Working with entrepreneurs, we run into this challenge repeatedly.
You start a business, and you work hard at delivering on that business. You reach out to new clients and create work for yourself that you execute, often very well.
However, delivering becomes a chore. It ends up being a lot of work, and the more you want to earn, the more you want to grow, the more work falls on your shoulders.
There seems to be a direct relationship between how hard you work and how much you earn.
There are only so many hours in a day and days in a year, so your potential is limited. And you end up trapped working ever harder to eke out a living.
You become a slave to the business.
You should be running a business that delivers results, money, income, and freedom to YOU, not making you a slave to it.
The first step to doing this is creating a mindset shift.
What is mindset
Mindset is how you view the world and approach your business.
Think of mindset as a lens you look through. If you look through a red lens, the world you see looks red. If you look through a blue lens, the world looks blue.
Similarly, your mindset tints the world around you and frames how you see, address, and tackle the problems around you.
Our mindset tool is based on Robert Kiyosaki's Cash Flow Quadrant, which he presented in his book "Rich Dad, Poor Dad." He applies it to thinking about your life and finances; we apply it to your life as an entrepreneur.
There are Four quadrants: Employee, Self-employed, Business Owner, and Investor:
The Employee Mindset
Almost everyone begins to approach business with an employee mindset. Our first introduction to business is getting a job, so we learn to be an employee.
As an employee, your boss sets the agenda. He or she is ultimately accountable, and you deliver according to his or her needs or the plan that he or she sets forth.
Growth in any organization means taking increasing levels of responsibility but always within the employee mindset. Managers in an organization still approach their work with an employee mindset. They set the agenda for those working for them, but do so within the constraints set by their boss.
Often even the executive leadership of a company views their role from an employee mindset. This mindset constraint is one reason why reinvention, innovation, and meeting future challenges are so tricky for executives.
They are not looking forward and inventing; they let the company set the parameters.
Example: imagine that you install fireplaces for a living.
(We came up with this example sitting in front of a fireplace, enjoying the warmth and feeling very attached to its presence!)
If you are an employee, you show up at work, receive your instructions, grab the parts, and install. If a piece is missing you call somebody else, you might delay until the next day. Your role is installation.
The self-employed mindset
When a person leaves a corporation or that first job to launch their own business, they tend to adopt a self-employed mindset.
When you look at the world with a self-employed mindset, you take on the agenda-setting work, but continue to be responsible for execution.
Often clients take the role of the "boss," and you end up bouncing from project to project. You are often either swamped with way too much to do or panicked because you don't have enough to do.
Your time horizon expands to maybe a year rather than weeks or months, but you are still very much focused on the work and delivering projects for somebody else.
Self-employment can be very limiting because there are only so many hours in the day. So if you approach your business with a self-employed mindset, you quickly run out of capacity and have no way to scale your business.
Example: you still install fireplaces
But not you do this as an independent contractor. Now you have to schedule, plan, ensure that all of the parts are in place and install the fireplace.
The big shift: think like a business owner
The change from "self-employed" to "business owner" is the critical mindset shift.
When you look at your business as a business owner, you solve business owner problems. You think about the future, you plan for what is coming next, and you set the agenda.
Instead of doing the work, you coordinate others to do the job. You are responsible for the performance of the company. However, instead of doing the work yourself, you manage the system that executes.
Example: people install fireplaces for you
As a business owner installing fireplaces, you are worried about all aspects of the business, not just installation.
You don't do all of the work. Instead, you manage others to do the work. You have a team of installers, and your focus is on managing them and managing the system that ensures you will continue to have many fireplaces to install.
The final stage: investor
An investor looks at a business as a money multiplying machine. You put money in, and you get money out. You can put money in a variety of machines to get a high return.
Investors hire people to run their businesses and deliver the returns. They think of the future and other investment opportunities, they are always looking for a new way to invest and make money.
The key here is allocation of capital, and the investor should always be asking if the allocation is right, and the investment pays off well enough.
Example: you think about maybe moving out of fireplaces
When it comes to installing fireplaces, the investor thinks about whether or not installing fireplaces is the right thing to be working on. Are wood burning fireplaces giving way to gas fireplaces?
Should you perhaps branch out into something else?
Alternatively, perhaps there are complementary products that go well with fireplaces that you should be investing in or offering.
What mindset do you need?
The key to mindset is first to understand the concept, then start analyzing how you can shift it to look at problems through the different mindset lenses.
As an entrepreneur, you must be able to understand all mindsets. You should work on building the flexibility to see things through one mindset frame or another, that will give you access to new ways of problem-solving.
However, you also want to push yourself toward the business owner, investor mindset. If you're going to grow, scale, and build your business, you MUST be able to approach problems from these perspectives.
We often find that this is the hardest shift to make. However, it can be learned, and you can master it.