Episode Summary – Business owner vs employee mindset
Today we talk about the differences between the business owner vs employee mindset.
There are a lot of articles on this subject, which tend to look down on “the employee mindset”.
This episode is about the differences between the two rather than one being right and one being wrong.
We explain what an existing employee who is thinking of owning a business needs to be prepared for.
Links and resources
Blog-Thinking of owning a business-would you be successful?
Self Assess Your Readiness with our Business Readiness Test
Blog- 5 risks new business owners can avoid
Blog -Which is better: a job or a business
What is difference between a business owner and employee mindset?
Today we talk about the differences between the business owner vs employee mindset and what to consider if you are an employee who is going to become a business owner.
This episode is about the differences between the two rather than one being right and one being wrong. There are millions upon millions of wonderful employees because their mindset predisposes them to that path.
If it weren’t for this pool of hard-working staff, many of today’s great businesses, both big and small, wouldn’t be successful at all.
We know that employees are crucial to businesses and that many companies could not operate without them. In Episode 3 called Understanding Your Motivation, we discuss a NAB survey and statistics around the reason why people liked the idea of owning their own business. What stuck out to us was that many of the answers suggest that many employees are very keen on becoming entrepreneurs. There is no question that many business owners were employees before them becoming entrepreneurs.
I’m certainly of the opinion that being successful in business does require a different way of thinking or at least an adjustment in thinking in some areas. It isn’t always clear to us when we leave employment to start our business, just what those differences are between a business owner vs employee mindset. So, we demystify what we consider to be some of the key differences between the mindsets.
What is mindset?
So let’s start by defining we mean by a mindset. Psychologists and other experts in this field may have a far more complicated definition than I do. I simply like to think of a mindset as being a ‘way of thinking’ or more precisely, the “process” of thinking. Mindsets can be referred to as being either negative or positive. For instance, we often hear about people who have received some terrible news about their health. Because they have a positive mindset, they almost subconsciously think about ways that they might be able to improve the situation or get a positive outcome. Whereas, someone with a negative mindset, upon receiving the same news, might think the worst.
Whatever your mindset is positive, negative or in the middle, try to understand it before deciding whether to jump into a business of your own.
We often talk about the unacceptable statistics around business failure. I wonder how many business failures can be attributed, at their core, to a mismatch between the demands of a particular business and its owner’s mindset?
Now, of course, we’re generalising a little here. Every business is different, and every business owner has different strengths and weaknesses, but we’ve got to start somewhere.
So, the first thing is
1 Consistency mindset.
Continuing the effort when you don’t feel like it. Being consistent in your demeanour towards customers or clients, consistently developing your own and your staff’s skills.
Now we all have bad days when we couldn’t be bothered giving our best efforts or, in some cases, even turning up once in a while. Although I’m sure, none of you has ever experienced that. Of course, if that pattern repeats too often as an employee, you might have a problem with the boss. In your own business, though, consistency of effort, mood, performance is critical as you set the culture within your business. You set the standards. Your customers, staff, creditors, everyone needs consistency from you – they need to know what they can expect.
Now we can’t put a too finer point on this – your behaviour determines the culture within your business. Your people look to you for leadership whether you realise it or not. And both your acts and your omissions will have a huge impact on the performance of those around you. We’ll talk some more about leadership within the context of small business on a later episode.
2 If it is to be, it’s up to me mindset.
[Geoff] I think the next mindset for someone in business is the “if it is to be, it’s up to me” attitude.
For example, in the UK, around 14m people work in the largest 41k businesses. For many of them, the success or failure of their employer does not solely depend on their efforts. In your own business, that is much more likely to be the case. So, “if it is to be, it is up to me.”
You are the driver of your business success, and so you need to embrace the IIITBIUTM mindset.
3 Merging your life with your business mindset.
The mindset we’ve called merging your life with your business.
Often employees can switch off when work finishes for the day. Of course, I realise that it is not true for many employees as they may have to bring work home from time to time or work longer hours.
