The Deadliest Business Trap Ever and How To Avoid It

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What does it take to successfully run a business?

Business, whether online [virtual] or offline [brick and mortar], small or big is governed by the same principles and calls for the same set of basic functions – production, marketing, finance, staffing and so on. Any difference that exists at all lies only in tactics.

 

Marketing is still about finding, keeping and growing profitable clients, whether your business is online or offline, big or small. The same goes for value creation [production], whether it is a product or service business you run, the reason for offering those products/services is the same -generating income by solving people’s problems. Also, online or offline, big or small, every business needs workers [staffing] and the same principles and functions of leading them apply.

 

You see, in both business and in life, principles and functions rarely change, what changes is tactics. ‘The why’ [principle] and ‘the what’ [functions] are fundamentally the same, what differs is ‘the how‘ [tactics]. So, that you run an online or small business, is no excuse for not structuring  and running your business on fundamental principles and functions that has been the bedrock of every successful business.

 

Having this consciousness is what makes successful business owners exceptional. They understand from the outset that being self-employed is limiting and from their small beginnings, they begin to lay the foundation for building a company that has the potential to grow and someday operate without them.

 

Are You DOING Business Or BUILDING A Business?

Doing business is the definition of being a self-employed entrepreneur [freelancer]. When everything about your business is dependent on you as the owner, you’re simply doing business. The keyword here is ‘dependency’. Being a self-employed entrepreneur means everything about your business revolves around you the owner. When you don’t work, your business is down. Why? Because you are ‘working in’ [doing] your business rather than ‘working on [building] it. This is the danger of being a self-employed entrepreneur –you and your business is inseparable!

 

Building a business is the definition of being a Chief Executive Officer [CEO].  When everything about your business is NOT dependent on you as the owner, then you’re building a business. The keyword here is ‘independence’. Being a CEO means you run your business as a company and everything about your business doesn’t revolve around you as the owner. When you don’t work, your business is still working. Why? Because you are working on’ [building] your business rather than working in [doing] it. This is the benefit of being a CEO –you and your business is separable!

 

Being self-employed [doing business] is the deadliest trap of business ever. That you are small is no excuse for wanting to be a one-man army. Someday soon, you will no longer be able to do all the things you so easily do now as a result of age, so what will become of your business then? Someday soon, your small business will outgrow your capacity to meet all your customer’s increasing demand, so what will become of your business then? Then, you’ll suddenly realize that all your ‘can-do-it-all-by-myself’ attitude as a self-employed entrepreneur is counterproductive. Then you will come to terms with the universal truth that one tree does not make up a forest and that one is too small a number to achieve greatness!

 

Successfully running a business is about profitably helping your clients achieve desired results consistently through the products/services you offer to them. It demands a high level of coordination and execution of several key activities. These activities cannot be handled successfully by only one person over a long period of time, so there’s need to create an operational structure/system for effectiveness and efficiency. Creating this operational system/structure for your business is crucial to your success as a small business. At the head of this structure/system, is where you must operate from as the owner of your business. And the formal title given to anyone occupying this position is Chief Executive Officer [CEO].

 

Running a business as a company is the essence of being a CEO

Recently, I began to notice a general misconception among many small business owners especially the self-employed internet entrepreneurs that the CEO title is for the bureaucratic corporate organizations and not for those who want to ‘do their own thing’. In fact, the other day I read the entrepreneurial journey of Ingrid Abboud of nittyGriddy and it really made me think deeply about why many online entrepreneurs shy away from the reality that someday their own thing will outgrow them.

 

While I can relate with the fact that most small businesses are started from the efforts of only one person at first, this is not enough reason to want to inhibit the growth potential of your business by still running it as a one man show. From the outset, it’s important to consciously go about your small business with the mindset as if it were already a big business.

