Are you an Entrepreneur or a Freelancer?

“If your business depends on you, you don’t own a business, you have a job. And it’s the worst job in the world because you’re working for a lunatic.”

Michael Gerber, The E Myth

I’ve heard an analogy that growing a business is akin to raising a child. We conceive it by registering a company. It starts to crawl in the same fashion as we sign our first customer. It learns to walk as we employ staff. We love, nurture it, and devote every waking hour to growing it.

Yes, it’s not pretty. Beneath the veil of the flashy website and user interface, the systems and people are hacked together. Loose ends and scrappy code to be perfected another day. We know it’s not perfect, but it works — and it’s ours.

We give it the unconditional love as do mothers, no matter how ugly their baby.

Ugly baby

As it gets older, we become more experienced as a parent and entrepreneur, and like a child, the business begins to sustain itself. Every parent knows children don’t stay small forever, and eventually your business will grow and get bigger and stronger until it outgrows you.

I hear so many CEOs romanticise business as being like family. They try to instill a culture of unity and closeness, building a bubble of safety and unconditional love. They treat the business just like an extension of their real family. They think of their business as their baby.

Now, the problem I have with this analogy is that it’s just wrong. Your business is not your baby.

Your real, human, walking, talking child is your baby. You should direct your love and attachment to them! And as for the family analogy… well, if your family is anything like mine, they are dysfunctional…

It’s easy to liken our business to family. I get it; it is afterall a manifestation of ourselves.

But I prefer frame business as something less emotive and, frankly, less complicated.

To me, business is more like a machine.

Your Business is a Machine

Ray Dalio, chairman and founder of the investment management firm Bridgewater Associates, is one of the world’s most successful investors and entrepreneurs. Referred to as ‘the Steve Jobs’ of investing, Dalio is best known for his collective set of life and business principles which he recently collected into a book titled, simply enough, Principles.

One of Dalio’s key messages is that the most successful entrepreneurs think about their businesses, not as children, but as machines .

“The most successful entrepreneurs are the ones that have ‘higher thinking’ and can take a step back and design a machine consisting of the right people doing the right things.”

Image Credit: Prinicples by Ray Dalio

As an entrepreneur, you are the smiley guy at the top (actually, a stressed maniac would be a better representation). Your goal as the visionary, the designer is to build principles and systems that produce the objectives of the business without it being dependent on you.

You have the controls to this machine and you must act accordingly. Your time should not be spent spinning the cogs. Rather, your time should be spent as the operator. Constantly engineering, tinkering, and optimising the machine to produce the outcomes you want.

The Practicalities of Higher Thinking

Framing your business as a machine serves two purposes. Firstly, it will help to dismiss the emotion and feelings of unconditional love that should be reserved for family and loved ones. It removes our emotive attachment to our business and equips us to adopt a posture of ‘higher thinking’. To remove our mind from the daily battles. To step back and view things from a mountain top — objectively crafting and strategizing our next move. Simply put, it’s a mental model that provides us with perspective.

This framing not only gives us perspective. It serves to balance long-term thinking with present day happiness. In the startup phase, your machine inevitably starts as just one lonely cog. As you grow and add more parts to your machine, it’s natural to be caught in a cycle of continually looking up — planning the number of parts we need to add to grow the machine. This can be intimidating and mentally exhausting. Higher thinking allows us to take a step back and take satisfaction in the machine we’ve built. Like a builder handcrafting her first home, you’re able to picture the cogs and parts that form your business machine. This visualization can offer a sense of satisfaction and gratitude, a mental model we can lean upon in times of overwhelm and anxiety.

Entrepreneurs Build Machines. They Don’t Become Them

Michael Gerber, author of The E-Myth, says that all entrepreneurs are business owners, but not all business owners are entrepreneurs. Allow me to explain this statement, because it’s important that we distinguish the two concepts.

An entrepreneur is a machine builder. She creates a vision, validates a product or service, employs people to fulfill that service, and expands it. The primary goal of the entrepreneur is to scale herself from the business, so it is not dependent on her time. To create a machine that grows and sustains itself.

The majority of independent business owners are not machine builders; they themselves are the machine! They are the sole cog relentlessly spinning, trying to do paid work. If they do not do the work, they do not get paid. Yes, they may operate out of a company structure, have a logo and have some staff — but fundamentally, they are still the machine.

Entrepreneurs on the other hand build an entity bigger than themselves. They design the machine so it’s not dependent on their time. Instead of working in the business, they work on it. They make money while they sleep. They build a business they can one day sell.

Henry Ford didn’t make cars. He built a machine that manufactures and sells cars. Jeff Bezos does not sell books, he’s building a machine empire that sells everything.

These are examples of entrepreneurs. They don’t get stuck in sales, marketing, product — whatever part of the business they love. They build organisations that function without them. Your goal as an entrepreneur is to do the same.

So, ask yourself what type of business owner you are?

Are you an entrepreneur or a freelancer?

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