The Entrepreneurial Fallacy
Entrepreneur has become a buzzword over the last few years.
Entrepreneur is not a bad word – in fact, it’s pretty harmless – so why shouldn’t we use it all the time?
Because the way we use it is crippling business owners and imposing limitations on their full potential!
I’ve been working as a business consultant and coach for over a decade, starting well before people even knew what that meant. I’ve worked with hundreds of managers and employees, self-employed people, business owners, investors and entrepreneurs.
(Can you see already that I’ve made a distinction between entrepreneurs and other business leaders?)
Any dictionary will define an entrepreneur as someone that generates profit from an enterprise, or words to that effect. By definition that means a kid mowing lawns or selling second hand books in front of their house is an entrepreneur!
But that’s not how I believe the word should be used.
From my experience working with hundreds of business leaders, I see the entrepreneur at the top of the ladder. The entrepreneurs I work with are multi-millionaires with income streams from multiple sources.
To understand your progression to that point, and why I believe calling anyone else an entrepreneur is crippling, let’s look at how business owners begin.
Self-Employed
Most real entrepreneurs start the journey of becoming a business owner by becoming self-employed. You might progress from being an employee in someone else’s business, to starting a venture of your own.
At this stage you further develop your craft and hone your skills. You begin to move from Operational Intelligence (that is how you technically apply your skill, such as being an architect) to Business Intelligence (the skill of owning and running an architectural business).
Here you learn goal setting, planning, understanding financials, setting targets, marketing, sales, and how to balance your time being the architect with being the business owner.
This is the first step in the journey to becoming an entrepreneur, but you are not an entrepreneur yet. You are a person who is self-employed.
This is not a criticism. It’s hard work and a huge achievement to get to this stage. I’ve been here, and you may be here now, and let’s celebrate that. Kudos to you, and keep going!
There should be more “Self-Employed Person of the Year” Awards.
So if a self-employed person wants to climb the ladder to becoming an entrepreneur, what’s the next step?
Business Owner
Here’s where you really start to get moving and can achieve some amazing things.
As a Business Owner you get to add the most important ingredient to business ownership – employees.
Why are employees the most important ingredient?
Your team is either your biggest asset or your biggest headache, and my team and I have seen both. Everything else in business can be replicated. You can copy everything your competitor does and vice versa – except this. You can use the same suppliers. You can use the same software and CRM packages. You can have the same systems. But you can’t replicate or clone people, and this is the area that separates good business owners from average ones.
At this stage your priority as owner needs to shift to working on your emotional intelligence to manage your team, and your business intelligence to grow your business. Operational intelligence becomes less of a focus for you, and the primary focus of those you employ to run your business.
If you are a strong leader – and more importantly a strong manager – you will create a strong and empowering vision, and give your team clearly defined values and culture. When this occurs, your team will shine.
You will provide regular feedback, and delegate effectively. You will enforce reporting from your team. When you as a manager are interested in your team and invest time with your people, your team will meet individual and team KPIs.
At this stage you shift from taking ownership of everything to holding your team accountable to their responsibilities.
In my own coaching and consulting business, this is where my team and I invest the bulk of our time with clients.
Leading and managing a team requires a totally different skill set than operational intelligence. When you are self-employed, you do not need these skills, so you don’t develop them. As a result, you can get stuck at this stage for years.
You may feel unable to grow your business due to a high turnover of staff, low team morale, and general ‘staff issues’ that are holding you back.
I’m a big fan of the late Jim Rohn, and live by his statement “work harder on yourself than you do on your job”. Business is a journey of constant and never-ending improvement.
The key to mastering this stage of business is developing your own leadership and management skills. If you continue to look to the team, hoping that they will improve, you are missing the point. A strong team needs a strong leader, and that is up to you.
When you master this stage of the business cycle you have more leverage, and can deliver to more customers or clients. You can have a bigger impact on the community and start to really generate some profit.
Planning takes on a different focus with a greater emphasis on marketing, systemizing, and ensuring the client experience is consistent. At this stage you need to take a long-term focus, and plan the next three to five years of your business. You must also identify and develop future leaders to help you with the next stage of the journey.
