After speaking to tons of business owners, I realized that most businesses owners started or purchased their business for one (or more) of these three reasons:
Reason #1: They wanted control over their time and destiny.
Reason #2: They have a creative passion/desire that they have wanted to share with the world.
Reason #3: They wanted to make more money.
Myself? It was pretty much a combination of all three.
However, many of these same business owners that I talk to are frustrated with their business, and that’s because the reasons why they started their business in the first place hasn’t happened yet:
They don’t have as much control over their time and destiny as they want.
Their creative passion is being stifled by the headache of the “business side” of the business.
They’re not really making a lot of money.
These business owners pour so much time, energy, and money into their businesses, but at the end of the day, they feel burned out. They feel trapped. They feel like they’ve been duped.
Because they find themselves owning a job.
They own a job without the benefits that come with a job – like a steady paycheck, health benefits, and two weeks paid vacation.
They own a job and get all of the negatives that can come with a job – like the feeling of being trapped, having to work 60+ hours a week, and sometimes having to work for people that they really don’t like (i.e. horrible clients).
Something’s got to change.
These owners aren’t experiencing the joys of business ownership – like having control over their time, sharing their passion with the world, and, of course, making money.
Think you might own a job instead of a business? Here are five ways to know for sure and ways to help you change things around:
#1. You own a job if you are the business.
Many business owners start a business because they are an expert at what the business does. Someone that loves to cook starts a restaurant. A dentist starts a dental practice because they are trained in dentistry.
The problem: the business is 100 percent reliant on you.
You can’t take significant time off because they business is dependent on you and your expertise.
A solution: Create systems in your business that are trainable and repeatable. Think of your business as if you plan to franchise it one day. You can’t possibly be at every location all the time. How would you train the management and employees to run each location?
#2. You own a job if your time (or your employee’s time) is directly correlated with pay.
If you work you get paid. If you don’t work, you don’t get paid.
This is especially troubling for service-based businesses where billing is directly linked with time spent. The only way to really scale is to add additional employees or constantly increase your pricing.
A solution: Productize your service offerings as much as possible. Instead of customizing solutions for each client or customer, create standard offerings that can be turned into a system (see above) that other employees can learn.
#3. You own a job if you are not able to scale.
Scaling means that you can increase sales without having to proportionally increase expenses.
If you can’t grow sales without taking on a ton of additional expenses then you are not able to scale, and therefore, you are getting, or will most likely get, trapped in a never-ending cycle of constantly treading water; you’ll sense that you’re never really moving forward. At least, certainly not the way you want to.
A solution: Each aspect of your business (marketing, sales, operations) must be optimized and made as efficient as much as possible so that each aspect can take on more without adding additional expenses.
#4. You own a job if your salary is dependent on the profits.
In other words, all of your pay is coming from the profits of the business. And if you don’t make a profit, you don’t get paid.
If your pay almost always comes from the profits of the business (especially if you are actively working in the business fulfilling a position) that means that the business is not efficient enough to be able to afford your position.
A solution: Increase your Gross Margin and reduce operating expenses as much as possible so that you can afford to pay a salary for your position.
#5. You own a job if your cash flow is not growing each year.
Cash flow that is growing means that you have more money in your bank account after all of your expenses and debt has been paid compared to last year.
Cash flow is crucial: you won’t stay in business for too long without cash flow growth. And, if you want more control over your time, to show the world your creative passion, and to make more money, you’ve got to improve your cash flow.
A solution: Think of your business like a machine in a manufacturing plant. The entire job of the machine is to produce cash, and to do so without your having to operate the machine manually.
In other words, if you walk out the door to go on vacation or simply take the day off, the machine will continue to run at full capacity. It will continue to crank out cash.
To own the business you dreamed of instead of a job (or the unintended job you may currently have), you’ve got to turn and focus, and always focus, on the one thing that trumps all other “to-dos” in the business side of your business: do whatever it takes to increase the amount of cash “your machine”, your business, manufacturers.
When you have a machine that produces a good flow of cash, then you will have something truly valuable: the life you imagined when you started your own business.
Who wouldn’t want that?