Talking to a number of budding entrepreneur’s at last evening’s Singapore Facebook Developers Garage and hearing about their growing pains served as an impetus to get this post out. Some of you whom I met up with at Affiliate Summit would have heard parts of this, but here it is in more detail…
No matter whether you live in Las Vegas, or Vancouver, BC, New York city or Singapore, the questions are the same – How do you grow your business?
I’m going to outline 3 discrete stages that I see business go through, and I’m going to paint some generalizations here. (generalizations refer to 90-95% of the people in each of these categories out there. So hold off on the flames, especially if you’re part of the 5-10% of “distribution curve busters” out there)
The 3 stages of business ownership:
- Stage 1: Bootstrapper/Solopreneur (Generalized income potential: $1,000 per day or $30,000 a month)
At this stage, you’re building your business and might be the sales guys, the operations guy, the bookkeeper, and coffee maker all rolled into one. Bootstrapping can be a useful tool, especially if you don’t start out with or you’re not willing to pump a lot of working capital into your initial endeavor.
I like this stage because it’s very “hands-on” in nature. I believe to have “business ownership”, you need to have a basic understanding of each function in your business. I am a pretty terrible “details” person, but having a basic understanding of the “nitty gritty” helps you put all the pieces together at the strategic/macro level.
The major constraint here is time, because you’ll have to juggle the various tasks within a 24-hour workday.
But if push comes to shove, remember that marketing and sales are the most important element of your business because that’s what brings home the bacon.
The solopreneur model works regardless of whether you’re playing in the brick-and-mortar space, the online space or the hybrid of the two. The one major advantage of being in the online space is that technology can give you a major advantage, whether it’s managing a PPC campaign with 120,000 keywords or managing an email campaign out to 25,000 subscribers.
It’s a fair simple stage to get up to speed on. But here’s where it gets interesting…
- Stage 2: Employer (Generalized income: $10,000 a day, or $300,000 a month)
So once you’ve maxed yourself out, you’ll probably start hiring people. They could be outsourcers or employees (young kids or work-at-home mums are a great fit here…).
Being an employer means you’ve very much moving from being a “do-er” to a “project manager”. You coordinate your workers, give them daily tasks, weekly tasks, set milestones, motivate them and help them pick up new skills.
A good time to move from bootstrapper to employer is at the $5,000 – $10,000 a month income mark. At that income level, you should be familiar enough with the business operations to delegate out responsibility.
One common issue I hear from bootstrappers is that it takes “too much effort” to train an employee…which might be a valid argument, except that if you don’t get through the initial hurdle of training someone up, there is a tendency for things to bite you in the behind, especially when the projects and contracts starts flooding in (you become a victim of your own success).
One of the worst things that could possibly happen at this stage is not being able to make the transition to becoming an employer, and having to turn work away.
The one major shortfall with being in this stage is that you become the bottleneck. Because your business is reliant on you giving out the orders and being the project overseer, if you go on vacation or fall sick, the business tends to grind to a standstill once your existing orders have been fulfilled.
So it’s worth taking a look at the third stage…
- Stage 3: Business Owner (Generalized income: $100,000 a day, or $3 million a month)
From being a “project manager” (employing employees) during the employer stage, you move on to become an employer of “project managers” – that means the people reporting to you function independently and take on projects, set their own milestones and come back to you when the project is complete, or if they run into a major challenge.
So how does the landscape look?
The majority of businesses function mostly like “employers” and have some elements of the “business owner” model.
On the other hand, organizations like Microsoft, General Electric, HP have moved very much into the “business owner” mode of operation.
If you’re an internet marketer capped at the $10,000 per month, or $100,000 per month level of income, the limitations you are facing might not be because you are not working hard enough…it may be a matter of looking at the strategies needed to move up to the next level in your business’ growth and working smarter…