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It is a fact that most businesses fail within their first 5-10 years. Why is this? The answer is complicated, as a number of factors could cause this. The most common reason is that these businesses were built improperly. How does one properly build a business? This will be the topic of the remainder of this article. For some of you, this article will be unnecessary. For others, it will be eye-opening. I encourage you to read further, as there may be some gems you can gain out of this, even if you are an experienced business owner. There is a difference between a job and a business. A job is a set of tasks that must be done. A business is a collection of jobs that work together to produce something. Most entrepreneurs attempt to start a business but wind up with a job. Instead of owning their own business, they own their own job. It helps first to understand the three classes of people inside a business: employees, managers, and entrepreneurs. Since entrepreneurs are how businesses start, we will start with them. The entrepreneur(s) first act as all three positions. There are a number of tasks that must be done, and the entrepreneur does them all. At some point, he or she finds that there are too many tasks for him or herself to handle, so he or she hires a few employees to take on the extra work. This is where the journey ends for most entrepreneurs. The most important work is done for the entrepreneur himself, whether it is the chef, the accountant, the doctor, or the lawyer. A proper business building strategy would be for the entrepreneur to set into place systems which can be easily replicated. The employees hired are trained to do the tasks in that system quickly, and if the employees are lost, they can be easily replaced. The systems should be simple and easy to understand so that a manager can eventually take over the reins of monitoring the employee. However much the entrepreneur may love “doing the work,” he must step back at some point and be a manager of his employees, ensuring that they each following the systems he set in place. Sometime later, he will want to create another unit to operate the same as the one he is managing. To do this, he must hire another manager like himself, and he must train the manager on what the systems are and how the employees are supposed to operate within them. This process is repeated over and over again, always with the entrepreneur stepping back to another, higher level. It helps to think of a business as a pyramid that you are building from the top-down. More about business financial planning and setting up an llc.
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