The 3 Pitfalls of Building Your Company the “Traditional” Way
The traditional way to build a business is to build an owner-reliant business.
You, the business owner, gather up the reins of power — you manage the key activities of the company, you make all the key decisions (or at least review them), you create the plan, and you lead the execution of that plan.
Sure, you have people to help, but they’re there to do just that—help—not to lead or take ownership of central parts of your business.
The core knowledge of how to manage and direct it is locked up in the gray matter of your brain. If something should happen to you, your business would crumble.
If you manage to somehow escape for a short vacation, you probably sneak your laptop or iPhone® with you on the trip and check email when your spouse and kids aren’t looking.
What’s the real reason driver for the typical business owner to build an owner-reliant company? They fear “losing control”, scared that if they don’t stay in control, things will go wrong. They’re afraid that their staff will screw up and they’ll lose a customer or face a lawsuit, or even that the company will fail. So they clutch at the security blanket of control, never seeing that it binds them in a trap that holds them in their businesses forever.
Remember the scene in Godfather III in which Michael Corleone (played by Al Pacino) wants to get out of the family business? He turns to his sister Connie and says, “Just when I thought I was out, they pull me back in!” Well, that’s exactly how many owner-reliant business owners feel.
While there is nothing wrong with this traditional model, and it works to build a successful small business, it leads to three serious pitfalls.
Pitfall 1: It caps your income and your success.
If your business revolves around you and your personal production, as you become more successful, you’ll smack up against the ceiling of how much you personally are able to produce for your business.
You can personally only do so much and run so fast before you just can’t do any more.
Pitfall 2: It puts everyone at greater risk.
If you stop working or get injured, your business dies—quickly. This is risky for you, your family, your employees, your customers, and your investors.
If you should ever get hit by the proverbial “bus”, your business will likely fold in less than 30-90 days.
Pitfall 3: It eventually corners you in the Self-Employment Trap–the more success you have, the more trapped you become inside your business.
You’re so busy doing the “job” of your business that you can’t step back and focus on growing your business.
As you grow your sales by personally producing more, you take on increasingly more overhead. That means each month, your starting point requires you to run even faster just to cover your fixed costs. It traps you firmly inside the suffocating blanket of your owner-reliant business.
So what’s the way out of the Self-Employment Trap?
In the traditional approach, you try to escape by personally working harder. But that’s like stepping on a treadmill and saying that the way to get off is to simply run faster. Not so. The faster you run, the faster the speed of the treadmill. You take on more overhead and hire more employees, but you put them into an owner-reliant model that merely increases your personal pressure to produce. And what happens if you ever stop running? You come crashing off the treadmill and your business dies.
Instead you’ve got to work to wean your business off of its crippling reliance on you. This means incrementally replacing yourself from more and more of what you do for your company, filling these responsibilities with the solid core of systems, team, and internal controls. This is something I’ve written extensively elsewhere about (just search on the list of other articles I’ve posted here for a real flavor, or get a copy of our free tool kit to grow your company which includes 21 in-depth video trainings to help you scale your business and get your life back, click here.