Back when I started Jakt (alongside a past business partner), we were able to find three decently sized clients rather quickly. I was excited: the money was good –no more wondering about how I’d cover rent or pay for food.I finally had some disposable income, and I was saving a big part of it.
But it was just him and I, which meant that we were each working a hundred hours per week. And when I say a hundred, I genuinely mean that. We had contracts signed that required us to spend 70-80 hours a week (each) on billable work. This means anytime we wanted to work “on the business” had to come outside of that time.
In hindsight, that was a mistake.
Instead, I should’ve hired two people to take 40 hours off both of our plates. Why? Because it would’ve freed up my time and given me leverage to grow and scale the business –more on this later. But I didn’t because I wanted to keep the money. I was broke when I started the business. So I wanted to stockpile it as much as I could. In retrospect, that was foolish. I just didn’t understand how hiring someone and giving up some money on the short-term would allow me to make much more on the long-term.
Yes, I would’ve made less money to start with. But short-term money should not be your main goal as a business owner or a CEO. And sure, you might even –and I did at time for sure– make less money than people that work for you –but…so what? You’re investing; you’re playing a different game. Trust me, if you do it right, you’ll reap 10x the benefits that you could by yourself.
Hiring people is just one part of transitioning from working IN the business to ON the business.
It’s a key distinction –one that slowed down my company’s growth.
So, what’s the difference?
The theory is fairly straightforward: working IN the business is doing the actual project work, while working ON the business focuses on designing the machine that is your business ie creating the systems, finding the right people, setting up processes, etc.
For example, let’s say you run a digital marketing agency: if you work in the business, you’ll be pitching to potential clients, onboarding them, running their FB ads, sending reports to them… If you were to reframe this and work “on the business,” you would be documenting each part of the process and then determining who you should hire, what roles you need, etc.
When should you start working ON the business?
I truly understand why some business owners and CEOs have a tough time transitioning from IN the business to ON the business –I did too! When you’re starting out, especially with no money, you’re just trying to keep your head above water and make enough money each month to cover living expenses
Then, you hire someone and you are responsible to make sure not only you can live, but that they can get paid every 2 weeks. With that kind of responsibility, it’s very easy to only be looking 2 weeks ahead (the way I lived my life for quite some time was by the 15th and 30th – payroll days – had 15 more days to get the money to pay people) and not take a step back to work on the business.
How can you work on the business when you feel you might not even be in business if you don’t make payroll right?
But looking back, I really think you have to start on Day 1, and for a couple of reasons: first, it gets harder as you grow. The bigger the business grows, the more complex it gets, so it’s much easier to start sooner and make gradual progress to not have “a holy shit, look at how much I need to do” moment. I personally started pretty early, but don’t think I prioritized it enough –I wish I blocked off even more time for it because the long-term impact and ROI is just so great.
And second, because working on the business has a compound effect. The truth is that you won’t see results on week one, or month one, or even year one. And I do get that when you are fighting to survive on the short-term, it’s hard to invest time and effort on something that doesn’t have an immediate ROI –but you just have to. I think it was Albert Einstein who said “Compound Interest is the 8th wonder of the wall,” and this works the same way.
Transitioning to working ON the business
Recently, a video of Bill Gates and Warren Buffet came up on my LinkedIn feed. In it, Buffet shows his (paper) calendar to the interviewer, and he’s surprised that there are days –even weeks– where Warren has nothing scheduled. Buffet and Gates then talk about how “sitting and thinking” is their highest priority.
And while it makes sense and it could be your ultimate goal, that’s simply unattainable in the short-term for most entrepreneurs, business owners, and CEOs that have a company to run. It needs to be a gradual process:
Stage 1: Generalist
In the very beginning, you’ll probably start by doing all, or a lot of, the work yourself. But in this early stage, you should already segment a percentage of your time fully dedicated to designing the machine: documenting workflows and processes used to run the business, setting up tools to make things more efficient, selling, etc
Sidenote: I consider “selling” as working ON the business when you are starting up, but IN the business later on. It’s something you have to step away from eventually too. In the early days, you’re doing something that helps keep the business alive and it doesn’t relate to doing the actual production work. You are ‘feeding” the business, and someone has to do it.
