The Owner’s Role
Will you be an owner or an entrepreneur? How about a consultant? Or a freelancer? What’s the difference?
The answer to these questions is important because you get to choose the approach that you want to take based on your goals.
When you consider self-employment or starting a business, you will hear a range of opinions from other people. They may think you have the best life ever and that your achievements have all been the result of good luck, without any recognition at all for the hours of work, the risk, and the opportunities that you have created for yourself. Other people will tell you that you are crazy, that you need the security of working for an established employer, or that you are never going to make it in today’s economy. Don’t discount their own experiences in self-employment (if indeed they have that experience), and keep in mind that once you have established yourself as being a freelancer, a business owner, or an entrepreneur, going back to traditional employment is not usually an attractive option.
Common in all instances of self-employment are the following attributes. These are necessary characteristics for business owners, consultants, freelancers, and entrepreneurs:
- You must be able to admit when you make a mistake, and then learn from it.
- It’s important that you can listen to the advice of others, and then sort the good from the not so good.
- You must be able to create a plan and take action on it.
- You need to have the technical skills required or to attract people to work with you who have the skills that you don’t.
- You must be able to tolerate risk. There are plenty of risks attached to each type of business.
Differentiation
A business owner is the boss within a clearly defined business. When I think of a business owner, a picture comes to mind of a small to medium sized business. The owner is the one who makes the decisions, and the business is probably going to end with him or her (or be inherited by someone in their family). An independent lobster fisherman who hires two or four people to help him on his boat during lobster season is a business owner. A hairstylist who opens her own shop and rents three stalls to other stylists (or hires them) is also a business owner.
An entrepreneur is usually seen as taking on greater risks than your typical owner. They tackle challenging situations and solve problems that are part art and part science. What they do will certainly overlap with an owner, especially early in the business. The entrepreneur invests money that they gather from their own resources, investors, the bank, and wherever they can find the people that they need. The biggest difference between a business owner and an entrepreneur is that the entrepreneur has a long-term view that is focused on systematizing, growing, and then selling the business for a profit. A hairstylist who opens her own shop, and then creates a system for hair and beauty related services that she develops into a chain of spas across the country, is an entrepreneur.
If you want to be a freelancer because you are a great writer, editor, artist, consultant, accountant, etc., then be a freelancer. Working as a freelancer is a great way to operate as a business, and to keep the freedom that freelancing and self-employment promise.
Lots of people start out as a freelancer, but then try to hire a few freelancers to work under them. Growth through hiring more freelancers can makes things tricky, especially if you still want to work as a freelancer, because someone has to also be a manager. You run a good risk of frustrating and pushing out the other freelancers, especially if they see that you selectively pick from the job jar and keep the best assignments for yourself. Instead, decide if the nature of the business is such that you are actually an owner rather than a freelancer.
You get to choose what you are: freelancer or owner or entrepreneur.
Words of Wisdom
As Michael Gerber has taught for many years with his seminal books on The E-Myth, if you’re an entrepreneur, you cannot grow and succeed in business by doing all the work yourself. You’ve got to step back and see the larger picture of the business in order to create the circumstances to move forward. If you are doing all the work, you’re not systematizing a business and making it bigger; you are simply hiring yourself to do the work. If you’re happy with doing the work (which Gerber refers to as working in the business and not on the business), then you need to hire a manager to run the business, and take your direction from the manager. If you want to continue in the role of entrepreneur, then you need to assume the role of manager and create a company where the people you hire do the work.