I talk with a lot of entrepreneurs and business startup hopefuls and there is one thing in common amongst all of them, they have lofty goals and take a lot of pride in their goals. This is one of my favorite things about this amazing group of people because they desperately want to effect change in their lives and the lives of others in an impactful, lasting way through hard work and determination. While I completely respect and admire this, the same mindset, if applied incorrectly, can be detrimental to any individual’s success. It is a double-edged sword.
Starting a business is a very exhilarating experience. In the beginning, a new entrepreneur will experience a mixture of feelings comprised of fear and pride. Once sales (regardless of profitability or sustainability) start rolling in, a sense of validation and empowerment will take over. To have your idea validated by the marketplace and learn that you can make money from nowhere is a mind-blowing experience, especially when it’s the first time. These strong feelings of validation and empowerment can push the NEW entrepreneur to be one of 2 types of business owners; a “Boss” or a “Driver”.
Before we define each of these types of new business owners, I want to define “Sales”. “Profitability” and “Sustainable business profits”:
Sales – Business revenue in exchange for delivering goods or providing a service
Profitability – Sales minus expenses
Sustainable Business Profits – Profits that have seen steady increase for at least 5 years
Now let’s talk about the Boss vs the Driver
Entrepreneur Type 1 – The Boss:
The boss is motivated by money and power. When the business is in its first 3 years of existence AND the owner is a first-time business owner, then the thought of launching a business with a few validated sales will excite the boss type. The boss is not so concerned with profitability, nor is the boss very interested in establishing sustainable profits as he/she is with the idea of running a business, managing people and closing the sale. Running a business, managing people and closing the sale, regardless of profitability gives the boss a high.
The boss feels a personal sense of importance, power, and influence so he/she wants to replicate this feeling as much as possible. To chase this high, the boss will take what little knowledge he or she has acquired since having the business, validated with a few sales, and immediately start to work on another business to “build an empire”. The boss typically has a number of businesses running at one time; all with no more than mediocre profits, if any at all.
Characteristics of the Boss Entrepreneur
- Runs more than one business that’s less than 5 years old
- Runs more than one business with negative to mediocre profits
- Absolutely refuses to do certain tasks within the business within the first 3 years
- High turnover of key personnel within the business
The Misinterpretation of Quote “The Typical Millionaire Has Seven Sources of Income”
Typically the Boss’ argument for running multiple startup businesses at one time is that “they” say that the typical millionaire has seven sources of income. While this may be true, I guarantee you that these millionaires focused on building the first and then built the other six after getting his legs under him.
The other larger misinterpretation of this statement is that people equate the word “sources” with “businesses”. In this instance “sources” means types of income. The actual sources are Earned Income, Profit, Interest, Dividend Income, Rental Income, Capital Gains, and Royalties. These do not equal 7 different businesses. In fact, all seven of these types of income can all be generated from one single business. My web design business Lidyr Creative has systems in place with the goal to achieve earning income for myself and my team-members from five of the seven. You are reading from one of the sources right now.
Entrepreneur Type 2 – The Driver:
The “Driver” is motivated by accomplishing a single business goal and building a business with sustainable profits. When the driver has his/her first-time business validated then he/she will typically take this as a sign to focus more on that business. This business owner knows that it takes a lot of man-hours and patience to learn the necessary skills to run a business and build a sustainable, profitable business, so his/her time is best spent focusing on the one business for now.
This business owner knows that it doesn’t matter how smart he/she is, there is no way around the amount of hours that he/she has to put in to get the business to a sustainable profitable level. They understand that the true definition of a business with sustainable profits is a business that has steady profits over at least a five period, so it is literally impossible to run know if your business is sustainable within 3 years. Therefore, he or she wouldn’t dream of diverting his/her attention to another business. The driver drives in one direction until he or she has arrived at the final destination of the desired goal. You cannot drive in 2 directions and expect to get to your destination is as short amount of time as possible.
Characteristics of a “Driver”
- Focuses one business at a time
- Drives in one direction toward one goal ensure that the journey is as short as possible
- Will do or learn any task within the business to accomplish a goal
- Typically retains team members for long periods of time because of a single shared goal
I want to stress that the “Driver” or “Boss” classification is only applicable to new business owners whose businesses are no more than 5 years old. If you have more than 5 years experience of running a business then chances are your original business is sustainable and you already possess the skills necessary to duplicate and replicate your systems much quicker than the newbies.
If you have discovered that you are a “Driver” then I applaud you. You are on the right track.
If you are a “Boss”, then I want you to take these things into consideration when continuing with your entrepreneurial journey.
3 Reasons Why Every NEW Entrepreneur Should Focus on Running ONLY One Business at a Time
1) Running More than One Startup Business is a Sign of Impatience
The lust for running more than one startup business is due to a lack of patience. The Boss business owner is impatient to see his returns on investment so he is tempted to make a lot of investments. The reality is that running multiple startups will ultimately slow down your returns because you cannot give any single business the attention it needs to flourish. Remember you reap where you sow. So if you are sowing a little in a bunch of different places then you will reap even less little in a bunch of different places.
2) Running More than One Startup Business is a Sign of Unbridled Greed
The Boss’ greed motivates the need to start multiple businesses. The greed for instant gratification and power will keep him/her from being focused. Professional podcaster and internet marketer, John Lee Dumas of EOFire, regularly says, “F.O.C.U.S. means Follow One Course Until Success”. Relax and follow one course and the money will come to you.
3) Running More Than One Business Will Confuse Your Audience
When you are in your infancy stages of running your business (first 3 years), you have to train your audience to see you as an authority in your industry. Because it takes a “million acts to build a reputation”, every message you send to your audience, builds your authority and trust factor. Why spread your message out so thin that it confuses your audience? Pick one message and “drive” it home.
I want you to take this information very seriously when starting your business. Running a business takes time, focus and practice, none of which can be cheated. Look at any of the greats in business, they all worked really hard at perfecting their craft for 5-10-20 years before they “drove” to the promised land of success. Don’t be afraid to go all in your dreams of entrepreneurship, but know that it takes patience and focus.