Is your business a true business or is it just giving you a job?

March 14, 2022
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General Blog

So, one day we decided it was time to set up a business for ourselves for one of the many reasons I hear. We scratch our head to decide what the business should be and invariably we come up with the idea that it should be in the subject that we know most about. A Carpenter starts a business in carpentry, an Accountant starts a business in accountancy, etc. This is a fairly logical approach as this is where my skills lie, and I can instantly earn an income from my first client.  Of the 4.54 million SME's in the UK however, only 1.18 million actually progress past this point and employ people. So, can my One-Man Army be called a business or do I just have a job? I think for this we need to define what the role of a business owner is and how it differs from an MD or any other role.

A business owner is a shareholder.  A shareholder is someone who has a financial stake in a business and is investing this cash for a dividend return.  If I owned shares in a bank, I wouldn't do any work for them, just look for the growth in share value or dividend at the end of the year.  The return I should expect depends on my perception of risk.  Now, is business a risky place to have my money? I think we should ask shareholders of say, Marconi, Woolworths, Dixons etc for this answer. On relatively 'safe' investments, I am informed by my Financial Advisor contacts that we should currently expect a return of ~8/10%.  So, in business I would argue that the investment is significantly riskier then we should expect significantly greater returns than this.

The MD's role in a business is to come up with the plan that convinces the Shareholders that the business will make this return and then implement the plan and make it happen. Meanwhile, our technical role (Carpenter / Accountant) is there to deliver the service to the customer. Now, if my business never employs people then effectively I fulfil every role in the business and my earning potential will simply remain at my hourly rate multiplied by the number of hours I am prepared to work each week.  When I have a holiday, I don't earn anything, or I have to pay someone to cover me.  For this reason, many of us decide to grow our business and take on some employees. At this point I may decide to employ other technicians that can also be fee earners in my business, and I end up working alongside them. We all become very busy and time is our greatest enemy, in fact I tend to do the non technician roles (the accounts, invoicing, tenders/quotes etc) late into the evening when everyone else has gone home as this is the only time I can get some peace and quiet. This isn’t necessarily a nice place to be, as if we cast our minds back to why I started on my own, it was to give flexibility and work / life balance.  After all, my last employer didn't pay very well, expected far too much from me and didn't treat me very well.  Let's reflect on my current employer; is the pay per hour better if I consider the evenings I work? Do I have a great work / life balance now? What am I like as my own boss?

So, is there light at the end of the tunnel?  I have found that one of the major issues with business owners is that they become remarkably busy and never have time to come away from the coal face and do the MD's role.  After all, when we aren't dealing directly with the customers, we aren't earning any money. So why then does the MD in most businesses get paid more than the technical roles? Surely, they must be able to bring more value to the business if it has structure and focus.  This is seen most frequently when the business has grown to a size of between 15 to 50 employees, the business owner, although maybe making a reasonable amount of cash, is so time constrained they are wondering just how they're holding on. Traditional business training is not a suitable cure here as it's the softer side that needs work, like trust, delegation, time management under extreme demand pressures, consistent delivery to client’s expectations across all employees. If this article struck a chord with you of how life is in your business or how you see the business life of one of your clients and would like to know how to start to change this situation, visit www.OYFLtd.co.uk for more information.

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