MCP Financial Resources and News

Small Business Success - Part 2

Written by David McCleery | Nov 29, 2020 8:53:23 PM

This article considers the difference between running a business and being self-employed and the consequences that follow.

Is My Business a Business?

One of the biggest challenges we see for business owners is creating an environment of clearly defined and communicated roles within a business.

Are the many roles and processes in your business clearly defined? What are they and who is responsible and accountable for them?

There are many functionality challenges in most businesses, with many functions being duplicated, and other roles not being done at all. 

For example, for multiple business owners or managers, is it clearly defined who is in charge of which tasks? 

Consider the following Functionality Test for businesses with greater than 5 people. 

If you answered 'NO' to any of these questions, there is an opportunity to drive in some change. 

Do you run a business or are you Self-Employed?

There are significant numbers of small businesses that currently operate in Australia. Data, such as the Australian Bureau of Statistics, shows that there are well over 2 million currently in operation. 

How many of these operate a business, as opposed to relying solely on our own personal exertion to generate revenue? 

Many of you may be aware of the book "Rich Dad, Poor Dad", written by Robert Kiyosaki and his concept of the Cashflow Quadrant. 

Source: Rich Dad, Poor Dad (Rich Dad #1) by Robert T. Kiyosaki, Sharon Lechter 1997. 

The messages in Mr Kiyosaki's book are broader, but for the purpose of this article, we will focus on the concept of generating income from being Self-Employed as against running a business. 

In the following table, we compare some traits that are examples of the difference between self-employment and business ownership. 

 

Self-Employment Traits Business Traits
  • Business cannot operate for a sustained period without your direct involvement.
  • The brand is "you".
  • You are the primary contact for all key functionality areas. 
  • Cannot grow past "The Single Owner Cap".
  • Exist value only involves the transfer of your client base.
  • Business continues to drive referrals and operate for a sustained period without you. 
  • There is brand equity created that could be sustained beyond the operator. 
  • There are others that play a role in designing or delivering key functions in the business. 
  • Leveraged Growth is achievable. 
  • Exit includes the client base, and potentially key process, referral relationships and people. 

 

Consider also the following test:

Importantly, there is no right approach here and no cause for judgment. Ultimately it is up to the individual to decide the type of business they want to build. 

However, if you have answered "NO" to any of these, are you able to assess and address the impact it would have on your business if you were absent for an extended period? 

Food for thought perhaps.

More Information?

E - enquiry@mcpgroup.com.au
W - mcpfinancial.com.au

 
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