When does a person who owns a business become an entrepreneur?
That is a trick question. Few do.
In his book, “Hire Your Buyer,” John Mill draws a distinction between “Businesses” and “Lifestyle Businesses.” A business that supports lifestyle alone is convenient but not a real business. I have discussed org charts that look like a rake and that is pretty much how a lifestyle business works. An owner and many helpers.
How then is an entrepreneur different? John talks about a stage 3 business owner, “I’m great, you’re not,” as the end for most owners. Certainly true for most lifestyle businesses. Stages 4 and 5 are where entrepreneurs live. Stage 4 “we’re great” and stage 5 “Let’s use our potential to make a global difference” are much harder to arrange.
Stage 4 and 5 businesses have life of their own. They do not rely on a single, all-knowing, and secretive commander.
To get away from stage 3 thinking, recognize your skills and temperament. Maybe stage 3 is right for you.
Suppose you are a clock maker. Once built, would you like to watch the clock run? Micro-managers like to watch it run. In this model, your first workable clock is your last clock.
An entrepreneur would more likely build it, hire people to wind it and maintain it, and ask for reports on problems or new opportunities, things that would make it smaller, lighter, prettier, more accurate or reliable. The entrepreneur would take those insights to build a better clock. Eventually there could be a factory full of clock-builders and ever improving product. People would grow in their skills.
Steve Jobs and Bill Gates both evolved to stage 5 even though they have considerable micro-managing components in their being.
A measure of entrepreneurial skill is the ease with which you can take vacations. I know more than one business person who made the philosophical move to entrepreneur when they first realized their business could have a life of its own.
Stage 3 owners are usually in the “business owns them” mode. They are stuck with working and have few options to get out. They are the business for practical purposes. Some discover that it is not the working they don’t like, it is the having to work that they don’t like. Entrepreneurs set out to make it so they don’t “have to” work.
You can’t do that from “I’m great; you’re not”
We are coming to a time when a great many businesses will disappear because the “lifestyle business” owner cannot make the leap to level 4 or 5 and yet they want out. Clock watchers typically have little middle management and businesses do not sell well without it.
If you cannot sell the business, the business owns you.
Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: email@example.com