Last week a friend asked what it’s like to own a business. Being the very profound thinker that I am, I told him “it sucks, it’s more like owning a lot of risk.”
As it turned out, he had just given notice at his job the day prior and was on his way to sign some paperwork for a business loan. Oops.
Here’s the thing, if you want the cheery answer, you may need to prep me. Tell me you’re on your way to the bank, your pregnant wife is in the car with you, and you’ve asked your in-laws to cosign the loan. Because, if you don’t tell me how you’d like me to respond, you’re going to get one of a dozen similar, but varying, reactions based partially on whether or not I’m swallowing down an I think I’m gonna vomit moment.
That’s why my business advice is so sought after – box o’ chocolates.
But, now that nobody’s asking…
Believe it or not, I have deeper thoughts on the topic of business ownership. They start like this: there’s a difference between owning a business and owning a job. Robert Kiyosaki makes a similar statement somewhere within his Rich Dad, Poor Dad series, but I’m not going to look for an exact quote – every time I open one of his books, my realtor somehow knows to call me about a new listing.
Back to the point. I have friends that owned businesses and couldn’t wait to get out. It wasn’t for lack of entrepreneurial spirit. It was that their businesses never seemed to build perpetual motion. If they took time away, the wheels stopped spinning. And if you can’t leave your business for an extended period of time (say three weeks or more) and return to the same condition that you left, what you actually own is a job.
But, I don’t know any business owners who do just one thing. Most businesses are made up of multiple components that operate in varying stages of self-sufficiency. In the case of small development firms, landing a new client might be a high demand component with no residual guarantee. Hosting (especially if resold) is typically a low demand component with ongoing income. If 95% of your required operating expense was covered by resold hosting, you could probably spend all of March in Austin and feel comfortable that your business systems and employees would all be fine without you.
Hosting is a bad example, but if you actively looked for business components with the greatest potential for residual return and the lowest potential for attention requirement, you’d probably be surprised by what you found. Every business owner should be asking themselves two questions: what’s easy, and what’s profitable. Once identified, more attention should be paid to them. Being good at what you do is a lot easier when you aren’t having to make decisions based on paying the bills. And finding residual income that doesn’t require constant attention is a great way to get there.
I’m the first to admit that I’m not the best source for advice (solicited or otherwise,) but our business today is a lot different than our business five years ago. The amount of residual income and the number of supplemental efforts and businesses has made ep a much better thing to be a part of.
Next time I get a call from a friend out of the blue, I’ll answer the business question with “it’s freakin’ awesome.” But I have a condition. Don’t go into to business to own your own job. Do it to own your own business. And remember, as deep a thinker as I am, free advice is what it is (unreliable and sometimes sarcastic.)
11 Responses to “The difference between owning a business and owning a job”
The difference between owning a business and owning a job…
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I recommend reading the book, “E-Myth: Revisited” this article reminded me about a lot of the principles taught there, good stuff.
Kiyosaki is a fraud. For your own good, please don’t follow his advice.
According to Thomas J. Stanley (in his book “The Millionaire Mind”), a man who has researched America’s wealthy for over 20 years, two of the important keys to success are 1) finding something you love and 2) something that no one else (or very few people at most) is doing. If you do what’s easy, more than likely you’ll have very stiff competition. It’s better to create your own niche with a smaller pool of competitors.
The following link didn’t make it in my previous post. (http://www.johntreed.com/Kiyosaki.html)
While there is a certain amount of truth to that (you become owned by your clients), your premise about being able to take 3 weeks off is fundamentally flawed.
No business owner, (or job owner) *can* take 3 weeks off. If you’ve got dreams that one day you will get enough hosting clients so you can shove off to Europe for the month….prepare to be let down.
The fundamental laws of business tell us that if someone could take 3 weeks off, someone else would be willing only to take 2 weeks off and would therefore steal business from him. This would continue until what we have now; nearly all your time most be spent focusing on work.
Do not despair, learn to enjoy stressful, hard work for its on reward. Never expect to get a break. Do not pretend that Saturday is different from Monday.
Bill, thanks for the book suggestion – I’ll check it out.
Hey Jeremy. Kiyosaki has some great, tight focus, single sentence points – I don’t endorse his wider strategies, but I do respect how much controversy the man is able to stir up.
Bryan, I don’t agree – business redundancy is very attainable. My personal reasons for working towards it aren’t coming out of a desire to pace my work schedule or take more vacations. I enjoy what I do. But if my business can’t survive without me or one of my business partners, it’s a job – just happens to be a good one.
Bryan S. is wrong.
I took five weeks off from working to relocate my family to Europe temporarily.
Now taking that much time off obviously set me back a little ways and I would have made more money had I been working, but I did it anyway.
What “job” do you know of would give an employee five weeks off to move anywhere in the world they chose?
Bryan -
You are in the wrong kind of business, my friend.
I have owned numerous businesses that I could take off for 3 weeks, sometimes 3 months, and the cashfow (and high profit margins) just kept on flowing.
The article is right — client service gigs are much more akin to jobs than more ‘productized’ entrepreneurial pursuits.
mod 1 on E-Myth as well. And Kiyosaki, good for inspiration & getting started, but for going the distance.
ps. my sites do $5k per month, 95% of it passive. check my blog for the screenshots. peace.
cdc and fezbucks: thanks for the comments.
We actually have a few ventures that aren’t service based at all – a lot of my perspective is based off of them. It’s nice to keep the pickaxe sharp, but if there are ways to spin gold from straw it doesn’t make as much sense to spend the entire day digging for it.
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