Freelancers VS Entrepreneurs — How to build a system around your business
As you probably know, I am very passionate about small businesses. I see them as organic vehicles of change. The magic of seeing a problem and solving it with a business never ceases to amaze me.
Of recent, I’ve been studying the small businesses around me, and I’ve noted that there seem to be two types of business people, at least, when examined in the context of how they run their businesses.
The simple difference is this. One focuses on a product, the other focuses on the business. This distinction is actually very important, as simple as it looks.
Most of us remember the Cashflow Quadrant of Robert Kiyosaki. Where you are taught to strive to be in the B and I quadrant. However, what most people need to realize is that almost all the quadrants look the same at the beginning.
The employee, small and big business owner look similar when starting out. The difference between a small and big business is even harder to detect at the inception.
The major difference though is this,
Freelancers/Small Business owners work in their business.
Entrepreneurs/Big Business owners work on their business
Let's delve a bit deeper into this.
A freelancer basically has one skill and transacts that skill with as many people as they can.
An entrepreneur, on the other hand, is more concerned about his audience and building the products that they need.
This difference is very subtle, but the difference becomes clear as time goes on.
You see, as a freelancer, you are the cheapest worker in your business. So whenever something happens, you are quick to take the jobs by yourself.
Let me give you an example. As a freelance baker, you'll be doing much of the baking, which is actually the least lucrative thing you could be doing.
Think about it like this. You clients pay for the cake, not the hours you spend making it. Whether you spend 10 hours or 1 hour on a cake, the price is the same.
So, as a small business owner, you will always be limited by the hours you have in a day.
Remember, in the last article, we said that one of the most important things that you can do in your business is SELLING.
The more time you spend baking cakes, the less time you have to get new customers and the less time you have to know your customer, to find out what they want, and create it for them.
This is what makes a CEO. You're not a CEO because you know how to bake a good cake. You're a CEO because you know how to build a pastry business.
So, you don't build a big business when you have plenty of money. You build it when you have zero money.
How?
Build a system around your business.
Find out who your customers are, find out what their problems are, create the solutions they will need, then sell it.
This is your job. Hire people to do all the rest.
There is a principle known as the Pareto Principle. It says that 80% of the results are produced by 20% of the actions.
But the Pareto Principle also applies to the Pareto Principle.
Out of that 20%, 4% of the work is responsible for 68% of your results.
- 4% of your customers bring in 68% of the revenue.
- 4% of your time invested, brings in 68% of the results you seek.
The key to working on your business, rather than in it, is to find that 4%, then work on it.
Let me give you an example of how this works. As a content writer, I am a freelancer.
Even though I have people that work with/for me, and earn a decent amount of money, I’m not deceived to think I have a business yet.
To do that, I'll have to:
- Find out the kind of people my writing business will cater for.
- Find out the kind of content they want.
- Train people to become those types of writers.
- Spend my time getting clients, pitching to companies, and repeating this process.
This same process can be applied to any small business in any field.
From baking to graphic design.
The goal is for you, the "CEO" to stop doing the grunt or technical work as soon as possible.
Mark Zuckerberg probably coded a major part of the original Facebook project.
If he thought like a freelancer, he’ll have just been replicating that ability to code, build applications for others.
As an entrepreneur though, he focused on the business side. Focused on building viable products, thinking of new strategies and systems.
He’s not sitting at a computer coding, and neither should you!
Leave the other stuff to other people that you've trained. Design your business into a replicable and repeatable process.
That is how you succeed. Leverage on the strength of others, and leave the most technical work to those around you.
P.S This article is part of a new series I’m starting called Business FAQs. It’s aimed at answering the questions that small business owners and solopreneurs have. You can join the live sessions on WhatsApp here
