Why did I decide to go into business for myself?

Why did I decide to go into business for myself?

Many have tried, many have failed but the few entrepreneurs that continue and succeed have certain things in common. With assurance, I can say that they have all asked themselves this critical question at some point in their effort… “Why did I decide to go into business for myself?” This question is typically following either a downturn in sales, an unfortunate mechanical mishap or an employee snafu that seemed to fall outside the regular flow of business operations. Much planning is typically done prior to going into business for yourself but there is always an outlier situation that befalls the entrepreneur. Let’s look at the history.

I’ve had the good fortune in my career as a business analyst to visit over 5,000 small to medium size companies meeting the business owners young and old. My work took me all over the country visiting over 500 small towns and cities. Over the years, my discovery had some specific similarities when I asked how they got started in their own business. The story was remarkably consistent. A vast majority (I’d argue over 90%) decided in high school that they really had little interest in pursuing their education by going either to college or trade school. So, while in high school they take a part time job working either in the trades OR whatever industry that they could find work, restaurant, manufacturing, distribution or other.

Turns out they become quite proficient at their skill level and are offered a full-time job with the company after they graduate from high school. After working several years as a manufacturer/plumber/electrician/excavator/distributor (enter the job title here), they realize they are so good that they find themselves as the key employee for the employer. Here’s where the rubber hits the road… he says to himself, “I’m tired of working hard for this guy while HE makes all the money and I get a wage.” Now the wheels start turning. Deciding that he knows as much about the business that the numb-nuts he worked for does, he decides to set out on his own. Slaps a magnetic sign on the side of his truck/car and/or floods social media with his capabilities and suddenly he’s his own business.

For some time, things go quite well because when you get started on your own all you can do is go up, right?!  The people he had spoken to while employed by another guy are asking if you’ll do their project, and they know someone who also needs work done, and so on and so on. Getting business as an owner-operator doesn’t seem that tough. In fact, he can hardly keep up with the demand. Enter phase 2, now I need help with all the work. Employing your brother/cousin/friend seems like a logical choice because you know him/her and the quality of their work so it seems like a great fit. With 2 people doing the work, things continue to grow. As you would imagine, the business is successful because all the WORK is controlled by the owner. Everyone’s happy, so it seems.

Suddenly, with the addition of a few more employees, the owner has less time to do the work and finds himself tied behind the computer up to his eyeballs in administrative tasks he never really tended to before he had a staff, equipment, inventory, vehicles or whatever. The people he hired for the work aren’t performing as he expects and he now finds himself in re-work, repair, mishaps, or any other issues as the industry may dictate. As pressure mounts to gain more clients to keep his people busy and keep up with the steady flow of expenses that is bound to increase as the business grows, he finds himself asking the question…

At this point the company has managed, depending upon the industry, anywhere from $1m to $2m in revenues. The problem is there doesn’t seem to be as much money “left over” as there used to be. Even though sales have doubled, tripled, or even quadrupled, the amount of profit has dwindled. “How can this be?”, he thinks to himself. With pressure mounting to keep his family financially stable while growing his business, he comes to one of his first critical decision-making points in his business. When he was doing the work himself, he was taking home more money with less headaches. Now he’s working more and taking home less – usually with many more headaches. The answer, he thinks to himself, is simple. Dial it back, sell some equipment, and jump back into it and do more himself.

I have seen business owners who have made this “dial back” decision 2 and 3 times in their time as the owner. Now they’re anywhere from 50 to 60 years of age and realize running the business isn’t all it’s cracked up to be. Problem is, it’s not as easy for them to “jump back up into the pickup truck”, so to speak, like it used to be. The question comes up again… “Why did I decide to go into business for myself?” Next decision… keep the business or sell it? But wait, the business has little or no value without me because I was told I managed the business to become people dependent NOT systems dependent. What does that even mean?!

Given the above scenario which I have seen countless times, it’s only when the business owner realizes the difference between “people” and “systems” dependent AND he knows that it’s HIS responsibility to control change, will anything ever get better. Should he choose to blame his business failure on the economy, the competition, or the weather, he will never get passed this cycle. This path of understanding for anyone going into business for themselves is essential to avoid asking yourself “the question”. Most business advisors stake their reputation on this sequence of understanding.

This authors advice; get the help you need before you take the 2^nd or 3^rd cycle of “downsizing”. It has been stated ad nauseum that “we learn from our failures, not from our successes”. Failure to learn to change the outcome while doing nothing different is an effort in futility. It falls under the “Insanity Principal” – doing the same thing over and over again and expecting a different result. I would like to see more entrepreneurs gain insight into working “ON” the business rather than “IN” the business earlier in their career to avoid “the question” being asked repeatedly throughout.