Making the leap from employee to entrepreneur? Here are three of the vital perspective shifts no one ever told you about.
Have you ever thought about starting a business? Going out on your own? Starting a side venture?
Maybe you already have, but you’re struggling to make the shift from employee to entrepreneur. It’s all turning out to be a lot harder than it seemed when you first made the leap.
As unpopular as it may sound, most businesses fail within their first five years because people enter the entrepreneurial world with an employee mindset. That’s why, today, we’re talking about the stuff people won’t tell you before you decide to become a business owner — so you can become one of the few who succeeds well past your first five years.
From Employee To Entrepreneur In 3 Mindset Shifts
1. Emotion → Facts
One of the first things people don’t realize is how expensive it is to be a business owner. From taxes and regulations to utilities and benefits, it’s easy to start seeing your business as an endless trickle of outgoing expenses. (A speaking business, however, has minimal overhead coupled with very high earning potential. More about that here.) To a certain degree, you have to start making decisions based on data and numbers — not just emotion. When you’re the one who has to hold the bottom line, your business data becomes a lot more real.
Every business is different, but the one thing we all know we need is to be profitable. If you’re not profitable, you’re jeopardizing your business, as well as all the people you employ and serve.
That means that a financially responsible entrepreneur must have a firm understanding of their financial model, revenue streams, lead generation, wages, expenses, investments, projections and growth opportunities. That’s what it takes to create a sustainable business. While you don’t want to throw emotion out the window — I do believe intuitive leadership makes for a better business — you do need to develop that mental muscle that’s constantly fixated on the bottom line. Because without it, your employees won’t have a business to work for.
2. Daily Responsibility → Complete Responsibility
In addition to thinking differently about the business as a whole, you’re responsibility shifts drastically. Instead of being responsible for daily tasks and getting your work done on a regular basis, as an entrepreneur, you’re now responsible for everything.
That includes learning how to set up your business, whether it’s an S corp., or you’re a sole proprietor. You’ll likely have to learn how to work with vendors, independent contractors and W-2 employees — plus all the regulations and paperwork that comes with that. You’ll also need to keep up with all the changing business laws and regulations, as well as tax policies, to understand how they’ll affect what you do.
Once you begin to grow, you’ll need to work with the specialists you hire: bookkeeper, accountant, financial planner, paralegal or lawyer, financial officer, etc.
Suddenly, you’ll realize you’re responsible for many, many people, in addition to a business that seems to have a life of its own. The pressure can be extremely daunting if you’re not prepared for the way your life can change when moving from employee to entrepreneur.
I used coaches, mentors, masterminds, and more to learn how to navigate these changes and challenges, and I never cut any corners. I always suggest other business owners do the same thing. It was costly, but it was one of the investments I was willing to make. And it paid off. Today my profession is my passion, and my passion is my profession. And I wouldn’t have it any other way.
3. Morale → Culture
As an employee, you’re focused on the company’s morale. And that makes sense. The morale greatly affects you and can play a large part in determining how much or how little you enjoy your work day.
When you’re the boss, however, you’re responsible for the entire company culture. It goes from being a one-way street (i.e. how does this job affect me?) to a two way street (i.e. how am I contributing to the company culture, and how are my employees responding?). As the leader, you’re responsible for understanding the relationship between your employees and your business.
Personally, I have always found that it’s better for everyone, and more productive for the business, when leadership makes an effort to bridge the gap in the “us vs. them” conversation. For me, that often looks like education and mindset work with my employees. It’s important for them to understand that, when they support the business, the business is better able to support them. It’s about creating that buy-in, so we’re all on the same team.
For example, make sure you do regular employee reviews, so when the question of a raise comes up, you can have a facts-based conversation without creating resentment or jealousy.
Let employees know that their work directly affects the revenue of the business. Explain that investing back into the business is necessary for the kind of growth that leads to more money in everyone’s pockets. Aim for buy-in rather than division. Have those tough conversations, so you’re not caught off guard by emotion but rather prepared with facts.