There are many reasons why people chose to go into business for themselves. Freedom, work/life balance or ‘I can do it better’ are popular motives. But it’s important to understand that there are different levels of business ownership and just because you ‘go into business’ doesn’t mean you’ll suddenly fulfil your motives.
So you really need to decide which level you are aspiring to and this is where the Entrepreneurial Ladder comes into play. So where do you want be and where are you now? Are you on track to live well and retire well?
This is where most of us start and traditionally what we’re prepared for at school – Do as you’re told, don’t rock the boat, work hard and get a good job. As employees get paid either an hourly rate or a salary all of their income comes from their own activity, so it is not leveraged in any way. They can only increase their income by getting a pay rise and can end up working long hours particularly when chasing and gaining promotions. Many believe a higher income equals greater wealth and status, but for most it means they’re just able to service more debt. Employees pay the most tax as they have very little options write-off’s.
But employment can be useful initially to save and build working capital and also to build knowledge and experience.
The Self Employed
The first jump on the ladder. But it’s not really a business, more like buying yourself a job. So now you’re the boss and soon you’ll be working less and spending plenty of time on the golf course. Well in reality whilst you can make a very good living the golf course remains a distant dream. The reason being that now you are the business, hence not only are you undertaking the work you now also need to run the operation. Therefore it will likely come with very long hours and a reluctance to take time off as it impacts directly on your income. Potentially this is the most stressful scenario.
You’ve taken on some staff (possibly family or your cousins best mates brother as he was out of work and seemed like a good bloke) to ease the burden. You’re now doing your own work BUT you’re also spending too much time managing them! In addition you also need to learn a whole new set of skills, this is good but it takes a lot of time.
The Business Owner
When you’re a business owner you’re starting to leverage your income because you now own a system. Your income not only comes from your efforts but also from your employees (who you pay to run your systems). You are now in the position where you can receive some degree of passive income and the freedom that comes with it. However, when you first start out there will inevitably be long hours required to build those systems. The good news is that the more systems you build and have running efficiently the more you’re able to step away from the business with no impact on your income. Remember at this level you will need to manage and lead.
Typically you may no longer need to rely on your own time and efforts for your income. Your money (and likely other people’s money) is working for you and you are living off the returns. Now you have the ultimate freedom to decide what you want to do, other businesses? Shares? Property? You’re now in the position to be a true entrepreneur.
So, when you’ve decided at which level you want to be the question then is how are you going to get there?
The reality is that most people struggle to get to where they want to be, this is for 3 main reasons:
- They (and their team) do not have the knowledge required to get to the desired level
A business will only grow to the ability of its staff. Once it’s at that level you’ll hit that ‘glass ceiling’ and it will be difficult to break through without introducing new strategies, new systems and different ways of thinking.
- There is little or no accountability in the business
We all have ‘stuff’ we know we need to do or should be doing but the reality is that most businesses are continuously firefighting and being reactive rather than proactive. This results in very little time being spent working ON the business which of course is essential if you want to grow. Having someone help prioritise tasks and then hold people accountable to complete them is essential and will get you to where you want to be much, much faster.
- They are stuck in their ways and not embracing change
It is very easy for a business to get into that ‘we’ve always done it like this’ mentality and this inhibits growth. Having someone with no preconceived ideas to ask challenging questions and look at your operation through an independent and unbiased set of eyes is worth its weight in gold.
And the above is what Business Coaches do.
I work with my clients, not only to grow their profits but also to guide them up the entrepreneurial ladder. Is this is a journey you should be on?