This article deals with the upper-level progression within an organisation and specifically what it takes to make the leap from being a company Employee (working at whatever level) to becoming a Business Owner. This move is often termed the point of ‘buy-in’ to become an Equity Partner or part Business Owner.
So, if you are anticipating the move into Equity Ownership or this is your favoured ambition, then read on, this article is for you.
For others then, this article is informative about the different realms of being the Business Owner or Equity Partner, their responsibilities, roles, and how they make decisions which is vastly different to that of company Employees at different levels.
We will cover in brief, about the Business Owner (and / or Equity Partner) including –
- The different Mindset
- The different Skills and Skillset
- The different Behaviours
- The different Values
- How the Business Owner uses different (to an employee), Vision, Strategies and Tactics to meet and achieve their business and personal ends or outcomes.
As a starting point the writer refers you to a model titled “The Cashflow Quadrant”. It’s in the public domain, presented in the book; “Rich Dad’s Cashflow Quadrant” by financial freedom guru, Robert Kiyosaki. A simplified copy of the “The Cashflow Quadrant” model is illustrated below.
Whereas, for our application (making the successful leap to Equity Partner and Business Owner),we are mostly interested in examining the E (Employee) and the B (Business Owner) quadrants. To summarise these E & B roles.
For the E; Employee.
- You have a job.
- You work for someone else or a company.
- You have specialist or technical expertise, or you are learning the ways and means of this.
- You are well educated in your chosen specialism.
- You want a contractual agreement with certainty of time commitment & equivalent financial and related rewards.
- Your summary statement is akin to – “I want a safe, secure job with good pay & excellent benefits”.
Now compare this to the summary for the B; Business Owner:
- You own a business that generates money for you and other equity partners, or shareholders depending on the ownership structure
- The success (or otherwise) of your business is at your risk. Therefore, by comparison to the business’s Employees you are a high-risk individual.
- You leverage a system that uses other people’s time and other peoples’ money.
- You provide jobs for people (your Employees or contractors or suppliers)
- The greater the success of your business, then the more personal time is yours
- Ideally you could have a six-month (or longer) holiday or sabbatical and your business continues to operate successfully and close to, or at optimum performance, without your direct in-person presence.
- Business Owners make statements akin to – “I’m looking for a new MD to run my company”.
One other comparison between the Employee and Business Owners is that the Employee nominally embraces a “Work Hard Ethic” (including the long-hours culture), whereas the successful Business Owner cleaves to the “Work Smart Ethic”. “Work Smart” is a concept (and with some Business Owners an embedded practise), wherein one works more intelligently as opposed to harder, and rejects (to some extent), the capitalist belief that hard work equals success. Business Owner proponents of the “Work Smart Ethic” do not believe that people who work harder always, or even usually, come out ahead of those who do not, but that intelligence and applied talent are the greater factor. Also, it says there is no virtue in hard work for its own sake, you therefore intend to reap the maximum reward for the work you expend, or you put in the minimum quantity of work to get the rewards you desire.
With that background, we will leave the “Cashflow Quadrant” model and venture further into the territory of the business owner (or Equity Partner).
We are now introducing you a second model titled “Progression through the Business Hierarchy”, see below-
This model is based upon the premise that promotion within the organisation is upon merit and demonstrated superior performance warranting an upwards elevation through the hierarchy. Employees can be promoted from the S sector into the P sector becoming (or moving towards being) a technical or professional expert. Some employees are satisfied to remain in this technical sector, but for others they seek to move onto Management of either processes, systems or people management.
Further upward towards the pinnacle of the business is being a Director or Partner, the PA sector of the above diagram. This journey is not just one of promotion and ambition, increased experience and responsibility and the resultant ‘bigger, better title’ and financial rewards, but it is a potential journey of change and personal development. This journey is incremental, but the real leap into the unknown (or partly unknown) is from the PA segment into the landing zone, within the dizzy heights of E PA ownership.
If this is your ambition, then what would you need to undertake to accomplish your ambition?
Firstly, you would need to have an idea of the Business Owner’s mindset and some practises. These mindsets and some practises include the following:
- Refer to the previously included summary for the B; Business Owner, which are likewise applicable and should be included here!
- They focus less on individuals, and more on repeatable processes and systems that can be operated by many.
- The greater the automatic nature of the business, the more guaranteed the top-quality results.
- The more that can be done by lesser qualified personnel, the greater the financial profit for the business.
- The less time the owner has to spend in the operational aspects of the business, the more successful he or she feels and the more time away from the business’s operation then that means additional time won for themselves.
- The successful Business Owner has a high tolerance for risk, ambiguity and uncertainty and this is coupled with an unshakable faith in his / her developed ability (and that of their other equity partners) and their strength-based character embodiments ‘to see it through’ to successful outcomes, whatever they may be.
- In the Leadership of people (Employees) the mindset is in getting people to want to do what needs to be done, whereas Management is getting people to do what needs to be done. Therefore, Managers push. Leaders pull. And whereas Managers command, Leaders communicate, inspiring and motivating people with the futuristic vision of the company’s success, in an inclusive manner where Employees’ positive contributions are genuinely appreciated and highly valued.
- In addition to being the developer of the business’s prophetic, long term future Vision, the Business Owner is the holder of the Purpose that the business serves, in the world. The holder of answers to questions such as …. Why is it here? What is the company’s reason for being? What must we do to remain relevant? How can we stay within the company’s core niches to achieve its purpose or is expansion required to achieve secondary purposes? You may think that the answer is obvious, and that it’s simply to turn a consistent profit and maintain continuing positive cash flow, but think again. These are basic givens, and if the company doesn’t make a profit and doesn’t have cash or cannot generate it, then guess what? It dies. The purpose of the business transcends financial gain and profit and identifies the true purpose for being.
Secondly, you would need to decide upon or undertake the following:
- Evaluate whether your personal risk profile is of the right type to comfortably become an E PA type?
- Can you find a sponsor amongst the current Business Owners, willing to invite you into their ranks?
- Can you find a sponsor to act as your mentor to assist you as you take the leap? And to ‘show you the ropes’ for acquiring and developing the newly required attitudes, mindsets, values, practises and Equity Partner ways and means?
- What other ways are available to you to assist in your development? Such as the services of an Executive Coach or joining a professional institute (such as the Institute of Directors) to take advantage of their learning and development offerings.
- How will you acquire equity or a percentage share in the ownership of the business? Financial investment and ‘buying into’ this, is the normal route. But others can be, by way of equity share-rewards for ‘bringing-in’ new / additional client work or new projects or generating above normal sales. Are you prepared to match your ambition with the equal amount of financial investment?
- Is the risk of the ambitious PA to E PA ‘leap’ worth the potential rewards? I would suggest that it’s best to ask this question of the current partners and widen your investigation to enquire with the owners of other independent businesses. That should provide an ‘objective’ view of the risk to reward ratio.
It is our sincere hope that this article proves to be informationally useful for the ambitious ones seeking the challenges and rewards of ‘owning a slice of the pie’ and helping to determine the future form and content of the business. For others we hope that it proves useful to aid in understanding the world of the Business Owner, for whom you give your most valuable asset, Time.
7th July 2021.
This article is dedicated to a current Business Owner client, as part of our assisting solutions to helping him, help his current employees make the transition to business owners. This client and the business’s partners foster the type of progressive and humane organisational culture, that if you were a potential employee, you would genuinely want to work within and help to grow.