Do You Own Your Business, or Does Your Business Own You?
An idea for a business is born in the imagination of an entrepreneur. The long hours, sweat and tears are expected to make the idea flourish into a business. But when can you crown yourself a business owner? Let’s assume your concept is financially viable, and you can make a profit. Is that enough? I argue that you don’t own your business until it can sustain itself for periods without you.
When your business needs you to work it, rather than run it, you do not own your business; your business owns you
A lot of self-employed individuals have not come to this realization. When your business needs you to work it, rather than run it, you do not own your business; your business owns you. Having employees on payroll and leasing a new space does not get you there. If you find yourself to be the primary person that interacts with your top tier clients, and are left to make most decisions, while still doing as much technical work as your employees, your business owns you. In the book Rich Dad Poor Dad, the author Robert T. Kiyosaki discusses the pitfall of being a busy worker in a chapter titled The Rich Don’t Work for Money. Now that doesn’t mean successful entrepreneurs don’t work hard or work long hours. It just means they work smart and make their investment or business work for them.
So how do you get beyond self-employment where you can leave for two weeks of vacation and not have to turn off the machine? Cogs and catalysts. The single biggest hindrance for entrepreneurs is the inability to delegate. Often, a business operator thinks that no one can do the work as good as they can. Although this may be true at the onset of hiring, it is exaggerated in their mind due to pride and ego. If you are unable to train and develop others, then the obstacle is you. Hire smart people. Invest in the future. “Build it, and they will come.” If you can get over the hurdle of recruitment, you will in time encounter an even bigger one, retention. A detrimental mistake often made by business owners is micromanagement. This tactic is demotivating, and you will be left with the wrong team, comprised of all cogs and no catalysts. To quote Steve Jobs, “It doesn’t make sense to hire smart people, and then tell them what to do.” Teach them and then let them make mistakes. That’s how they become catalysts.
The goodwill of a business is a derivative of its clients, infrastructure, workforce and reputation.
To put this disparity in the context of value, the goodwill of a business is a derivative of its clients, infrastructure, workforce, and reputation. Conversely, the goodwill of a self-employment operation is only you. This brings me to retirement or exit strategy. If the company is not separable from the entrepreneur, it cannot be sold. Buyers do not pay for sweat equity. Where ever your business is in its life cycle, you should be trying to make it a self-sustaining machine. A machine with the right amount of catalysts and cogs that perpetually operates, and you are unconstrained to provide only maintenance and betterment.