[Geoff] My wife has always worked in the corporate arena. She loves it and has held some pretty senior positions, especially in the last 8-10 years. But there is one thing that has always got a little under her skin about my business career. It is the number of times I’ve had to miss family functions, or time with kids, coming home early from family holidays because of my business. The fact is that, for many of us in business, it’s a 24/7 thing. Eventually, of course, you want to get to the place where you can step back a bit. I was lucky enough to be able to do that. But, in the formative years at least, your business will merge a little with your life, usually more than a job will. You need to ask yourself the question “am I OK with that?”. If the answer is no, a lot of planning is required to enable the business to grow successfully without your complete attention and effort.
4 No fall-back mindset.
[Brendan] Number 4 on the business owner vs employee mindset list is what we’ve termed the “no fall-back mindset.”
I’ve heard it said that the average person starting today as an employee will have 17 jobs across five careers throughout their life. As a business owner, that same mentality may not work.
As an employee, regularly changing jobs is a great way to gain more experience, move up in the pay grades and take on extra responsibility, growing your career. In your own business, though, it may not be possible to have an easy exit. As I said in an earlier episode “it can be very quick and easy to start a business but significantly harder to exit one. A successful business owner is likely to have a no fall-back mindset that drives them to succeed.
5 Jack of all trades.
Number 5 is the “jack of all trades” mindset.
If you work in an established business, then you are a part of an organisation. In large companies, there may be many departments for all the necessary business functions. This usually means demarcations so that employees stay within their job descriptions and levels of authority. It also means you are surrounded by people who can support you as you can call upon help, advice or resources within the same organisation.
In medium businesses, there will also be an organisation where employees have job titles, job descriptions and responsibilities.
These are examples of classic approaches to managing companies.
As the organisations get smaller, they cannot afford a large number of staff or departments and therefore, multitasking and covering multiple roles is a necessity.
A lot of big business thinking is around specialising, and we have seen the education system respond with more specialised courses and degrees to appeal to the market.
In smaller businesses, the generalist is still a necessity as a team of specialists is just not financially possible.
People who start businesses quickly find out they are exposed to every function. They have to make decisions rapidly often on gut feel, which can be very challenging.
6 The risk/reward.
[Geoff] OK, number 6 is what we’ve called “The risk/reward” mindset.
You expect the full reward of your business endeavours will come to you; you also need to understand that the entire risk does as well. For instance, as an employee, you might work out of a lovely office building or a grand warehouse. But for your boss, they see it as a liability for which they are often personally responsible for several years of rent and outgoings for the term of the lease. So, as an employee, you might be more concerned with the here and now, whereas the business owner needs to be concerned with the long term.
Now I can completely relate to this one – facing an increase in rent, and then a staff member asked for a pay rise.
7 Drowning not waving.
[Geoff] Here’s the last of the business owner vs employee mindset differences that I think can be very helpful in negotiating your business journey. I’ve called it “drowning not waving”. I know that sounds a little odd and, in some ways, could be interpreted as contradictory to some of the other mindsets we’ve listed like “if it is to be it’s up to me”, “jack of all trades” and “no fall-back”. But, to me, “drowning not waving” speaks to something that afflicted me for many years.
I was often reluctant, especially in the early days to seek support when I was finding the going a bit tough. The result of that being a tonne of stress that I really didn’t need to inflict upon myself.
If you are struggling with something in business, I encourage you to reach out to people you trust to help. That person or people might be someone internally if you have staff. It could be a family member or friends or, in many cases, it might be to one or more external professionals depending on the sort of assistance you need. I guess the trick is knowing who you can trust in situations where the going might be getting a bit tough.
The fact is, when you leap into business, you create your roadmap – there isn’t one to follow. So, knowing when it’s time to put your hand up and ask for help is a mindset that is important to cultivate, even if you are the self-reliant type.
Your support team
[Brendan] We have a later episode covering the people, including external professionals, that you’ll need on your team. We explain what to expect from each person so it will be worth having a listen to that.
OK, so that’s all for today’s show. We hope we’ve given you some more food for thought around the mindset you’ll need to make a success of your business venture.
As always, you can go to www.ShouldIOwnABusiness.com to access the show notes.
In our next episode, we explain how to identify the knowledge, skills and gaps you may have in your business.
The information contained in this podcast is general and does not take into account your situation. The content does not constitute business, legal or financial advice and should not be used as such. You should consider whether the information is appropriate to your needs, and where applicable, seek professional advice from a business adviser, financial adviser or lawyer in your jurisdiction. To find out more, please go to www.ShouldIOwnABusiness.com.