 

Thomas Watson Jnr., once said about his father, Thomas Watson, the founder of IBM when the company was still a very small business, not even yet known within their locality. His father came home one day and suddenly announced the change of the business name from what it used to be to IBM [International Business Machines]. He said out of surprise he had to ask him why such an audacious global name for a business which was at that time only a one man show. His father replied him by saying that you start acting from small the way you’ll like to be when you eventually become big.

 

The CEO title as corporate or bureaucratic as it may seem, comes with its own unique responsibilities and functions. Business is a team sport and every team needs a coach in order to be effective and successful. The CEO is the coach of a business. Being a business owner is about performing certain functions, these functions are governed by certain fundamental principles that cut across all kind of businesses, online or offline, big or small. Performing these functions is what being a CEO is all about.

 

The function supersedes the title or position. The title simply serves as an encapsulation of the fundamental functions and corresponding roles required of every business owner. This unusual article is about knowing what these fundamental functions are, their underlying principles, and their corresponding roles. With this new knowledge acquired, you will stop doing business and start building a business, thereby escaping the deadliest business trap ever –self employment!

 

A Company is more VALUABLE than a person [freelancer]

That you are currently operating as a self-employed entrepreneur [freelancer] is not enough reason to think or act small. Look for other smart people to bring on board as vision partners in your company. Share the vision of your business with them; they don’t have to be fulltime employees for now till you can afford them. Bring them in as freelancers or strategic partners to work together on specific projects and help build the company. But make sure they share the same values as you, because strategic partnership/alliance can only be formed on the foundation of trust powered by shared values.

 

Remember always, that you are not simply doing business [freelancer], but rather building a business [company].  Therefore, endeavour to seek out the right kind of vision partners that can fit into your core ideology and culture as a company.

 

This is how Brian Clark of Copyblogger built a truly SIGNIFICANT [unique and useful] company –Copyblogger Media LLC by strategically partnering with the likes of Tony Clark co-creator of Teaching Sells as Chief Operations Officer [COO], Sonia Simone of remarkable communication as Chief Marketing Officer [CMO], Sean Jackson the creator of Scribe SEO as Chief Financial officer [CFO], Brian Gardner founder of StudioPress as the product manager for their Genesis Framework and turnkey themes for WordPress and Brian Clark himself occupying the CEO position. With these 5 member team, Copyblogger Media LLC is growing into one of the most successful social media company in the world today coming up with innovative products such as; Premise, Authority Rules, and Third Tribe.

 

Chris Brogan is also doing the same thing, that’s how he created the Human Business Works [HBW] company by strategically partnering with Rob Hatch as COO, Liz Stewart founder Lush Beads as project manager, Josh Fisher as the creative director, Merlene Paynter as director of content, Anne Bryant as the executive assistant and Chris Brogan himself occupying the CEO position. With these 5 member team, the Human Business Works [HBW] company has successfully launched innovative products/services such as; 501 Mission Place –a nonprofit, Kitchen Table Companies, and Blog Topics.

 

Size has NOTHING to do with running a business as a company!

On May 1st 2006, in my sitting room, I and my mentor and friend Tolulope Oyebola, [he taught me most of the things I know about I.T. –Information Technology] decided to go into business after we both resigned from working as computer and network administrators for a cybercafé. We co-started NEWCHILD, an I.T. support company. Prior to this day, Tolulope had been doing business as a freelancer alone on part time even as an employee with the same business name [Newchild].  But on this particular day, he decided it was time to build a real business, so that’s when I came on board –to help in the building of a real business [company].

 

From the outset, we assumed different roles in the business based on our individual strengths and weaknesses as individuals. As the founder and being a core technical person, he took up the CEO [Chief Executive Officer] position in order to technically [value creation] drive the business. I, being a core conceptual person, took up the COO [Chief Operations Officer] position in order to strategically [business development] drive the business. While he ensured the business consistently had the technical competence to solve customers’ problems being an I.T. company. I ensured the business had the capacity to consistently function as a real business by putting the necessary operational structure/system in place. And so together, we began the building of Newchild Information Technologies, as a real business [company].

