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How to become a business owner
Are you running your business or is it running you?
If you were to take a two-week vacation with your family, how would you spend your time while you were out of the office? What would happen to your business while you were gone? Would you spend the whole time on your phone or laptop answering emails and putting out fires? Is your team unable to function without you being in contact with them? Would your vacation cause you more stress because you’re not in the office?
If your business would suffer in your short absence, then you are a business operator – not a business owner. When we define a business operator, we see that it involves the day-to-day running of a company. It’s very hands-on and, when the operator is not on-site, the business usually comes to a screeching halt. For a business owner, the focus is on making decisions for and profiting from the business.
As Tony tells attendees at his Business Mastery events, the real goal of a business must be to build something that will run when you are not there. If you’re a business operator, the good news is that you can learn how to become a business owner in the truest sense of the word – and achieve your dreams.
Are you a business owner?
When we use the words business owner, meaning one who individually or with partners is in control of monetary and operational decision-making, we are talking about a true sense of ownership. The business owner has ultimate control over the company and decides what to delegate and to whom.
Though the image of the young Silicon Valley prodigy often comes to mind, the average age of a business owner in the US is closer to 50 years old. A business owner can earn a monthly salary and typically earns more than an average American, but he or she is not an employee and is the only one in the company who has the right to take a net profit at the end of the year or reinvest that money back into the company.
What separates an owner from an operator? Adopting empowering beliefs about freedom and not struggling to do it all on your own.
To gather whether you are a business owner or operator, it all comes down to one question: Are you running your business, or is your business running you? To determine the answer to this question, ask yourself the following: Are you able to be strategic, or are you doing the same things over and over because you’re too busy to create an atmosphere of innovation? Are you able to step back and see the bigger picture? Or are you caught in the weeds because your team can’t effectively run the ship without you?
Entrepreneur vs. business owner
Is an entrepreneur a business owner? Entrepreneurs have an idea or technology they develop into a business, often at great financial risk. In the early stages, it’s therefore true that all business owners are entrepreneurs – when you start a business, often all you have is a vision and funding. As your business matures and is no longer a new and risky venture, you may no longer be considered an entrepreneur.
On the other hand there are entrepreneurs who never become business owners. You could be an investor, or be a visionary leader who sold a great idea without ever taking on any of the work. There are even serial entrepreneurs who start and quickly sell companies as a living.
How to become a business owner
If you can’t step away from your company and let others steer the course, your new goal is this: Learn how to become a business owner instead of an operator. Choose to make that shift in both your identity and your business. How? As Tony said, a business owner is the ultimate strategist.
If you ask yourself “What is a business owner?” then you likely have some areas where you can improve when it comes to running your own company. Want to learn how to become a business owner and get out of operator mode? Here’s what it takes.
1. Wear a variety of hats
Though the goal is to build a cross–functional team that can handle most aspects of your business without you, this won’t be the case in the beginning. As a new business owner, you will find yourself answering phones and mopping the office floor in addition to making presentations and landing big deals.
You’ll likely need to learn new skills as well, like accounting and reading financial statements. A business is only as strong as the psychology of its leader, and there’s no shame in admitting that you have weaknesses. In fact, it’s essential to ask for help when you need it or even outsource some work so you have time to focus on what really matters.
2. Make personal sacrifices
A business owner will have to make some short-term sacrifices to grow their company. This could mean long hours, missed vacations and putting extracurricular activities on hold. However, the bigger picture is that this effort will help you achieve long-term goals.
Remember that there is no such thing as work-life balance – there is only work-life integration. When you’re doing what you love, your work and life are naturally integrated. And once you’ve built your business and found ways to increase profits, you can enjoy the freedom you’ve earned.
3. Invest in yourself
Think that becoming a business owner means making big bucks right away? Think again. Most new business owners end up investing any profits in their companies rather than paying themselves. In fact, the answer to “How much do you pay yourself as a business owner?” is often “Nothing” in the first few years. According to Fundera, 30% of small business owners take no salary at all, and 83% pay themselves less than $100,000 per year.
As a business owner, you may be required to invest some of your savings in the business as it grows. However, just as the personal sacrifices are usually short term, so are the financial ones. You’ll have some lean years, but when you’re doing what you love, it will be worth it. And once you grow your business beyond the infancy and teen phases of the business cycle, you’ll achieve both financial and personal freedom.
4. Focus on what’s important
When you look at the business owner definition, you’ll notice it does not include putting out fires. A business owner focuses on top-level issues like creating a positive organizational culture and developing new strategies to increase customer loyalty. You create a compelling vision for your company and inspire others to follow you through that vision.
Don’t get wrapped up in details. A business owner’s job is to guide the direction of the company by building strong values and a culture of innovation. The details can be left to your team.
5. Build the right team
A true business owner maximizes his or her business by leveraging not only their own ideas, but the abilities and strengths of the talented individuals around them by building the right team. You certainly need to have your own leadership skills, but you also need to strategically hire so that, over time, they can step into major leadership roles and handle the day-to-day operations of the business without you.
Ensure that you have a team you can trust with this “baby” you have poured so much love and passion into. Otherwise, your business will always be limited by what you as a business owner can personally do each day and you’ll always be stressed. If that’s the case, then you don’t have a business – you have a job. You’re restricted when you have a job that you have to be at every day, but you’re financially free when you have a business that can effectively run without you.
Does becoming a business owner seem a little overwhelming? This doesn’t mean you can’t do the things you love or be a part of the business. By all means, you can still be the operator where it makes sense to be the operator. But allow yourself and your business to thrive by making this necessary shift in your mentality.
Channel the great traits of an entrepreneur and have a vision in mind for your company. What’s your ultimate goal for launching your own business? Chances are, it was to experience greater financial freedom or to have more time to focus on the things you love, like your family, interests or worthy causes. Keep this end goal in mind as you make the shift from business operator to business owner.
Are you a business owner? If not, will you become one? Learn more about what it takes to be a business owner and spend time with others who are working to build their own businesses. Shift from a life of stress to a life of freedom by attending Business Mastery