Using the word Entrepreneur for business owners in this stage is holding them back from their potential. Don’t get me wrong – being a business owner is an amazing accomplishment, and needs to be celebrated!
There needs to be more “Business Owner of the Year” Awards.
So why aren’t self-employed people or business owners entrepreneurs?
When you are self-employed or a business owner as we’ve defined the terms above, your income is distinct from that of the true entrepreneur.
When you are self-employed, all your income is generated by personal exertion, or doing the work yourself. You are essentially trading your time for money. If you can’t take a holiday for three months because you’re the only one who generates income, then you are self-employed. Once you’re at capacity, the only way to grow your business is by hiring people.
When you’re a business owner, the only way you get income is from your business. This also does not make you an entrepreneur. We work with many entrepreneurs, and there’s a major difference.
We believe that for most business leaders, financial independence cannot come from being self-employed or a business owner.
Financial independence occurs when you generate passive income. This can occur when you become an investor or an entrepreneur.
As a business owner at this level you have further options, such as employing a General Manager to run your business for you, or selling your business. As a business leader, having this freedom is a wonderful thing.
Here’s where partnering with the right consultant is critical. Making money in business is one stage – setting yourself up with multiple income streams and a passive income is an entirely different level.
So are you an investor or an entrepreneur? Let’s talk about reaching these two levels.
The Investor
As you now have leverage in your business by being a successful business owner, you can invest time and money in educating yourself about money. This is the time to dial up your goals and shift your focus.
Now you can learn about other asset classes such as property and shares, tax structures, and self managed superannuation. You can gain a greater understanding of debt. This takes time, and it means partnering with the right people.
When you are self-employed and trading time for money, you don’t get paid when you don’t work. This limits the time you can invest developing your new skills. It comes down to the fact that the more you learn, the more you earn.
As a business owner, when you invest time growing and developing your team, the more time you have to work “harder on yourself than you do on your job”.
You need to learn the skill of delegation. If you fail to delegate you can’t grow your business effectively, as you are too busy doing everyone else’s work and fixing their mistakes. Micro-managing your team does not give you freedom to grow yourself and your business.
If you err on the side of abdication – giving too much autonomy to people who don’t have the right skills – you may find you need to fire them for poor performance, then start the cycle over again.
The key to freeing yourself to become an investor is being a disciplined and professional manager. Without this it’s a “rinse and repeat” existence for the next five to ten years.
We love assisting businesses in this space, as we find with some structure, skills and discipline, we can get traction…fast!
The Entrepreneur
Over the last 12 years we’ve had the privilege of working with existing entrepreneurs, and also taking self-employed people on the journey to becoming investors and entrepreneurs.
It’s a joy for us and for them. It’s definitely not easy, but very rewarding.
We call a business leader an entrepreneur when they have multiple businesses and/or income streams. They can have businesses across different industries, different states and different continents.
We work with business owners who now have a general manager running the business they started when they were self-employed. They now have land and property development businesses, share portfolios, as well as other diverse businesses, including farms.
Their role and skill has now shifted to governance, in which they define what their general manager is responsible for, and what they themselves oversee in their role as CEO or Chairperson.
The entrepreneur is also the figurehead of the business, and acts as more of an advisor than a manager. They can often be the rainmaker in the business, but the business is not dependent on them being there.
We enjoy our mentoring sessions with these clients. Here we discuss the vision, the ‘big picture’ stuff, and new ventures. We critique and challenge the status quo, and spend a lot of time discussing their upcoming holidays!
If you’re an entrepreneur, we congratulate you. We know how hard you’ve worked to get where you are. You’ve mastered yourself, your business and your future. We need you, and yes there should be more “Entrepreneur of the Year” awards too.
Do you need to stop calling yourself an entrepreneur?
Please do not be disheartened if you’re at the self-employed or business owner level. The investors and entrepreneurs started here too. The good news is they’ve paved the way, and there’s people out there who can help you get there.
If you are self-employed or a business owner, please, for your own benefit, stop calling yourself an entrepreneur. You could be limiting yourself and your potential.
Acknowledge where you are. Give yourself credit for how far you’ve come, then look to the next level. You’re in a good place, now let’s create a better one…