Work on your business, not in your business
People often start a business to get out of a rut and take control of their life. However, instead of building something that provides a steady income with enough time left over to enjoy the rewards of their hard work, many people find themselves in a new rut.
They end up running faster and faster just to stand still. In other words, they don't control their business, it controls them.
This is the difference between being self-employed and running a business. Self-employed people work to earn money. Business owners build an asset. It works for them, they set the goals, organise its affairs then step out of the way to let others do the work, maybe with a little help and guidance.
To get there you have to stop thinking like an employee and start thinking like a shareholder and a CEO. Look at the business as if it were an investment. Ask yourself if you get a reasonable return on that investment: could it do better? This is what the business owner should focus on, not the day-to-day details.
The key to moving from the treadmill of self-employment to running a business can be summed up in a single word: systems and proceses.
To put the right systems and processes in place you need to understand fully how your business functions. Then you break down the various processes and tasks into a set of tasks before putting everything back together as a series of processes you can delegate or, if you get it right, sell. By getting this in place early you're helping to set yourself up for success.
This can be as simple as paying someone else to serve customers in your shop while you work on the bigger picture. It can also mean getting professional help and perhaps the right financial software so you can manage the amount of money flowing in and out of your business and know that you and your suppliers are paid on time.
Once you've successfully put the right systems in place, you can step back and concentrate on growing the business, coming up with fresh ideas, controlling costs or, even, perfecting your tennis serve.
Turning your business into a system isn't something you can do overnight. And the option isn't open to everyone. Selling your skills or expertise might be the business, your personal brand may be where all the value lies.
This can be deceptive. The best person to run a hairdressing salon might not necessarily be a stylist. In fact, having a specific skill like that can often get in the way.
For example, a skilled hairdresser may be tempted to cut hair all day. Even if you are the best hairdresser in the country this only pays so many dollars an hour. Turning a salon into a thriving business can earn you many times that amount.
The likes of Vidal Sasson and Rodney Wayne only became wealthy when they stopped cutting hair. Michael Hill became New Zealand's best-known jeweller after he personally stopped selling necklaces.
Package something you do into a product that can be sold over and over, not necessarily by you. It can be a training course, a book, an app or a franchise.
To make this work you have to take a step back from the everyday grind and decide exactly what your goals are. Then determine what you might be able to do to get there. Try to look at what you do from a different perspective.
If you've been working hands-on in the business, you'll understand the processes. Say you run a café. You need to open early in the morning, clean and check the espresso machine, then make coffee all day, take the money, keep the place clean, then maybe order more beans before closing down at night.
Whether you recognise it or not, this is a series of operational and financial systems. They are all things you can pass on to someone else. So let them run the café. At this point you have two options. You can hire a manager to run the café while you scout around for another location to open a second branch or you can sell the operation as a going concern, train the new owner, make a healthy capital gain and do the whole thing over again and again.
The moment you decide to work on the business instead of in the business, your options multiply.