Are you a business owner?

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In today’s Blog, I want to focus on your business. And more specifically, are you a business owner? Or are you self-employed?

So what do I mean by a business owner VS self-employed?   These are two very different things, with two different outcomes, two sets of challenges, and two different sets of rewards. Neither one is better than the other. They are just different.

I believe it’s important to understand the differences so that you are chasing the right outcome. I find a lot of business owners haven’t thought about it long enough to understand what I’m saying. I will tell you that I have been a business owner my whole life, and now I’m moving towards being self-employed. So what’s the difference between these two?

I’m gonna talk about Joe and Sandy today. These are my two business examples. Both of them are in business. They both have a business name. Both of them have an office they go to. They both have a business checking account. They both incorporated and they have an LLC.

Joe, on the one hand, has a four-year degree. He has his architect’s license and 10 years of corporate experience. He has an architectural drafting business.

Sandy, on the other hand, is a landscaper. She has four crews out working for her. She has an office and an office staff. She has a management team.

Joe makes about $200,000 a year. And Sandy makes about $200,000 a year. They are both happy with what they do. So the question is, what’s the real difference between these two?

Joe has no employees. That’s pretty nice. He has no payroll headaches. I gotta tell you, I like that. Joe doesn’t have to deal with workman’s comp or liability issues. Joe can work from almost anywhere with a computer and a cell phone. Joe has a good reputation in the architectural community and his customers like him. 

Sandy, on the other hand, has lots of employees. She has a big payroll. Sandy has issues to deal with like payroll filings, matching taxes, workman’s comp insurance, and liability insurance. Sandy has people that get hurt on the job. But Sandy also has a good team in place at her office that helps her manage the day-to-day. So what’s the real difference between these two? ,

Joe is an actual real-world example of an architect that I used to build one of our restaurants about two years ago. Right in the middle of our project, Joe gets sick and I don’t hear from him. I’m wondering why I don’t have my plans and our project is grinding to a halt. After about a week, I finally I get a call and Joe says,

“Listen, I’m sorry, I am sick, I can’t work. It’s going to be a couple of weeks. All the rest of my customers understand I’m asking for a little bit of time.”

Well, here’s the problem. I’ve got a construction project going on, and I can’t shut it down while we wait on Joe to get better. I’m sorry, Joe, I have to get somebody else to do this job. I don’t know if it’s two weeks, I don’t know if it’s four weeks, I don’t know if Joe’s ever coming back. So we had to fire Joe, and we had to get somebody else to finish the project. It sucked for Joe and it sucked for me. Joe was temporarily out of business.

With that in mind, let me ask you this about your business. If you stopped showing up for work, if you didn’t go to the job site, or if you stopped trying to sell your product, what happens to your business? Are you out of business? Or does it keep going? Do you provide most of the sales? What if you stopped? Do you do most of the technical work? What if it stopped? If your customers rely on you for your personal knowledge and expertise, and suddenly you can’t give it to them, what happens to your business? Can you go on vacation for six months? Or here’s an easy one, can you turn your cell phone off for about six weeks and just not answer it? What happens to your business? What happens to your income? And what happens to your family? If your answer to all those things is no I can’t do it, that’s okay. As long as you understand that you’re self-employed. You are not a BUSINESS owner. You don’t have a business that can carry on without you.

Sandy, on the other hand, has a team. She has managers and accounting people. She has salespeople and general workers. If Sandy is sick and she’s laying home in bed, her team goes on. Everybody is still doing their job. Sandy’s income isn’t interrupted. Sandy is a business owner. She has systems in place. Her business can run without her being there all the time.

That’s the real difference between owning a business and being self-employed.

And here’s the big one, too, Sandy is building intrinsic value in that business. She has the ability to walk away from that business one day and collect the income, or she can sell it for a potentially large one-time payout and sail away in the sunset.

Joe, on the other hand, doesn’t have any value in his business. In 20 years he is going to just quit. He’s going to get nothing more than the money he’s already earned.

So the question is, are YOU a business owner… Or are you self-employed? Are you building value? There’s nothing wrong with either answer. You just need to understand what you have, and what you’re building so that you’re not surprised one day with the outcome that you get.

The next question is, do you WANT to be a business owner… or do you want to be self-employed?

I told you that I’ve been a business owner through multiple companies for 30 years, and I’m kind of tired of it. I’ve sold four companies into private equity and venture capital. I’ve made a lot of money, but I think I’m gonna go back to being self-employed at this point. I just want to work and do what I do and have fun and help people……. It’s your choice.

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