Chapter 2

Finding the Path that Works for You

IN THIS CHAPTER

Working out where you're headed: Cottage industry or multimillion-dollar enterprise?

Playing with the different roles needed to make a business work

Creating a business that's independent from you

Understanding that some businesses are harder to grow than others

Many years ago, I did some consulting work for a guy who'd started his own industrial welding business. The reporting systems for this business were a complete nightmare. As I trawled through the accounts, trying to make sense of it all, my client looked across the room at me and announced, in a somewhat apologetic tone, 'You know something? I'm a really good welder.'

For me, this brief interchange summarises the dilemma many business owners face. People start out in their business doing what they're good at, and what they love to do (whether this is welding, performing music or face-painting at kids' parties). But before long, they find they spend more and more time doing stuff they're not naturally good at, such as bookkeeping, looking through contracts, hiring employees or managing websites. Sometimes this extra work becomes such a burden that the joy of being in business is lost. Or sometimes the business owner rises to the challenge, thriving on these extra demands and enjoying the reprieve from day-to-day tasks.

In this chapter, I explore the questions that get to the heart of what you want to achieve with your business. Do you plan to take on employees and grow your business? Do you have a unique concept that means you could potentially sell your business for a substantial profit in five or ten years' time? Or are you happy tinkering away in your home office, earning a modest income with little stress and few demands?

No answer is right, no answer is wrong. However, this chapter provides an opportunity for you to pause and choose the direction that's best for you.

Deciding What Path You Want to Take

Generally, business books assume that you want to grow your business, take on employees, maybe even develop a franchise or expand internationally. However, in the first part of this chapter, I want to spend a bit of time exploring whether you feel this desire for expansion. Maybe you're quite content pursuing a small home-based part-time business, or maybe you don't want the stress of taking on employees.

Taking a step back and thinking of all the self-employed people I know or have worked with, I can see that most people follow one of three different paths (or occasionally all three paths, but one after the other):

• A simple owner-operated business with no employees.
• A business where the owner focuses on providing the service but employs others to help run administrative functions of the business.
• A business built by the owner that then has a life of its own, where employees provide the services or manufacture products and the owner is in a management role. Ultimately, the owner may even seek to create a franchise.

Which path do you want to take? Even though most business books imply that if you're serious about being in business, the third path is the only way forward, this isn't necessarily true. Small owner-operated businesses may have less opportunity for profit, but profit is only one of the many motivators for being in business.

Doing the thing you love to do

As I touch on in Chapter 1, a starting point for many small businesses is that a person starts a business doing the thing that he or she has experience doing, or possibly the thing that they have just completed studying. So the person who was working as a high-school teacher starts a business tutoring high-school students, the physiotherapist who was working at her local hospital opens her own practice, or the newly qualified chef opens a restaurant.

The upside of running a business in this way is that you get to do what you love to do, and usually what you're good at. You also have the perks of self-employment (choosing your own hours, possibly charging more for your services and being your own boss).

The downside of being a solo owner-operator is often long hours, with no income when you're on holidays or if you're sick. The experience of being cleaner, shop assistant, bookkeeper, marketing manager and finance manager all within the course of a single day can be relentless, and you may end up feeling that you're a jack of all trades but a master of none. Your business is utterly dependent on you; if you don't turn up, you don't get paid. In addition, the amount of money you can make from your business is always limited by the number of hours you're able to work.

Some people would argue that the kind of work involved with an owner-operator business, where it's just you and you do your own thing, defeats the purpose of going into business. They would argue that unless you want to conceive of a business that has a life of its own beyond yourself, you're better just to keep working for someone else. Otherwise, you're not really creating a business; rather, you're creating a job with a pile of overheads.

I disagree. Although I acknowledge that this small-scale kind of operation has its drawbacks, I've lived in a regional area and been self-employed for too long to be that naïve. Sometimes no jobs are available and the only option is to be self-employed. Sometimes you may have such substantial family commitments that your business becomes a relatively peripheral part of your life, and the income it generates is just a bonus, not the core. Sometimes the way you generate income is so personal, so idiosyncratic (maybe you're an artist, a faith healer or an inventor) that you can't conceive of a way that this business can be grown beyond yourself. All of these reasons are perfectly valid reasons for being in business, yet staying small.

Even though you may have perfectly valid reasons for staying small, if you're currently self-employed and you have no employees - or you're planning to start a new business with this structure - do pause to consider what your options might be. Conceiving a way to run your business so that it can operate without you can be challenging, but is the only way forward if you want to generate profits that aren't directly dependent on the hours that you work.

Getting help and delegating what you can

If you're not content to be an owner-operator doing everything yourself, the first and most natural stage of expansion is usually to employ some assistance. Maybe you hire a bookkeeper, employ a casual labourer, or get assistance with marketing or website design.

Many experts and professionals end up with this kind of model. For example, our local orthodontist hires several employees (two receptionists, a dental hygienist and an office manager) but she is the only person doing the actual work (you know, the multi-colour braces and general teenage torture). Sure, she could probably hire another orthodontist to work for her, but she has a great deal invested in her reputation and, for whatever reason, feels she can't trust another person to provide the same quality of service.

In a way, the part of my business income that I generate writing books is similar. I employ a bookkeeper and office admin person, and occasionally get help researching topics, but at the end of day (and I confess that it's truly the end of the day as I write this), the only ones left standing are me and my cute little silver laptop.

This way of working is what many people choose. You get to do the thing you love and you can choose your own hours, be your own boss and usually make a decent living. And, unlike single owner-operators who do everything themselves, you can hire others to help with day-to-day business operations, so that you can focus on doing the thing that you're good at.

The downside, of course, is that you're still 'it' as far as the business is concerned. You are your business, and your business is you. Your income is always limited by the number of hours you're able to work and, if you're on holiday or sick, the business doesn't generate income. You also carry the risk of being responsible for not just your own livelihood, but the livelihood of your employees also.

If your business has this kind of structure, you may find it hard to imagine how you can expand your business so that employees could provide the same services as you currently do. However, nobody is indispensable, and no matter how smart or talented you are, chances are someone's out there who can do all the things you do.

Often, a good idea before hiring an employee is to spend some time writing down procedures for the daily tasks the job involves. This is the first step towards separating yourself from your business, so that you can describe to others the attitudes, skills and standards that you expect. (For more on this topic, see the section 'Documenting and building systems', later in this chapter.)

Building a business that's separate from you

The third path that you can take (refer to the preceding sections for an outline of the other two paths) is to create a business where employees are the ones providing your service or manufacturing your products. If you look around you, most...