Many entrepreneurs start their own companies because they are specialists in their field or profession. By “going it alone,” most people hope to gain more financial and personal control. Many of these folks have also recognized ways to do things differently and better than the industry standard and the desire to do so.
However, none of these motives instantly address the need to shift from an employee to a business owner’s perspective.
Because a business owner’s responsibilities are much greater, this is a critical transition to comprehend and act on early. Multiple jobs, competing priorities, and skillsets must be mastered or handled to be truly effective as a business owner.
Four perspectives on money
Based on their attitudes toward money, Robert Kiyosaki, author of Rich Dad, Poor Dad, has described the difference between an employee’s perspective and an entrepreneur and a business owner.
He described four different personas:
- Employee persona – centered on exchanging their time for money from their company. They spent practically all of their earnings because their revenue rarely exceeded their living expenses.
- A self-employed persona is one in which a person works for themselves within a company they own. Their hourly compensation is slightly more than that of a full-time employee, but they also take on the risks and difficulties of running a micro or tiny business.
- The persona of the business owner:In this case, the individual is not only paid a direct wage but also employed people and profits by selling the time of those employees to their customers. This corporate structure’s systemization and scalability allow money to be accumulated.
- The persona of the Investor – At this point, the individual can invest any surplus funds and thereby “earn money from money.” Third-party professionals frequently supervise investing activities, which frees up time for these individuals.
SME business realities and financial attitude
When you consider Mr. Kiyosaki’s categories, it’s simple to see why becoming a successful business owner necessitates a significant adjustment in thinking.
We need to take a closer look at the reality of business ownership to shift between those attitudes. Finances are crucial, but they aren’t the only factor to consider or mentality shift to make when starting a business.
I’ve tweaked Kiyosaki’s model to better represent the realities of owning and operating a small business and how mentality affects business growth.
Start-up: Businesses at the start-up phase are inherently volatile, high-risk, and subject to a constant flux of ideas, systems, clients, and other factors. There is inconsistency in how marketing is carried out, how sales are made, how services or products are given, turnover and profit levels, etc. It’s a constantly changing, evolving creature that requires effort to keep under control.
Functional — You work for yourself and make some money, but the business is entirely dependent on you. In most circumstances, the business owner works long hours, wears several hats, and earns modest wages comparable to an employee in a similar scenario, except that as a business owner, you are exposed to far greater danger and stress.
Growth and scaling necessitate refining of the business model and the “entrepreneur attitude.” It’s all about figuring out how a company’s ten fundamental pieces might operate together more effectively. Although growth is generally simple, scaling a business up is frequently more difficult.
Independence: Achieving independence requires systemization, processes, and employee development so that the company may have a “change of pilot” if necessary. The main goal of this stage is to reduce or eliminate dependency on the owners – in other words, to transition from required direct engagement to independence and the company to become an autonomous asset.
Exit: The business is being prepared for maximum valuation or easy succession at this stage. More effort needs to be made to attract investors and convey the business’s value proposition as an investment.
Each stage of a business has its own set of difficulties and possibilities and distinct advisory and support needs. Some common features go across all of these stages of development that distinguish the genuinely exceptional from the ordinary.
The following are nine steps you can take to improve your business ownership abilities:
#1 – Acknowledge your limitations — you can’t be an expert in everything. Determine where you need assistance with running a business, whether it’s with systems, recruitment, finances, HR, leadership, strategy, or anything else, and get the help of education you require!
#2 – Be willing to invest in yourself – it’s tempting to do everything yourself or rely on a “free guide” to fill in the gaps in your knowledge and abilities. Because your performance directly impacts your company’s success, be willing to invest money to improve your results.
#3 – Plan your company’s future – knowing where you’re going and why makes the ride much smoother. SMEs typically put off business planning since the plans aren’t for them but rather for a bank, an accountant, or an investor, and they end up collecting dust on a shelf. Instead, create a plan that motivates you and provides a roadmap to grow your firm.
#4 – Create a future business that can function without you – as frightening as it may sound, your priorities will shift, and you will no longer want or be able to devote as much time to your business as you do now. So, rather than hiring individuals, anticipate the positions your company needs and work toward them through recruiting, systemization, and training. This allows you the freedom to work in your business whenever and wherever you desire.
#5 – Work on your business, not for it – business owners wear numerous hats, including CEO, finance, HR, supervisor, sales, marketing, IT, and facility manager. It’s all too simple to focus your attention on the present moment’s needs — they tend to shout the loudest and are frequently within your comfort zone. Is it, however, where you provide the most value to your company? I can assure you that the answer is no! So plan your time according to the many responsibilities you play and make sure you have time to concentrate on the company’s future.
#6 – Ask yourself the tough questions – being complacent, staying in your comfort zone, or simply believing you know everything is a bad place for a business owner to be in. We promise that your competitors will not be doing this, and neither will your customers! You’re only lying to yourself and destroying your business if you don’t ask yourself the tough questions and give honest answers. One of the most valuable components of hiring a business coach is having someone ask you these questions with the correct intentions — to help you and your company improve.
#7 – Not everything has to be flawless – it’s easy to get caught up in focusing on one part of your business and getting it to work perfectly before moving on to the next. Enhancing all parts of your supply chain, sales process, operations, and so on by just a few percentage points will provide you with a much better return on your investment. It’s also far more feasible.
#8 – Hold yourself accountable — when you’re on your own, it’s all too easy to let yourself off the hook and make excuses. This is something that successful, and growing businesses do not do. They are accountable to themselves and accept responsibility for their actions and inactions. A reliable external counsel, such as a business coach, can help you.
#9 – Do not learn by trial and error – as an employee, I doubt you were simply left to your own devices on day one and left to your own devices. Would a plumber or a lawyer be required to try something out and see how it goes? Not. The support network should not disappear just because you are shifting to being a business owner. My third piece of advice is to retain the structural aspect of being an employee by ensuring that you have the necessary education, training, and support. Give yourself the best chance of success by learning business owner skills from individuals who can help you rather than learning via trial and error. The cost of failure and mistakes is far too high to take that chance.
Tim Rylatt is the co-founder of UK Growth Coach, a company that offers business owners coaching to help them simplify their operations.
Tim’s coaching experience includes nearly a decade of working for the world’s leading business coaching firm and establishing his thriving coaching businesses since then. He has worked with over 250 companies throughout his career and is a published author on the subject. He is also a Director of two award-winning marketing companies. He has real-world experience as a business owner and a co-founder of UK Growth Coach.
Please click here to learn more.