 

My first task was to turn Newchild from just an ordinary business [legal entity] into a company [living entity] and to do that required branding. At the time, they were several computer repairs and networking freelancers all operating as self-employed entrepreneurs, rather than as a real business [company]. So, I began the branding strategy by positioning the company as ‘The Professional I.T. Support Consultants”. The owned word in this positioning statement is ‘Professional’. We wanted to differentiate ourselves by deliberately creating a dichotomy [class difference] in the market. What was this dichotomy? We wanted the market to know that there existed two classes, types or kinds of I.T. support consultants; ‘professionals’ and ‘unprofessionals’.

 

To communicate our professionalism, I listed out all our services/solutions such as computer repairs/maintenance, networking, web design, training, internet access etc., and branded [renamed] them. Rather than use their general names, I came up with creative names for each. For example, Pre-Ups™ which is short for ‘preventive updates’ is the brand name for our computer repairs/maintenance services; Shareworks™ is the brand name for our networking services/solutions; Serverplus™ is the brand name for our internet bandwidth management solutions; Webcom™ [web development/design services and solutions]; Netlinks™ [internet access solutions], Proficient™ [I.T. training services] etc.

 

My second task was the creation of a corporate identity for the company. These included the creation of a corporate website, complementary cards for the both of us, a company profile that described the company in a compelling manner; service brochure that explained in details each of our services and solutions; different sales documents such as service request forms, customer information form, customer satisfaction survey forms, all these further helped in establishing our professionalism as a company. We couldn’t possibly be a professional company without having a formal/corporate image. In the profile, I included the responses we gathered from surveying our existing customers as testimonials; we partnered with a few other freelancers with core competencies in different aspects of I.T. and asked for permission to include their names as part of our team of professionals in return for more freelance jobs from us –they agreed.

 

What was the outcome of all these unusual efforts? Within six months, we were able to work for the Nigerian Air Force [logistic command, Ikeja], Lagos State Library Board and a few other small businesses. Today, the company comprises of 7 team members including Tolulope and I who still happen to be the only two core employees of the company out of the 7 of us. So far, we’ve successfully taken over the management of a once defunct cybercafé and been managing it now for 3 years with about 1700 registered customers; we develop most of the unusual websites in Nigeria; if you doubt my claim, click on this link to view our portfolio.

 

Tolulope Oyebola, is one of the smartest CEOs I’ve ever come across. He recognizes his weaknesses and doesn’t in anyway try to hide it. Rather, he seeks out other smart team mates to compensate for his weaknesses. This is how together; we’ve been vision partners since 2003 after he taught me computer repairs and networking as his student. In fact, Newchild Information Technologies is my very first project as a business development consultant. Tolulope gave me all the freedom I needed to test out all my innovative ideas and strategies.

 

What makes an exceptional CEO?

I have written some detailed articles about the essential roles of every successful CEO in a series before. Although, I am still working on completing the series, below are the ones I have been able to complete so far and I seriously recommend you read them. When the whole series is completed, I will be making them available as a Free report [ebook]. I will only be giving out this ebook when completed to naijapreneur! subscribers. So if you aren’t yet a subscriber, enter your name and email address in the box below this article to subscribe now!

 

The 3 essential roles of successful CEOs

The Leadership role of every CEO

The 3 essential qualities of effective leadership

Developing the right character for effective leadership

Creating a compelling vision for your organization

How creativity gives entrepreneurs an edge

 

Over to you

Are you doing business or building a business?

How are you acting big even as a self-employed entrepreneur [freelancer]?

Do you think the title of a CEO is too ‘formal’, ‘bureaucratic’ or ‘not cool’ for self-employed entrepreneurs?

What are the challenges you currently face being a self-employed entrepreneur?

I would really love to hear from you, so feel free to share your thoughts with the community below.

