Working ON your Business vs. IN Your Business

Working ON your Business vs. IN Your Business

To the casual reader, this title might seem a bit odd. To anyone who has been involved in services provided to small and medium size business owners, this concept is quite clear. Moreover, the concept is critical for a business owner to understand his/her most significant role in their own business. For clarification, you may have heard the title “Owner/Operator” when identifying a small business owner. This simply means that he/she not only owns the business but is the person responsible for performing the work. Best example: Gus’s Landscape Service – where Gus owns the business AND does all the grass cutting himself. Business ownership most always starts here.

As business owners grow their business they will diversify, segregate and delegate various responsibilities within the structure of the work performance. When Gus decides that he has more work than he can handle, he hires his son Buster whereafter they both are doing the work. As business grows even further with more landscape jobs, Buster’s friend Billy joins the team. Skipping forward, Gus has 20 employees now, all out in the field with 4 trucks, trailers, and equipment while Gus’s wife Glenda is at home dutifully billing customers, preparing paychecks and paying bills. Once a business owner like Gus manages his business to hit roughly about a $1M revenue mark (most often less), Glenda realizes that the company is making more money each month, but, to her and Gus’ surprise, they are keeping less. Sure, Gus isn’t working the long hours he used to but there is less money in the bank, less money to pay bills, less money to pay for repairs and less money in their pocket as the owners of the business. What happened? How is that possible? What now?

This quick missive is a description of the typical progression of a small business owner. At this point a decision must be made. In my experience, the business owner who has NOT recognized the relationship between “working IN” the business versus “working ON” the business, he will typically decide to dial it back. He’ll reduce his staff, sell off a truck, trailer or two and jump back in the truck and work more hours because he was making more money when “he was doing more work”. Not surprisingly, a business owner may find himself in this exact same situation 2 and 3 times in his career.  “High volume – low income” activity to “low volume – high income” activity, without realizing that he, yes Gus the owner, is the instigator of this reoccurring paradox. Unfortunately, by the time that Gus has come to this realization, he is now in his 50’s and doesn’t have the physical wherewithal to work long hours anymore. Gus never took the time to learn the value of “systems” dependency, versus “people” dependency – his current situation. More accurately, we can now circle back to Gus working IN the business versus ON his business.

Anyone in the business advisory industry who has had the good fortune of meeting a business owner like Gus and who understands the simple concept of “ON” vs “IN”, would be delighted to walk Gus through a series of questions that would bring enlightenment to his situation. The most fundamental tenets of business operation are all absent when this situation occurs, and the remedy can make the most remarkable changes toward success when they are understood and implemented. For example;

• How do you track employee productivity?
• How do you schedule your workflow for optimal use of travel time and equipment?
• How do you price your service as to be competitive and still cover costs?
• Does your pricing cover your overhead burden?
• Are you managing cashflow effectively to purchase equipment as needed?
• Does your staff have the same objectives for performance as you do?
• What is the compelling offer that you have that makes you a better choice for a client?
• How do you measure all these cost variables in real time?
• How much money SHOULD you be making?

I would argue that if Gus’ company is making more and keeping less, he likely would not be able to answer these questions with any credibility. He knows what he knows because he has been doing the work for years, many years. He taught his son and his staff how to do a good (maybe even great) job, but it still comes back to the most important question; who is managing the business? The concept, when broken down in this manner seems easy enough, but when you’re on the inside looking out, it’s too easy to get crowded with the forest that the trees seem out of focus.

Running a business without a fundamental concept of measuring workflow process, managing people for performance with cost controls and measuring all cash in and cash out transactions without having a specific expectation for outcome can be daunting. What’s that old expression, “If you don’t know where you’re going, any road will get you there”. This blog isn’t designed to examine all the ins and outs of working ON the business but rather to be an identification of what happens when there is no distinction. Working IN the business may make an owner feel all warm and fuzzy while he delights his customers, but if there is any inclination to make money so that he can grow, engage the help of others and enlarge his reach while being able to support his family and ultimately retire… well, only HE can decide if it’s worth it to make the important change in his role. Becoming a businessman(woman) instead of simply a business owner is a decision that each person who endeavors into working for himself must make. Should he NOT make the decision, the outcome will invariably be the same – the owner will be managed by the business rather than the business managed by the owner.

From the Hosts of the Biz Easy Podcast

https://www.youtube.com/@bizeasypodcast6263