And when I say “segment time,” I mean to block off time in your calendar and treat it as important as any business meeting you might have. It’s easy to get caught up on the hype of project work, but this needs to be a priority second to none.
Stage 2: Specialist
Then, figure out how much money you need (aka, keep your expenses as low as possible), and as soon as you can financially afford it, hire someone. You’ve now gained leverage, and you can progressively start firing yourself from doing the daily work.
There will usually still be something that only you can do –or at least you’ll think that. In my case, that was sales, so I combined working on the business with client acquisition. At that point, however, I had to move away from selling myself –”Anthony”– as the person who’d be working on the project, and I started selling the company, “Jakt.”
You have to set up that expectation from the jump, or you might lose clients because of it (here’s more on that). Eventually, however, you have to lay yourself off from that job of selling day-to-day too (you might still come in for the largest of deals, but hopefully you get my point).
Stage 3: Architect
Now that you do not operate in the business, you can take an even bigger step back (you should have been doing it from the very beginning) and look at your business like a machine comprised of different systems (article on this coming soon). You are now the architect –the Maestro of the symphony–, and you’ll see that your role has completely changed since you started the business.
Your current job is to design a machine comprised of a system that operates as efficient and precise as possible. You ’re also focused on designing the machine and systems such that they will achieve our near and long term goals –and then you’re constantly adjusting with the feedback you receive over time.
That’s the game: architecting systems that will work together to achieve your short term and long term goals. It’s the hardest part, a never-ending game –but (if you like that sort of thing) it’s also exhilarating, and I love it!
Stage 4: High-Level Architect / Active Owner
The idea is to, eventually, get to the stage where you are no longer the short-term architect of your business –instead, you are now the long-term architect. I am now only getting there with Jakt, but it has taken me over seven years (and many mistakes along the way).
Here’s the thing: you can’t design a business that operates and grows without you by yourself.
Business is a team sport and you need to find the right people. I have to ask myself –”where do I want Jakt to be in 1, 4, 5 years?” and then I put the people in place that will design the machine to get us there.
There will be some of them that will be mostly working in the business, and there will also be a few that should become “the new architect” of their arena or business segment. There’s not just one architect on top. There’s one that looks after the machine as a whole, and there are others that are responsible for the smaller pieces and systems the machine comprehends.
Work to foster a company culture where working ON the business is seen as important by everyone. Although not everyone does it to the same extent –depends on the role they play. They too should be adding compound value to your systems, which makes you a company that is able to make exponential growth instead of linear.
Everyone has a role to play in helping the company’s advancement, and some people are in positions where more of that is expected than others –that’s normal. But you, as the CEO, need to emphasize the importance of optimization and instill that in your culture or, more than likely, they won’t critically analyze if there are better ways to improve their operational systems. Everything starts at the top, and you have to set the example.
Stage 5: Passive / Non-Operating Owner
And the final stage is when you also turn over the reigns of the long-term strategy. The machine works for you in a completely independent manner, and you just receive your percentage of profits.
I do want to mention that these 5 steps are not necessarily the path you HAVE to take. They’re just, in my opinion, the natural progression if you are trying to become a Passive Owner. But you can also stop at any stage you so choose or remain in them for a long period of time. At the end of the day, it is your business –and you should do with it as you please.
Firing Yourself the 3 Quick Takeaways:
- Working IN the business is doing the actual project work, while working ON the business focuses on designing the machine – finding the right people, creating the systems, processes, etc
- You should segment time to work on the business from day 1 (it gets harder later on), and find ways to streamline all processes. It will compound over time if you start day 1, and you’ll be able to move faster.
- There are different stages to working on the business –and their level of involvement will vary accordingly: from doing all the work yourself to your business becoming independent from you.
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