To many people, owning your own business and being your own boss is an enticing dream. Visions of controlling your destiny and not being told what to do are reminiscent of a professional nirvana.
For many other people, being an entrepreneur is a roller coaster of conflicting emotions. Entrepreneurship is a never-ending series of situations that can move from feelings of total control, creativity, and freedom…to feeling trapped, blindsided, and a slave to the company that you have created.
Working for someone else vs. being your own boss is a major decision that should not be taken lightly. Being a business owner is not for the faint of heart.
Yet in today’s challenging job market, many professionals blithely open their own consulting firms or small businesses without fully understanding the critical changes in perception that must be made in order to succeed.
8 Perceptual Changes That Differentiate Entrepreneurs From Employees
One of the most popular recurring misconceptions about being a business owner is that you now call all the shots. You can basically do whatever you want because you own the business.
However, businesses of any size do not operate within a vacuum. No one – even the one-person sole proprietorship – is immune to the internal and external forces that affect a business:
- Changes in market demographics, lifestyles, and product preference. Many new entrepreneurs look at what they are good at and turn them into products with the idea that, “If you build it, they will come.” However, just because you do something well does not mean that others necessarily want it OR that they are willing to pay for it – often times not at the price point at which you want to sell it. Even more importantly, people are fickle and their preferences change; if a new competitor comes out with a product or service that is more enticing, your customers are very likely to at least try it out.
Key Questions: Are you focused on both daily operations and long-term strategies to continue to thrill your customers so that they keep coming back to you – and do your operations effectively enhance your ability to actually do it?
- Fluctuations (often dizzying) in the economy. Even experienced economists are wrong in their predictions about where the economy is going. Without proper contracts in place, a client can decide to cancel or postpone an order due to economic changes that affect their businesses – and which also affect yours. There is always an element of risk in any business. When you are an employee, a bad economy might result in being downsized; but when you own the business, it might result in significant debt, sleepless nights, and personal as well as company bankruptcy.
Key Questions: Do you have processes in place to mitigate financial risk – or are you too highly leveraged?
- Flawed assumptions about what works in business. Too many employees who have become entrepreneurs attempt to use the same business models as their previous employers. The problem is that these employers usually had well-known brands, deeper insights into their markets, established clientele, and higher levels of working capital. Adjusting a large company’s business model to suit a start-up or small company is more than just “tweaking”: it requires gut-wrenching, data-driven analysis as well as an in-depth understanding of your unique strategic goals as the owner of an unknown business. The real costs of an unsuitable business model can be substantial on financial as well as emotional levels.
Key Questions: Have you aligned industry insights, market trends, and labor with your business model?
- Failure to innovate. Innovation is generally higher in entrepreneurial ventures – you have to be creative and think outside the box in order to do more with less in a way that creates value for your as yet unknown clients. Many new entrepreneurs unsuccessfully try to replicate the products, services, guarantees, and/or price points of their large corporate competitors. Creating and selling products/services is more than just manufacturing and marketing; the final offerings reflect a long line of processes, assumptions, and risk-taking that are unseen by the consumer yet dramatically affect those final outputs. Necessity is the mother of invention and the only way to differentiate your company from the “big boys” is by doing something differently and doing it well.
Key Questions: While you don’t have to “reinvent the wheel,” what unique selling proposition (USP) does your company possess?
- Failure to implement. Innovation and implementation work hand-in-hand – but this dual focus is probably the largest bailiwick for entrepreneurs who are cash-strapped, overworked, and desperate to close sales. The greatest idea must be operationalized in order to be transformed from a dream into reality. Without effective processes and engaged employees, it becomes extremely difficult for a company to “make good” on what it is attempting to bring to market. The challenge is even more difficult for a one-person sole proprietor or consultant.
Key Questions: Even if your idea is great, do you know how to streamline the input/transformation/output process so that you can meet deadlines and sell the products at a price point that actually covers all your associated costs and expenses? Are your employees on board and enthusiastic about what you sell and are you able to adequately compensate and recognize them for their efforts on behalf of your business?
- Viewing your business as your baby. Many people have likened entrepreneurship to parenthood. Your business is like your baby because you created it, nurtured it, and protect it to the best of your ability. Like children, your business can give you a great deal of joy and pride, but also a great deal of pain and frustration. Both businesses and children eventually mature and move away from the original owner or parent; it is only through solid processes, people, and products that your business can “grow up” into an independent entity that continues to thrive and grow. But letting go can be extremely difficult.
Key Questions: Can your business baby survive without you – have you put in place the necessary processes to allow it to grow?
- Too closely identifying with your business. No matter how large or small your business, owners usually see their enterprises as reflections of themselves. Although many companies are eventually sold to new owners, many other companies remain under the tight control of the original owner. This is both a good and bad thing. It’s good because there is a hardwired need to run your business in a way that makes you feel good and allows you to be able to look at yourself in the mirror with pride and dignity. But it’s also bad when it leads to rigidity and change resistance to ideas that you didn’t think of – especially when your business is in crisis. Unless tempered, the amount of emotional connection that an entrepreneur has toward his or her business can skew sound business decisions due to the need to satisfy and substantiate the owner’s ego.
Key Questions: How great is the overlap between your business model and ego? (Hint: There is always an overlap!)
- Physical, emotional, and energy limitations of being human. We are not robots or automatons. Unfortunately, humans need time to rejuvenate physically as well as mentally. Maintaining high levels of motivation and stamina is a challenge. Many entrepreneurs lie awake at night (losing much needed regenerative sleep) thinking about the problems that still need to be solved, the clients who promised to pay but didn’t, and the ever-increasing “to do” list. We can’t do it all and when you say “yes” to one thing, you must say “no” to something else. This goes back to your strategic goals and how your business relates to the rest of your life.
Key Questions: Have you realistically determined the necessary trade-offs prior to launching your business – or are you over-extending yourself physically and emotionally?
Owning your own business is inherently different from working (however hard) as an employee in someone else’s business. While the stakes are higher and the risks are scarier, the financial and emotional rewards of entrepreneurship are significantly greater. While these trade-offs are not for everybody, to someone with an entrepreneurial mindset, these rewards offset the risks.
Dr. Geri Puleo, SPHR, is a change management/HR expert and the President of Change Management Solutions, Inc. A popular speaker at regional and national conferences, she can be reached at gpuleo@ChangeWithoutBurnout.com. You can watch her TEDx Talk on YouTube at https://www.youtube.com/watch?v=hFkI69zJzLI.