This is a post from my private Facebook group for entrepreneurs, The Forge.
HOW TO BE AN EXCEPTIONAL BUSINESS OWNER
In my previous post in this series on average and exceptional business owners, we learned that being an average business owner is rather pathetic — the median revenue (not net profit) is $44,000. The median employee earns $52,000 before taxes.
(Part 1: https://www.facebook.com/groups/TheForgeGroup/permalink/955854154525321/)
Taking on all the responsibilities and workload that comes with a business to only make less than a job is crazy stressful. Sure there might be perks such as work flexibility, but odds are the flexibility is coming from not having enough work to begin with.
To be a well-above average business owner, you would have some employees and a personal income (salary + profit) of at least $250,000. That would put you around the top 1% of business owners.
Crazy, right? All those entrepreneurs who say they are crushing it with their $1 million per year revenue business, might be in the top 1% depending on how much they get to keep.
It just doesn’t feel exceptional does it? About $1 million in revenue + employees + $250k income seems like that should be average for a business owner — maybe even the minimum.
With all that said, here is my definition of an exceptional business owner — he or she does not own a job.
That doesn’t mean the entrepreneur isn’t passionately working in the business. What it means is that the company can survive without the founder. That’s a sellable asset. It can be passed to heirs. It can provide income whether working or not.
Subtract Yourself Out
I work with my clients to subtract themselves from their business. Each job they had to do when they started eventually gets assigned to someone else so they can do new, higher-level jobs. Sometimes we can even hire someone for a high-level position so my clients never even do the job. That’s when rapid growth kicks in.
Then they get subtracted from those jobs until they are the executive of their company. And then… if they so choose, they can subtract themselves from that job and just sit on the board.
One of my clients is committed to do that by the end of next year. He’ll no longer be the CEO of the company, but simply an owner.
Once this happens, his business’ value will go up significantly. He had once been offered 2x earnings with an earn out. He actually described it as an acquihire. After he steps away as CEO and the company can run without him, the value will be at least 4x earnings with net profit close to $1 million.
A $4 million exit might not sound exceptional, but it is. That would solidly put him in the top 1% of businesses. I estimate that would put him in the top 0.5% of businesses.
This place is called The Forge, not Unicorn Wish Factory.
I’m hammering you with reality. I’m hammering you with it so you can beat it.
Do you want to be in the top 0.5% of businesses?
With one of my clients I keep asking him each time we make progress with his business whether he still wants his previously stated goals. He had set goals he thought were a stretch for the way his business was. Then after doing a few right actions in the right places at the right time, his goals started to feel small to him — within just a few months.
I do have clients who resist doing what I tell them to do. Many times we buttheads for 6 months all for them to realize that they didn’t really want to be in the top 0.5%. The top 1% was nice and comfortable for them and what they really wanted was to maximize lifestyle today and worry about having an asset sometime in the future.
The funny thing is, as the one client I previously mentioned, building a business into an asset and not a job maximizes lifestyle.
It doesn’t have to be a chore to grow your business. If you’re suffering while growing, you are doing something wrong or you don’t really want the growth (probably because it scares you).
So get real with yourself.
Would you like a multiple seven figure business that pays you a market rate salary and a seven figure distribution?
Or are you happy with a low six figure revenue?
Maybe you’re even comfortable making $25,000 a year and living an above average lifestyle in the Philippines.
What will prevent you from being an exceptional business owner is you.
Not the industry. Not your niche. Not your team.
First you have to want it. Really want it.
Then you have to take concerted and focused action towards it.
Then you’ll start to believe — maybe even know, that you’ll be an exceptional business owner.
With my clients I used to try to change their beliefs first. It was a frustrating process for both of us.
But I realized that entrepreneurs are doers. Give them a job to do and they’ll do it.
So I started giving out assignments that once completed would shift their beliefs about what was possible for their business and for themselves.
Take action. Complete it. Then you’ll believe. Then you’ll know that you had it in you all along.
If you’re an entrepreneur already, then join me and over 400 others in The Forge.