Tuesday, April 14, 2020

Think of Yourself Separate From Your Business

A note for new entrepreneurs.

No matter what happens in your business, you need to think about yourself separate from your business. You are you, playing a role inside your business. You need to always maintain this distinction between yourself and your business.

Here’s why this matters. At every stage of your business, your business has a character and a personality. It has specific financial requirements. It has needs and it generates rewards. All of these things change over time.

In the meantime, you have a changing role within your company. You might become an employer or an outsourcer. You might take on a partner, buy another company to merge with, or sell your business to another company.

No one who’s been in business for five years will tell you that they foresaw every single thing that happened in their business.

When I started my first business, I just wanted to make some money from my knowledge of computers and politics. Within one month of starting my business, I had dropped the political consulting and become a technology consultant.

A year later I was deep into consulting within an industry I’d never heard of when I started. Five years after that I had a few employees and had started moving down the road that would lead to my second corporation, my first book, and a business completely unrelated to what I started out doing.

Your business will grow and morph over time. As it changes, you will need different things from your business. You will probably start out wanting money from your business. Over time, it will probably become a source of creative inspiration. And, if you’re lucky, your clients and associates will become among your closest friends.

Eventually, you may decide to change the form of your business (for example, from a sole proprietorship to corporation). Or you might change your focus from one industry to another. There are many changes you might make.

At every stage, you will do well to think of yourself as the owner of the business – not as the business itself. In the hard times, you will need to make hard decisions and push the business to pay your full due. When you deal with employees, partners, clients, and associates, you always need to be the owner.

If you lose sight of this and see yourself as the business (and the business as your self), you will end up making bad financial decisions. For example, if the business is losing money, you might lose clarity of thought as you do whatever it takes to keep your business alive.

As extreme as that seems, it is very common. Remember: 80% of all businesses fail. And very often that failure is a result of confusing our personal ego with the business itself.

Even if you have to get rid of all your employees and go back to a business of one person, this is better than going out of business because you made bad decisions that led to borrowing money, growing debts, and eventual bankruptcy.

I know this sounds extreme. But mark your calendar and re-read this chapter one year from today. I promise it will make a lot more sense!


More juicy info for first time entrepreneurs . . .


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1 comment:

  1. I would add that one of the great challenges of solepreneur and other micro businesses is preparing their business for eventual sale. One thing that your business cannot be if you want to sell it ever . . . is you. What do you have to sell if you ARE the business? Building a business entails extricating yourself from its center over time. While many a founder sets and maintains the tone and culture of the business, the successful ones move from the center to the periphery and over time, even further out to much more of an observational role and then someday, sell. Be that guy, or gal.


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