 

PS

I know this was a rather long post, that’s because it is a two-in-one article. I tried to make up for not being able to publish an article last week Monday as usual. Wasn’t intentional, I was down with malaria for two weeks that’s why. I hope it was worth your while? Do share it with other entrepreneurs out there on Twitter, Facebook, LinkedIn, email, etc. Thanks for your time!

 

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Comments

  1. Hi Tito

    Wow this sure has been an MVP :-) really informative and so much valuable experience that you have shared. Not just theory but your journey and sounds like you chose well with a mentor and now biz partner.

    I have a couple of people who are working with me at the moment. I have never believed I could do it all myself. I am a complete technophobe so am grateful for the techies who help out in that arena LOL

    And I in turn have helped them out with aspects of their biz too. Would like to have a couple of people I can work with on a more permanent basis but that will come as I expand my business.

    Thanks for such a great post. Found it really helpful Tito.

    Patricia Perth Australia

    • Thanks Pat for dropping by, always love to read your feedback as they are very insightful.

      It’s good to hear that you are well on your way escaping this deadly business trap and have enlisted the help of others to compensate for your weaknesses and help build a real business [company].

      Having strategic partners is the new way to build great companies even as self-employed entrepreneurs. It makes all our efforts individually more productive!

      Thank you Pat for being a great part of this community.

  2. Hey Tito, great article!

    I do think that a lot of us entrepreneurs get really into the mindset that we need to do it all. It’s not always effective, that’s for sure. I’m not too keen on actually developing my own business into a big corporation with 500+ employees, but I really love the idea of outsourcing and working with joint venture partners.

    I’ve never liked terms like “CEO” and “President” just because it’s so much associated with big, big companies. I’ve always been like that, but a blog post like this and sharing your own experiences helps me see it in a different light.

    Thanks, really great way to put a spin on things in entrepreneurial land!

    • Hey Elise,
      Great to see you here again, been a really long while. How are you doing in terms of academics?

      I like that you talked about size [500+] employees or more. I talked about this in the post because I have seen many entrepreneurs confuse building a company is dependent on size. This is not always the case as the examples I cited in the post proved. Size really has nothing to do with running a business as a company.

      Another reason for the post, is the CEO thing. You like many refuse the title because of the ‘big, big’ perception often associated with it. I am glad through the article you have been able to see the other side of being a CEO. The big big thing is not all their is to it, it’s fundamentally a matter of function than position.

      Thank you so much Elise for taking the time to drop in and share your thought on this post. I know how precious your time is. I really appreciate it. Can’t wait to have you fully back online and blogging.

  3. Tito,

    Awesome post man! Anyone who wants to make a success of “work at home” needs to think in the terms of business. At first you may be doing 99% of the tasks yourself, but you should always think for the day when you do not “do it all”.

    Some of this is scaling. For a business to grow it needs to scale. Obviously if you try to do it “all” forever you will reach a point where you cannot grow. But if you have plans and practices in place for aspects of the job, you cansimply plug-in outsourcers and eventually employees and concentrate on your “core geius” the things you do well, that REALLY matter.

    -S

    • Thanks Steve for coming out here to join this very crucial discussion about self-employment and building real businesses.

      In the final analysis, is having this mindset as you said that someday you will not be able to do it all by yourself. Going on doing business and never taking time out to put in the right structure and systems that will enable build a business is the wrong approach.

      That you are the only one working ‘in’ and ‘on’ your business is not enough reason to remain stagnant because of your inadequacies as an individual. Still being self-employees, we must never lose focus of the need to enlist the help of others in the
      building of a real business -company.

      Thanks once again Steve for dropping by. Much appreciated!

  4. This is a most excellent post Tito and very precise on it’s message. There is a difference between being a self-employed business owner and being an entrepreneur business builder. Both are great in my mind, but they are different.

    I’ve known very successful self employed business owners who do very well for themselves. They don’t answer to anybody and earn six figure incomes as a result of hard their hard work. They take pride in their business and it shows in everything they do. They’ve built their business by treating their customers like family. This can apply to a restaurant, retail store and just about any business you see in your community. However, their business doesn’t run without them.

