Which Of The 3 Types Of Business Owner Are You, And What Does It Mean?
Time tends to slip by pretty quickly after starting your business, all of a sudden you wake up and (touch wood) you have been in business for 3 years.
You also morph into a certain type of business owner gradually over that time, without really realising it. In turn, this drives how the business moves on and ultimately what it becomes.
In the spirit of taking control of your future, would you not rather be more deliberate about what kind of business owner you are and where your business is going? Self-awareness is obviously a key starting point, but maybe one of your colleagues/team can help you realise what type of entrepreneur you are.
So what are they, and what does this mean for you and your business?
Type 1 – Focus solely on being your business and working within it:
If this is reflective of your day to day activity, this means you are probably quite reactive. You obsess about your own business, but are not hugely aware of the wider sector you are in, and what is happening. You are very hands-on in delivering the service/product which your business provides its customers/client. You personally shoulder responsibility for a number of roles and activities within the business.
What does this mean? This is great, you clearly care a lot about your business, your team and your customers/clients. The issue is that this absorbs all of your time, detracting from planning ahead, or noticing the need to plan for the changes ahead. Without this, you tend to focus more on consolidating and defending the status quo, rather than preparing your business for the future.
Type 2 – You delegate well, but focus your time solely on the day to day activities:
Similar to the first type of business owner, you focus a lot of time on the day to day activities working with and finding new customers. You are however good at delegating tasks, passing on what you can, and spend as much time as you can on revenue-generating activity.
This is good again, as you have been able to increase the capacity of your business past your own time. This builds the number of people you could work with and help, rather than trying to do and be involved in literally everything.
The problems lie in creating an exit point or succession. Where you are solely responsible for the client retention and attraction, how do you ever walk away, or sell for a figure which you would be happy with?
Type 3 – You spend all your time on your business strategy, vision, and planning for this:
This is obviously the other end of the scale from business owner type 1, where you spend little time with day to day activities and much less time with customers/clients. You spend the vast majority of your time managing and strategically planning to fulfil your vision for the business. This means you have teams, processes and structures in place to work with and attract customers/clients, and therefore the ability to scale. You think ahead of where your sector is headed, how you need to adapt to this, as well as how you achieve your ambitions for what your business could be.
The downside here is that you need to relinquish control of the little things, as well as invest heavily in the assets and resources need to grow your business. This can mean profitability is difficult to achieve/maintain at times in the short term. This may not be conducive to what you have to planned personally, and with your family.
On the other hand, your business has the potential to grow where potential profitability is only bound by your ambition. You can build for a future where potential is not bound by your time. You are also able to build something which would be far more attractive to sell, if you become operationally irrelevant, but create the potential for future growth which an acquirer is looking for.
None of these are right or wrong necessarily. To some extent, these ‘types’ can reflect a journey you go through as a business owner. The key is to understand what you want your business to allow you to do as an individual/family. If you don’t want to build towards a sale but rather work hard for a good income that facilitates your personal aspirations, type 1 or 2 is perfect. But if what you have in mind is building a legacy, with your lifestyle being unlimited, you really need to push through to type 3, where possibilities are unlimited.