3 Stages from Self-Employed to Business Success

Making the move from self-employed to successful business owner sounds easy on paper, but don’t be fooled! There’s plenty of work involved. However, on the other hand, there’s also the reward: money in your pocket and time on your hands to plan your next move.

So how do you get from Stage 1 to Stage 3? Let’s break it down:

Stage 1: Time and Money

If you are still working a full-time job, your biggest challenge with Stage 1 will be time. A new business is going to demand a lot of your time. And if you’re not taking it out of your full-time job, it’s going to come from family time. That means the potential for conflict. This is a great place to get your family involved. If you’re going to be less available while you begin this new venture, talk to everyone about your goals and plans and how everyone as a family can help to make the changes needed to get the new business off the ground.

The other concern is cash flow. If you’re leaving a full-time job you’ll need to make sure you have cash flow coming in right away or have enough money put aside for several months. Most businesses struggle in the beginning. You need to build inventory, products, market share, websites, and so forth. That takes cash. It’s essential that you make a budget to learn what your cash needs will be. Plan on having a good reserve and quick sales if you immediately are planning to quit your day job.

Stage 2: Learning to Let Go

At Stage 2, your biggest challenge will be fighting the need and the desire to do everything for yourself. Letting go of tasks is difficult for you. You’re possessive of your baby, and not interested in someone messing it up. But, because you’ve been doing everything yourself, you probably don’t have great systems in place so someone else can step in and truly give you a helping hand.

This is where you first really begin to bump into the difference between working on your business versus working in your business. Stage 2 is a place where many businesses and business owners stay. In a sense, it’s easy. The cash is coming in. You’re doing what you want, but on your own terms. You may not even want to expand beyond a certain point because you like things the way they are.

That’s all okay, but it’s important to recognize that you’re limiting your time and earning potential to what you can physically get done each day. Plus you’re limiting your freedom. Vacations are hard to come by, and you still may find yourself in conflict with your family over family vs. business needs.

To move to the next step means hiring your replacement(s), and that means your cash flow is going to dip for a while. You’ll need to be able to run some business projections to determine who you need and how much it’s going to cost. Plus you need to make sure those you’re hiring have a good ROI, or return on investment. For example, if you hire a bookkeeper so that you don’t have to do the bookkeeping, what does freeing you up from that task mean for the business? How much more in revenue can you generate for the business by letting go of that task?

Stage 3: The Move to Working on Your Business

When you get to Stage 3, the work begins all over again. Now you’re looking at replicating yourself so that you can take yourself away from the daily business work and begin to look at the bigger picture: growth and development.

Stage 3 is all about building systems. You’re going to have to document everything you have been doing in such a way that other people can do it. It’s a huge challenge! Designing systems isn’t easy if you’re more of a big-picture person and aren’t at your best when caught up in details. It’s also hard if your business is rocketing along and the work is coming fast and furious. The temptation to run with it and catch up systems at a later date is alluring.

The payoff is money and time. As you replicate yourself, your revenues will increase, but so will your costs. So it’s still not time to take your eye off the bottom-line. But making the move to working on your business also gives you the time to look around to see what else you could do. Perhaps there’s another income source you’ve wanted to explore. Maybe there’s a product or service that meshes nicely. Maybe you see a new market that needs some nurturing. Or, maybe you see the writing on the wall for your business, and you need to retool to meet a coming demand or challenge.

You’ll find more on designing systems, budgeting and cash flow projections in Smart Business, Stupid Business. Pick up your copy today and begin the journey to smart, successful business owner!