    On the flip side, there is another kind of business, one that has structure i.e. CEO, COO etc. that has a core purpose of expanding i.e. franchises, regional or national footprint, distributors, multiple retail locations, etc.

    It’s just a different mindset all together. Not in how business is done per se, or how customers are treated, but directionally, as in what the purpose of starting the business was intended to be – Big.

    As you’ve pointed out – there are important things that go into building a brand or business, there is much thought that goes into presenting a professional image… that sometimes is not the top priority of many self-employed business owners.

    There is much information to digest here Tito! But, we see things in very much the same light.

    I love how you think, you’re obviously a very capable business professional and I look forward to sharing more business insights along the journey.

    Cheers my freind : )

    • Glad to have you here Mark, it’s really one big honour!

      Being a veteran business executive and entrepreneur yourself, I really needed your view on this critical issue. Thank you for the awesome feedback, had to re-read it to digest the load of information.

      You have eventually narrowed down the difference between being self-employed and building a business -the level of freedom each creates. The former has little or no scalability and heavily dependent in most cases on the owners. The latter is scalable and not dependent on the owner.

      The good thing about the age we live in now, is the opportunity it creates to build a great business even as a self-employed entrepreneur by strategically partnering with other smart people who equally share your desire to build a real business -company.

      Thank you once again Mark, it was awesomely great having you in the community!

  5. Why does it always seem I’m the only guy that takes the opposite position on things like this? lol

    As a solopreneur whose business is incorporated, one might say that I’m doing business instead of building a business I suppose. However, the belief that it’s potentially less than a business that has employees is drastically incorrect.

    I will celebrate my 10th anniversary of being i business for myself next month. I have had some fantastic years, and I’ve had some lean years. However, across the board I’ve had nothing but satisfaction. I have traveled around the country, seen things I’d have never thought I’d see. I’ve spoken in 9 states at this juncture. And I can pretty much do my business wherever I am, not having to worry about anyone else or paying anyone else. True, I have to continually market, and when I’m not working I’m not making money. But that doesn’t make my business, incorporated, any less than anyone else’s business, employees or not. What is my potential? Well, I’d tell you what my best year was, but that might sound like bragging.

    I will add this, though. Even working for myself, it takes a lot of networking as well. For instance, my present contract has come about because I met this guy for dinner back in 2004. In this case I didn’t have to walk into a client and market myself because he did it for me. But I did do the work, so to speak, that led to it.

    • Thank you Mitch for making your own contribution.
      I asked to have your feedback because somehow I sensed you would have a contrary view and I needed to hear that. Thanks for being yourself always.

      Being in business all by yourself with such accomplishments for 10 years is really commendable Mitch. However, I have a question for you:

      What will happen to all the good you have done for people and companies through your personal effort when you’ll no longer be around -dead?

      I know that your business is helping to make a difference somehow, do you want such contribution to be missed by the world when you are eventually dead?

      What plans are you making to ensure your business continues to make the SIGNIFICANT [unique and useful] contribution it is currently making through you when you are gone?

      If you ask me, this is one of the reasons why self-employment is limiting -it lacks continuity without the founder. And that doesn’t leave the world much options of continuing to enjoy the same value they got from the self-employed founder.

      How do we deal with this dilemma Mitch?

      This is what I seek to understand. I gladly await your feedback.

      Thanks for making it out here once again to be a part of this crucial discussion.

      • Here’s the thing, Tito. If I have any such thing as a legacy, it’ll be built by the products I create, the books I write, and the seminars I get to do. Any person that thinks leaving a company behind keeps either their legacy alive or their principles intact hasn’t looked at the history of business. While you’re alive you get to have your vision, although sometimes even creators get fired from their own companies. The ethics of a company always depends on the people in charge, which means those companies either get better or worse. So, there is no such thing as continuity; it’s a myth. But there is such a thing as legacy, and those that show the path, whether they happen to work for themselves or lead a company during good times will have that opportunity more than anyone else.

