In this blog we discuss the dynamics of transitioning to a small business and the challenges you may encounter along the way, including building a team, letting go of responsibilities, and most significantly… changing your mindset!
Your business is something that’s built around you as the founder or owner. You bring in the clients. You do the work. You earn the income. And that’s the deal. Maybe you have a support staff or two, but, the business is built around you. It generates income for you. And, frankly, it will end when you either retire or pass away.
And maybe you are happy with that. And that’s okay. Because building a business is hard, and it’s messy, and it’s not the right fit for everyone! But what if you want to create a small business, something that transcends you as the founder or owner. Something that survives you as the owner and can be sold because people aren’t buying you – they’re buying the business that you created?
The first thing that you need to be prepared for – if you’re going to make the transition from running a business to building a business – is to understand that you personally can’t primarily spend your time serving the clients anymore. The fundamental constraint that every business owner eventually faces is that there are only so many hours in the day and week, and therefore only so many clients that can be served, before you hit a wall. At that moment, you reach the maximum capacity of a single person business, and have to make a decision about whether you will stay that size – with what may be a very good income – or grow into a business that goes beyond your individual capacity to serve clients.
Now, that doesn’t necessarily mean you have to get rid of all of your client facing duties. Some founders that continue to be the marketing or the face of the business, because that’s their primary skill set. But understand that if you want to build a business, your primary role isn’t serving clients. It’s not marketing for new ones. It’s being the leader of the business.
The second thing to recognise is if you’re going to build a business, then you’re going to need a skilled team to service clients. Again, building a business is not about you as the primary agent, but about you hiring employees to serve clients. On top of that, you’ll have to manage these people. And, eventually, you’ll have to hire people to help you manage other people! You will be required to bring new employees into the firm’s culture and teach them to be successful. Because, at that point, their success (your employees’ success) is your business’ success.
The third thing and arguably the biggest challenge, is that you’re also going to have to completely change your mindset. You may have started out providing a service/product to clients, but going forward you are no longer trying to do that… you’re trying to build a business that does it. The big changes aren’t actually the nuts and bolts of transitioning product or hiring some staff or changing the name of the firm – it’s a mindset shift about whether you’re really, truly trying to build a business that transcends just your personal ability.
In fact, we know from the benchmark data that you might spend 10 or more years making less money than you would by just being a solo operator, because you have to keep reinvesting to grow, to hire more staff, to get more clients, to then hire even more staff to service more clients, and so on… so that you can feed the machine and try to emerge from the other end as a business with scale. In other words, building a business takes a lot of sacrifice along the way. That’s part of the tradeoff. You don’t have to do it, but if you do, be prepared for the reality of it.
Ultimately, the path to being a business owner is not for everyone. Many are happy to continue doing all the work as a solo operator – and that’s okay! – but for those who do wish to build their business into something bigger than themselves, it will require a complete mindset shift to vision a business that truly goes beyond your individual ability to serve clients and instead is all about getting other great people to serve the clients in your business!
If you need help with business planning to grow and build your business Contact us today!