Building a business is hard. Whether you want to call the work “hard work” or “smart work”, frankly it takes both and a lot of each. The definition of success is at the discretion of each person but let’s face it, the reason most people want to build a business is to get rich and then do whatever they want, be it sitting on the beach all day or enjoy their hobbies. To achieve this is very difficult but when planned property any business owner can make this their reality, even those in the contracting services sector. Often times these business owners become an owner and operator and are coming from a point of being selfish as opposed to providing value to the marketplace. This leads their business to be stuck and rather than creating a company that operates automatically like a system or machine without their presence, they have just created a job for themselves.
Building The Right Business When Providing Services
The first step in building the right business begins with work ethic and habits. Young kids are always saying to work “smart”, while the older folks say to work “hard”. To build a successful service based business it takes BOTH! You must have a balance of knowing how to be determined and ambitious to work hard day-in and day-out.
The Problem With “Hard Work”
If you are a concrete contractor in Huntsville, that does not mean you should be the one smoothing out the freshly poured concrete for the next twenty years. As the owner your efforts will be required for the heavy labor in the early years, until you have the workflow coming in and management skills to hire crews to handle these tasks. But you must have a goal and vision for where you want your company to go. You must plan 5-10 years down the line and you do this by asking yourself about your financial goals, then work backwards to crunch the numbers. Once you have calculated the numbers, maximum effort is required to achieve these goals. You must realize that in order to hit the large 7-8 figure liquid cash payday, it will require scaling and utilizing employees, software and management protocol (otherwise referred to as systems) in order to continually level up.
This is the number one reason why so many business owners take on the owner-operator role and are perpetually in this place until they turn 65, and “retire” with the cash they were able to scrounge up and save. It is simply because they stay at this point and most do not even realize it. Not a wise plan for those looking to get rich and have freedom and choice over their time. But many business owners with these service companies are in business for selfish reasons, such as desiring more money but not working a job with a boss (though as an owner-operator, with the hours put in their earnings are less than a managerial position), or to fill an egotistical gap. Nearly every one of them will not get past this point until they shift their mind to provide value instead of taking from the market for their own material gains. With providing unique value comes more financial gains than most can imagine.
The Issue With “Working Smart”
On the other end of the spectrum is working “smart”. This is a concept that younger people have coined but it has a lot of truth to it, as long as one does not use it as an excuse to slack off in their duties as an owner. Most folks see it as laziness, however they are only seeing half the puzzle behind these words and those people that think this way are stuck in the 1960s when there was not anything that provides leverage like the internet does today. As a goal oriented entrepreneur, the people with these clueless thoughts do not matter.
Balance Is Key
When “working smart” is combined with “working hard” – which means executing calculated work 60+ hours per week for months on end while still envisioning their future goals, that is where the magic happens. You cannot beat the guy who will out work anyone from a time standpoint, but the work he does creates immense value for the marketplace while at the same time uses leverage to grow the company as much as possible. Combine this with ensuring his daily habits are in check to ensure his brain and body are healthy, and the ambition, determination and perseverance to dominate a marketplace, you have the recipe for an unbeatable entrepreneur.
This calculated work involves first realizing that as an owner, they need to get themselves out of the trenches (front end labor) as soon as they have the workflow coming in and they have learned how to manage employees. The owner needs move beyond their ego and realize these are tasks that can be done by most people that are skilled and ambitious. Once this is realized, the next step is automating themselves out of positions like the salesman and bookkeeper by hiring people for these positions. The owner will have to do the “smart work” to ensure written or video protocol is in place for this employee to know what their position is and how to execute. Then the owner must continue this cycle with each position in his company to scale up the business. Once it has reached a point where his financial goal of a liquid net worth is possible, he must then seek out a business broker to find a buyer for the company and exit for millions of dollars. Then take the vast majority of those millions (lets also not forget the 6-7 figures cash earned while owning the business) and park it into low risk investments that yield a 2.5%-10% yearly return which will perpetually continue to pay for likely decades to come, and that my friends, is how you get rich AND have ownership of your time.
Starting a company can be outright tough. The mere thought of starting a business puts fear into the mind and eyes of most people. But for some of the most eager of entrepreneurs, it lights a fire of excitement. However, there are times when getting that business up and running to operate in a manner that puts cash in your pocket while allowing the owner to slowly but surely work less but maintain or even if done right – increase how much he is making from his business.
Here is one of the best ways to determine your business is on the right track to achieving the time and financial freedom you are after.
Operational Systems Are Set In Place
The only true value of a company, especially one that does not present something completely brand new to the market place, such as a home services business, the real value within these companies comes from the little factories of a business that are created by the owner.
“Systems are incredibly beneficial for efficient operation and also if and when an owner wants to sell their business.” said a Dallas lawn care provider who is a stickler with business systems. In addition to operating efficiently, you also get the added bonus of a higher value of the “worth” of your business to a prospective buyer for when it comes time to sell it for a nice lump sum payout. From there you would have the choice to possibly retire completely, depending on how young and ambitious you are (age is relative with this) or use it to fund your next business. Or a mixture of both, becoming more of an investor in businesses as opposed to actively working within your business.
What Are Operational Systems?
If you are new to entrepreneurship or owning a business, you may be wondering what “systems” even are? They are simply just protocols for when things occur in your business. Every well structured business on the planet has them in place.
Take Starbucks for example. Despite them having dozens of different drinks on their menus, plus the endless combinations of available customizations that can be done with those drinks, your order comes out nearly perfect every time. How? Systems in place. Their team has done the homework to ensure that once an order is placed, the key people for fulfilling that order ring in the cash register, then a barista begins making it by grabbing the base ingredients, which are strategically placed throughout the coffee bar’s back area by design. And usually within less than a minute, your custom drink is ready.
It is easier said than done. The even of Starbucks getting your drink completed correctly in such a short time is a result of thousands of hours of testing different strategies, protocol and more, then assessing the data of what works best, then adjusting some more, and continue tweaking until they have it right. To this day they probably still test certain things. And it is not just limited to the “front lines” of a business like a coffee shop or a lawn service. Systems are in place at the headquartered office as well! Procedures and protocols are set up for maximum efficiency in all departments: legal, administrative, accounting, tax, management and more.
Here’s an instructional video on how to build and implement systems in your business:
Bottom line, systems in place build successful companies.
We are all about sharing the successes and specific insights of what those people did to achieve those successes on our website. We have a boat load of content that is going to be shared and we are very excited to share it. We know first hand how tough it can be for a person to figure out a way to map out their goals for their life when it comes to financial wellness. Our website is all about sharing things related to that. We have interviewed dozens of business owners and each article we share here on the blog with be a specific thing they did to get where they are now and tips for a person who may have been in their shoes years ago. Helpful tips for optimizing, avoid pitfalls, steering clear of financial issues, planning accordingly, setting up systems with a business to ensure it operates efficiently and eventually without the owners’ presence, and so much more.
Stay tuned and Merry Christmas!