        So, I’d ask you this follow up question; do you see your opportunity at a legacy limited to creating a company with employees?

        • Hey Mitch,
          Great response.
          I understand that products are a great ways to leave a legacy, especially for the solopreneur.
          However, I still feel they are limiting, because times change and we do need updates of the products we create, so having a team who keeps things fresh and relevant in place to keep your legacy going is necessary. Especially, being a consultant yourself.

          And that a company depends on those who are in charge is true, but doesn’t alter the purpose completely for which it was created. You teach leadership and you do know about leadership succession and ensuring the future of the company is in the hands of those who are from within to ensure the culture is preserved.

          This is our the original intent of creating the company is preserved from generation to generation. Companies have been able to pull this off, so I wouldn’t completely agree with the statement that business continuity is a myth.

          But I do agree, products are also ways of ensuring your legacy lives on, but what about new products that supports your cause long after your gone, who creates those?

          The peter Drucker legacy lives on as a management thinker because a team of people continue to fight the cause for which he stands for through the institute set up for the continuity of his teachings.

          I still think, building a company is a much better approach to institutionalizing and preserving the ideals we spend our life upholding.

  6. Hi Tito!,
    Great distinction between doing business and creating a business. It got me thinking like I’m probably not more doing a business than creating a business. Very good point. I need to revise my business plan. :)
    Thanks for the reminder. Loving blessings.

    • Hello Andrea,
      I appreciate your coming out here to participate in this discussion.
      The issue of ensuring our businesses outlive us and continually remain around even after our exit as the founders is one we should all seek to answer.

      By yourself you are doing so much good in your business, we need to understand that we are limited and will not always be here. Should the good we do now be missed by the world as a result of our death or inadequacies due to age?

      This is what building a company guides against. It helps us to institutionalise our good and ensure the contribution we make alone is multiplied through others and we can better make a difference in the lives of all our stakeholders.

      Thanks again for your contribution. Much appreciated.

  7. Tito!

    What’s up my friend. I sure missed your A+ content, but I’m back in business now!

    You asked a great questions…
    Are you Doing Business or Building Business?

    Let me tell you that in the corporate world, believe it or not, most people just “play” business. They are clueless on the intricacies that make a business successful, or the basics of business principles…they simply make decisions loosely, based on little to know experience or research. It’s really sad. If a ‘trep made the same moves – they’d be DONE in the matter of days. [I know this had nothing to do with your question!]

    I personally think that Doing business is a great way to get started, but should never be the end goal. Without having a support system in place, how in the world do you allow room for unplanned invents, vacations, etc…

    Doing business is not a long-term methodology if the goal is success.

    I personally think that the title of CEO is largely over played. ANYONE CAN BE A CEO. But not anyone can make C-Level paper! When I work – I want to generate revenue, that’s the focus – so you can call me the custodian all I care, as long as I’m getting a return for my time and effort! Great post Tito – thanks for keeping us enlightened!

    • Hey Buddy,
      Nice to have you back in the game.

      Doing business is the way most get started, just like myself.
      The danger is getting complacent and thinking it is the end in itself.

      We should strive to make our businesses survive beyond our own natural limitations as humans -death. Our death shouldn’t be the death of our businesses, we owe it to those we serve to ensure the good our business does is sustained long after we are gone.

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  3. [...] or failure is measured by how well these duties and functions (responsibilities) are carried out. A successful CEO is the individual who performs these required duties and functions exceptionally [...]

  4. [...] there wouldn’t be a high rate of failed businesses. Common sense is an inadequate skill for running a business successfully. Even your life is too complex to be handled with common sense talk less of a business.  The major [...]

  5. [...] 12 disciples.As an entrepreneur, are you trying to go it all by yourself?This is how many end up in the deadliest business trap ever. You must realize that you are not going to be here forever. What you build should outlive you. The [...]

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