Many small business owners do not actually run a business. They simply run a self-employed job!
For example, I remember speaking a while ago with a guy, who told me he ran an oven cleaning business.
I asked him how his business worked and he explained; “It’s really straight forward, Jim. I have some very powerful cleaning products and I travel all over the county, cleaning people’s ovens with these industrial strength products. I’m usually able to get an oven looking as good as new.”
I asked him what happened to his earnings, when he was on holiday. He replied; “I’m only making money when I am cleaning ovens. When I’m taking a break, I don’t make anything.” He then joked that this was why he seldom took a break.
That guy did not run a business.
He ran a self-employed job, with what sounded like very few perks. When he’s too old or too sick to clean ovens, his income stops immediately. That’s not much of a return, for maybe 20 or 30 years worth of work. We all deserve better than that!
How could he turn it around?
If this guy wanted to start running a business, he could decide to hire people to do the actual cleaning for him, whilst he grew the business. That may or may not work, depending on his attitudes to employing people. So, here are a few alternatives, which would turn his time-for-money business model on its head:
- He might want to produce a book or DVD, which shows consumers how to safely clean their ovens, so that they look like new. This scales well and could be used as part of a residual income stream.
- He may want to get a license, to be the official reseller in his country of a range of oven cleaning products. This can be extremely profitable.
- If he went on to develop a successful oven cleaning business, by embracing these business development ideas, he could create a program for owners of other oven cleaning businesses, to show them how he achieved his success. Ironically, this would ALSO create another residual income stream for him.
- He could also sell the above program to other people, who sell their time for money, such as; consultants, freelance designers, trainers, business advisors etc.
The bottom line: The sooner you start running a business, the sooner your “job” stops running you.
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Image: Jespahjoy
Great advice Jim.
Everybody should read “The E-Myth Revisited” to see why you have to run a business rather than be in business.
Although Gerber’s ideas differ a bit, the principle is sound.
Though I have done minimal research into oven cleaning, franchising his business, if executed correctly could also be a profitable angle.
Jim, excellent point, as always!
Reading “Millionaire next door” can’t comment that another option for that guy would be actually to start setting aside his profits and investing them. That way when he can’t work – he could be secure too. Although, yeah, own business is much better (and I do agree with your distinction between “self-employed” and “business”.. too many things are called “business” these days
even when I rented my office and had staff of 2 I still resented it being called a business until we’ve got about first 10 clients and even then I’ve had my doubts whether it was a business, since I, as an owner, still was doing a lot of work).
This is a very interesting way of discussing the difference between running a business and self-employment. It’s very easy to be self-employed, though taking it to the next step is obviously the most challenging, and many people hesitate because of the risk of failure. Thanks for the post.
This is how I feel right now, haha. I hope that guy took some of your ideas. Hiring new people is really difficult (I know, I’ve been trying) but I suppose it’s just what has to happen if you want to get anywhere with a business.
Wow, I never thought of things that way! You are right though and it got me thinking about how many times I have put off going on vacation because I needed the money I made from work or I just couldn’t step out of my office for long enough to relax, even though I own my own business (technically). Having a backup or a way to bring in round the clock money is essential for income security, thanks!
Great article Jim, and you have right. There are so many techniques that can be used to grow a business, but the main one is to learn how to work with people. I think this one will always help in grow any type of business, because I see so many business owners who don´t have any idea to work with people and all they know is to demand thinks to be done and newer listen to new ideas. Great article and thanks for sharing.
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I would suggest that he pay down debts as fast as possible in addition to the residual/passive income strategy, or so that he has the time to build a residual/passive income strategy.
I mean, with my self-employed job, I would very much like to make it into a business like you say. I have ideas for passive income, but I can’t get started on it unless I have time. Only recently have I been able to get a little time. And how? By working my tail off in order to pay down debts (I recommend the Dave Ramsey advice here). Finally only now am I getting a little time each month that I can work on my top 3 passive income ideas.