business, including the position of business leader?
Do potential successors have a desire to hold the business leader role?
Do potential successors require additional training, development, or education in order to be able to assume more senior roles?
How long would completing a professional development plan take?
Would there be “gaps” in the management team going forward and how could these gaps be filled?
Do potential successors have the financial resources to facilitate a transfer of ownership (i.e., pay for the shares)?
Do potential successors have a desire to undertake the risks (and rewards) of ownership?
Are there potential funders available to provide the successors with the necessary capital to undertake a transfer of ownership, in the event that a vendor take back is not an option?
Not only is it important to ask yourself all of these questions to determine whether or not your children are really a viable succession option, it is also important to consider your options more broadly. What is the future outlook for the industry in which your business operates? Can the business be expected to have a profitable future, or is it really “time to sell”? Is it a better option to keep the business in the family or would a better option be to sell the business now and benefit from the proceeds of the sale?
If your primary responsibility is to operate the business on a day-to-day basis, the issue of succession may seem quite overwhelming, particularly in terms of finding the time.
Qualified advisors can help you move forward by:
Providing executive coaching to help you consider your succession options, assess the potential of family members as successors, and develop professional development plans;
Establish the necessary legal structure and tax planning, including family trusts, estate freezes, and necessary agreements;
Forecast your post-succession income requirements and plan accordingly;
Assist potential successors in terms of financing requirements and achieving professional development requirements; and
Mentoring the new business leaders, to raise the likelihood that the transfer of ownership is a successful one for everyone involved, including the business.
Generally speaking, these tasks are not likely to be completed by a single advisor; rather, an advisory team including an investment advisor, lawyer, and a business advisor who can work together to assist you in terms of succession planning and the transfer of ownership. In the event that you choose to sell your business, you will then have an established group of advisors who can help you understand the intricacies of the sale process and bring in additional advisory resources as required.
Although this may sound like an involved process (and it is), be glad that you have a business that is established enough to require succession planning. That’s why you worked so hard to build it, right?
Okay, you’re a grown-up. So maybe it’s not marshmallows because even the high-priced artisanal ones are kind of underwhelming, like eating a miniature pillow. Maybe for you it’s the second (or third) glass of Chablis or a new pair of Louboutin shoes. For me it’s anything with coconut and coloured gemstones.
But whatever your weakness, exerting a bit of self-control now and again pays off in unexpectedly big ways. In a famous and oft-cited experiment conducted 50 years ago, children who were able to delay eating a marshmallow had much better life outcomes than the kids who didn’t.
The study’s author Walter Mischel rewarded kids who were able to delay immediate gratification for up to 15 minutes with two cookies. In the passing years, the children were further rewarded with higher SAT scores, advanced degrees, better weight control and stress coping capabilities, and lower drug use.
According to Mischel, the kids who passed the marshmallow test had sitzfleisch, a Yiddish word that means grit, an ability to “stick with it”. Like hair, some people have more sitzfleisch than others but everyone can acquire it.
Sitzfleisch is particularly useful in investing. Many investors—both punter and professional—feel they must constantly be doing something with their portfolios. Buying, selling, shorting, hedging, leveraging…there’s holding too but, like breathing, that doesn’t seem to rate as an activity.
This chronic fidgeting comes with costs. For starters, since no one can time the market, there’s the omnipresent stress of trying to pick the right time to trade. You’ve got to be right twice: once when you buy and once when you sell. This is, of course, a loser’s game. Then there are the trading costs themselves, such as commissions and taxes. Each of these inexorably chip away at total returns.
A study published in the Quarterly Journal of Economics noted that, because men tend to trade more, they reduce their average returns by 2.65% compared to 1.72% for women.
Sometimes trading is the right thing to do, for example when valuations have put your strategic asset allocations out of alignment. However, to trade simply out of restlessness or a compulsion that you can’t just sit there but have to do something, is an expensive habit.
One way to build your sitzfleisch muscle is to practice in small ways at first, then gradually build up to working with your life savings. Make a commitment to, for example, walk twenty minutes every day, rain or shine, or stick to one glass of wine at dinner, or as Paul McCartney suggests, implement ‘meatless Mondays’ at the dinner table. Any of these would do. Before you know it, you won’t even glance twice at those posh marshmallows— or the flickering ticker symbols.
There are many great research resources available and a good place to start is the Canada Business Network (canadabusiness.ca), which provides a wide range of business research and start up resources in conjunction with various partners and agencies across Canada. Research of particular interest would include demographic information, in terms of quantifying both the numbers of potential customers in your geographic area and the amount of money that they spend. This information could help you to do a “macro” level assessment of the amount of potential ladies clothing consignment sales in your area. The Canada Business Network has research libraries with great librarians who can help you to find the right information. All you have to do is visit the website, select your region, and have a look at the resources that are available to you.
If this “first pass” of research indicates that there’s a market for your business, it’s time to get creative. How can you differentiate yourself from existing businesses? Could you sell online? Are there other services or product areas that you could co-locate with your store to bring in additional revenue? There is no secret to it, just let the ideas flow and research the ones that you think have some potential. This creative thought process can help to identify ideas that you may not have previously considered.
To find out what type of revenue to expect, check out Statistics Canada’s Small Business Profiles that summarize the actual financial results of businesses, sorted by NAICS (North American Industry Classification System) code. The report includes an Income Statement and key financial ratios, presented on an overall and quartile basis for companies within the industry code in Canada, as well as for particular regional areas. These business profiles are excellent information, and the research librarians that are part of the Canada Business Network can help you to identify the industry code and information that you need. You will then be able to utilize this “micro” (i.e., company specific) information to better understand the potential financial results, as well as in conjunction with the “macro” market information you have already collected.
If you plan to approach people who already have a similar business to collect information, a few Dos and Donts:
Do keep whatever contact you have with them on the “up and up”. You would never want to be perceived as trying to “steal” someone’s idea, and regardless of your intentions, we all know that “perception is reality” to many people.
Do be prepared to be surprised by the information they might be willing to share with you on a casual basis. You might find out, for example, that they want to get out of the business, sell it, or take on a partner. You just never know; this type of situation does happen and could create an opportunity for you.
Don’t take steps to work for a company part time, unless the owner knows that you have an interest in starting a similar business. Otherwise you run the risk of looking like you are trying to get an inside look at the company before starting your own (and, remember, perception is reality).
Don’t get too emotionally attached to the business idea. Sometimes, finding the “perfect” thing to do can almost leave you breathless, but remember, this is a business that will have to provide for your income requirements. It’s great that you love it, but you need to have a balanced approach to be successful and manage against the downside. Consider the benefits that an objective business advisor could bring to the process.
Do be mindful of your research and use it. If the market is too small, create a new idea. Conduct additional research to identify any interesting trends in other markets that could be introduced in your own area. Having ideas and some flexibility in your “back pocket” could help you to evolve your idea to something that is a blend of what you love and what makes money.
And Don’t give up. Opportunities are out there; it just takes some creativity, flexibility, and patience.