The True Role Of A Business Owner
There is a common thing I see in the world of a business owner. Many business owners I have spoken with give the same answer when asked this question. Why did you set up business? The answer I always get? Because I love what I do, so I wanted to get freedom and more money while doing the thing I loved back in my job.
But did you know there is a really big issue about that answer? Sit tight, and let’s dive into this in a bit more detail.
So, what is a business owner?
We are going to start here with an explanation of what a business owner is because it is something that gets very mixed up. And in my opinion is often the common factor that causes the problem we are going to look at in this weeks blog. The Business Owner plays a strategic role and is not engaged in the day-to-day activities of managing the service. Rather, they focus on the big picture. They define the vision and roadmap. They have the knowledge and authority to make strategic decisions and clear the path of political and financial obstacles*.
And what is a freelancer?
Now we know the definition of a business owner, we are going to dig into what a freelancer is. A freelancer is someone who does particular pieces of work for different organisations, rather than working for a single organisation**. Now think back to the original question of why did you set up a business. Can you see where the un-alignment is coming from here?
So, what is the problem in the common answer?
As you can see from the definitions above, there is a huge difference between running a business and going freelance. ‘You see the answer of because I love what I do, so I wanted to get freedom and more money while doing the thing I loved back in my job’. This answer to me would suggest you want to be freelance and not a business owner.
Some may say, but what is the problem with doing freelance as a business owner, and of course, you can title yourself how you wish, however, you do need to be aware of the downfalls of doing this which I dig into below.
- Lack structure
You see, with a business owner you are setting your business up to have a team, and therefore the structure will be very different to that of a freelancer. A freelancer will be much more set up as an individual, and may hire someone to help them with some admin work for their business. A business owner will hire people for the client delivery, sales, marketing….
- Mixed strategy
The strategy of a business owner is very different to a freelancer. A business owners strategy will be much more comprehensive, and need to look at ROI in a different way because they are driving the business, not delivering in the business. While freelancers look for help on strategies that are more basic, and be looking at the delivery aspect of getting the job done. This is where their focus will be the majority of the time.
- Cost aspect
So, when you are freelance and looking at business owners, the numbers become very different! Business owners revenue will be much higher than that of a freelancer, however, a business owners expenditure is much higher. A freelancer, is more around earning the money you need (accounting for when things get quiet!), with minimal expenditure. The problem with this usually comes when a freelancer is looking at a business owner for mentorship. There is a huge misalignment here, and it can often confuse the freelancer, and make them start aiming for numbers that are way above the capabilities of one person delivering.
- Now the business model
A business owner will have multiple offerings that deliver an outcome, they have a team delivering the results. However, with a freelancer it becomes much simpler. A freelancer is there delivering the outcome for a business owner. They are very much implementers, and usually they are hired for an organisation and tend to be more of a long term team member that is embedded into the business processes, policies etc.
Something that is very important is to look at your personality to establish which avenue you want to pursue with freelancer and business owner. Business owners are big thinkers, they innovate, they generate ideas, they see gaps….They are visionary, and happy to not implement. Freelancers on the other hand are implementers at their core. They do not want to dream up ideas, they like to get on with the tasks at hand, and continue to develop themselves in their role. They have no inclination of wanting to be a visionary and just want a job with more flexibility.
Of course there is more I can cover here, but for me, it is important to factor these two roles in and show the differences between them. Over the years it has become a bit of a blurred view on both of these roles and where they stand in the business world. This in turn has lead to more business failures, along with burnout in my opinion.