You are a small business owner. You own your own business. Yet even still, you're probably thinking like you still worked in a job. That's to say that you've patterned your business model after trading your time for money. So your business model looks something like this:
You land some work. You declare your hourly rate. You produce some form of output over time. You receive money in trade for your time. Hey, not a bad deal, and you start marketing yourself to more clients. Your first client is happy to give you recommendations, and leveraging their trust, more people sign on the dotted line for your services. Sounds great, eh?
Well, there's an unfortunate reality happening in the background that's actually hurting you - a negative system based off of your business model. That pattern looks like this:
You see, the more work you obtain, the less time you have - because there's only one of you. You're only capable of so much output (you can only work forty, sixty, eighty, or even a hundred hours in a week), and eventually, you make a diminishing return on money.
You flat-line. You can only work so hard, with so many clients and projects, and make so much money. And system is part of what's hurting you. You're thinking like an employee.
Employees trade their time for money. It's the only revenue stream they have. But trading time for money isn't a business. It's a job. Their work isn't scaleable, which means, you can never add more time and you can never add more labor. Meanwhile, some of the ancillary effects of the system should be pretty obvious to you. The more clients you obtain:
- The more work you're contracted to perform.
- The less time that you have, diminishing your ability to take on new work.
- Tardiness increases; deliverables become more and more late; quality slides and you make more errors; you over-commit and under-perform.
- That diminishes perception and confidence. Fewer people can recommend you. You aren't paid top billing for your services. You're working as hard as you can for little benefit.
- Your business develops a bad reputation; you burn out; cash flow becomes constrained.
- You're out of business.
One of the first things to recognize when owning your own business is that you're not an employee. You've got to stop thinking like one. You're creating a great job for yourself but not a great business.
Next time, I'll talk more about thinking like an entrepreneur or a business owner, and address potential solutions to this problem. Until then, think about your business. Where are you trading your time for money? How isn't your business able to scale because of your model? That'd be a great place to start thinking about how to transform your business and change your thinking.