What is it that separates the likes of Steve Jobs, Bill Gates, and Elon Musk, from your friend who sells cupcakes online, aside from, of course, success?
All the aforementioned people are technical ‘business owners’ but why are the captains of industry I mentioned earlier bestowed with the titles of ‘entrepreneur’ while your friend is simply referred to as ‘self-employed’?
In the business world, these two terms mean entirely different things. But why is it that many small-time freelancers and people who run odd jobs insist on calling themselves, entrepreneurs? Is it a harmless ego boost, or can it have undesirable repercussions?
Perhaps two of the most incorrectly conflated terms in the English language, are ‘self-employed’ and ‘entrepreneur’. And as uncomfortable and discouraging as it may appear to be, the differences between the two must be properly established, lest countless people, including you, who are too invested to realise the perilousness of the situation and find yourselves committing career suicide.
Self-employment is in many ways, a trap that one finds themselves in; a black hole that sucks in untold amounts of time, money, and skills, on an endeavour, which is unstructured and suffers from an inconsistency of effort and returns.
In these situations, a familiar yet uncomfortable situation is that as an ‘entrepreneur’, you suffer from what can only be described as the ‘worst of both worlds’ where you endure the stresses of being business owners, but scarcely have anything to show for it, i.e. profits, much like a salaried employee. In a purely logical sense, finding yourself in a perpetual state of self-employment, with no direction or scope of expansion, is a damning fate, but fortunately, there are ways to get out of it.
Before we discuss how to overcome such an eventuality, it is important to get clarity on how exactly ‘self-employment’ differs from being a business owner.
Any business, no matter its scale, has seven distinct functions i.e. Marketing, Sales, Operations, R&D, Accounts, Human Resources, and Management. In a self-employment scenario, you would have observed that these functions are not consistent and that the entire business lacks the stability of action in these areas, and the entrepreneur remains in a perpetual state of what I call ‘fire-fighting mode’. In a business scenario, the entrepreneur has developed systems and created teams to handle these functions, which keeps the business moving forward and continuously evolving. If you find yourself personally and consistently undertaking the aforementioned functions, you suffer from a case of self-employment.
Role of the business owner
In a self-employment scenario, all operations are directly dependent on the business owner, whether it’s planning marketing initiatives, closing sales, servicing customers, handling accounts, or hiring new talent. As a result, the owner is constantly forced to take a very hands-on approach to the company’s daily functioning. In a business scenario, however, considering the fact that the owner has already assigned talent to deal with daily operations, they can instead focus on a strategic initiative to optimize performance, expand the business, and increase profits. If you find yourself spending little to no time on strategic planning, while instead of having to deal with daily business operations on a regular basis, you’re self-employed.
In a self-employment scenario, the ultimate goal is for the entrepreneur to generate a comfortable personal income, while simultaneously being able to meet business expenses, especially salaries, in a timely manner.
In this regard, it’s not entirely dissimilar from taking up a well-paying profession. With businesses, on the other hand, the objective is to generate massive wealth for the shareholders and create value for customers. Businesses give you the opportunity of establishing wealth creation systems, which are consistent, scalable, and unlimited. If you find yourself taking up small projects on a need basis, with few plans for the future other than wondering where your next meal is coming from, you’re self-employed.
Now that we’ve established your situation (considering you are indeed self-employed), we can now discuss a few simple remedies to address the core issues that are holding you back. The fundamental problem with self-employment is that it lacks long-term goals and a direction, and these factors must, therefore, be eliminated from the picture. Here are three simple but comprehensive steps that will help you:
Creating a sustainable, scalable business model
Sustainability and scalability are two key features that every business model must incorporate, which most of them do not. I’ve personally witnessed how so many tech startups, many of which have become household names, have highly scalable business models but are unable to draw out the tipping point where the business will ever become profitable i.e. sustainable.
This is dangerous because it leads to wishful thinking around increasing valuations and raising funds with no clear finish line, making for a bubble that could pop at any moment. On the end of the scale, there are traditional businesses which are profitable but lack the ability or wiliness to expand their operations i.e. scalability. The ideal business model should allow for your business to grow while remaining profitable, a failure on either front, over a long period is simply not an option.
Groom a new generation of leaders
It is imperative as an entrepreneur to assemble a ‘core-team’ of talented individuals who are competent and trustworthy enough to run critical business functions in your absence. This gives you the luxury to focus on strategic planning while your managers handle the company’s daily operations that are unworthy of your attention.
Build systems, and set protocols
Systems and protocols are a proven way to ensure efficiency and accountability. It is, therefore, necessary that no matter how small your organisation, you set these systems in place early on.
Many small and medium-sized business owners object to systems saying that they only slow things down. But this is because these entrepreneurs do not have adequate knowledge about the topic of ‘systems’ and their ideas on the subject are rooted in traditional sciences around process building and compliance, which are out-dated, and are not agile enough for small and medium-sized businesses.
What I’ve just explained to you is the hard truth. In a society that encourages people to chase their dreams, with little regard for the consequences, I implore you to access the situation you as a business owner is in, and act accordingly. Self-employment is a terrible trap that consumes everyone who unsuspecting finds their way into it, and the only way out is to give up and get a job, which is, of course, unacceptable for those with an entrepreneurial spirit, or make a change. The choice is yours.
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