Most Business Owners Don't Actually Own a Business

July 26, 2014
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ReubenD's recent blog, "Taking the Plunge on People and Equipment", was great. He made some great suggestions for tackling an issue with which many contractors struggle. That said, I have to disagree with his opening line that deciding when to hire additional people or invest in new equipment is "one of the hardest decisions to make in any business."

Deciding when to hire additional people or invest in new equipment is one of the hardest decisions to make for contractors that own a job (but think they own a business).

Confused?

Let me explain...

Most business owners don't really own a business. They own a job.

The simplest way to determine whether you own a company or a job is to ask yourself the question, "if I quit showing up tomorrow, would my business continue to run and flourish or would all hell break loose?"

If you can step away from the day-to-day and have things run without you, give yourself a pat on the back. You've managed to do what most people find impossible - you've built a company. If, on the other hand, all hell breaks loose every time you try to take a short vacation, you my friend, have a job - not a business.

Getting back to the subject of ReubenD's post.

To transition from owning a job to owning a business, you need to work to create systems that make decisions like when to add human resources or invest in equipment, easy.

For example, instead of spending (wasting) time trying to figure out the cheapest way to build a good looking website, spend time trying to find a long-term marketing partner to help you create a marketing system that you'll use to generate a predictable volume of qualified leads each month.

(Note: A great website is arguably the foundation of your marketing system, but in my experience, most web developers lack the business accumen to build what you really need to succeed.)

When you know exactly how many new, qualified leads you're going to get each month (plus or minus a small margin of error), and how many of those leads are going to turn into sales; when you know how long it takes you - from posting a job through training - to onboard someone new, it's not hard to make these decisions.

What is hard, very hard in fact, is creating systems (and fine tuning them to the point that you transition from owning a job to owning a business).

A lot of small businesses start the process, but abandon it because they perceive a lack of results and progress. They expect the process to be quick and clean - "cookie-cutter" for lack of a different phrase. It's not.

Building a marketing system, for example, can take 12-24 months - sometimes longer.

You've got to assess where the business and its marketing is today. You have to put the right tracking tools in place - even when there's sometimes nothing to track. A lot of contractors are really baffled by this... "You want me to pay for tools to quantify nothing?! I just want to put all my budget into SEO!"

Those that own businesses understand the need to make data-driven decisions. As a result, they don't question the investment in various analytical tools. They just do it. 

Equally alien to many contractors is the need to run marketing test after test - without generating a positive return. Business owners realize that a failed test generates data - data used to refine and improve future tests Business owners realize that most highly successful marketing campaigns are the product of many failed attempts.

I can almost always tell when someone is going to be able to move from owning a job to owning a business based on how they react when a marketing test fails miserably. Those that agreed to invest in the analytical tools to track the campaigns success and recognized the failure as a lesson learned - another datapoint in the creation of their marketing system - end up running businesses. Those that saw the failed marketing attempts as a waste of money; those that jump from marketing partner to marketing partner (sort of using the "one strike and you're out" method of marketing), end up staying small and owning a job - F-O-R-E-V-E-R!

So, if you're struggling with when to hire someone new or invest in a new peice of equipment, by all means take some of ReubenD's advice. At the same time, recognize the difficulty for what it is - a symptom of owning a job - not a business.

And don't forget, creating systems is flippin' hard. If it weren't, everyone would own a business! Embrace the struggle because there's nothing more rewarding when you get it right.

Post by:

Ben Landers | Website


Comments (1)

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    jhutchover 5 years ago

    Excellent points! Systems and marketing are probably the most important things a successful contractor can invest in.

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