What, and who, are you working for?

Do you live to work or work to live? It's a perennial conundrum for small-business owners, writes Adam Courtenay.

Do you live to work or work to live? It's a perennial conundrum for small-business owners, writes Adam Courtenay.

Freedom of thought and action has always been a key motivator for those starting small businesses. It's the middle-class dream come true - no boss, no work schedule, no plans other than to make good in your own inimitable style.

And that's when it all tends to go awry. There is an existential angst at the core of small business, observers say, which begins at self-recognition.

"It's quite confronting when you tell the self-employed they don't actually have a business - they have a job," says Ty Wiggins, principal of Business Converge Networks.

"You can see the blood draining from their face. People put the self-employed and business owners in the same mix. They are totally different."

The question then becomes why am I working? What's it all about? Wiggins says many self-employed people never come to terms with the idea that when their own income and exertion stops, so does the business. There is no million-dollar payout at the end of it. The self-employed have nothing to sell.

The business becomes more hateful than the job they left, Wiggins says. "They can't take time off, they can't trust anyone to do what they do, they can't recruit new staff and they're working longer and earning less. The clients may be loving it but they end up putting their hand up and saying they want out."

Brian Maguire,principal of Absolute Clarity Communications, says 80 per cent of small businesses fail in two years, but rarely for the reasons owners think. They might blame insufficient working capital, market conditions or not enough clientele, but in two-thirds of cases these people shouldn't have gone out on their own in the first place.

"They are reacting to a situation they didn't want. They may have been made redundant or were passed over for promotion. Maybe they lost out in a corporate battle. They then set up a consultancy.

"They tend to call me up after 18 months," Maguire says. "And they want to go back to full-time employment. When they started they had some customers and the early dollars were already there. But when they had to go out and build the business, they had no skills. They couldn't generate new business or recruit people that could replace them and run it. They failed the two-year test."

Real business ownership is - paradoxically - a business that is not dependent on the owner. The whole point of starting and running a business is the ability, in the end, to be free of it.

"It's OK to be self-employed. Just realise that that's what you are," Wiggins says. When you can recruit someone who can replace you and the service you offer, you are a business, he says.

The problem for many is that they would have to pay a premium to replace themselves. "So you find yourself paying yourself $60,000 a year in your own business for a job that would pay $175,000 in the open market. You can't afford to replace yourself and you are stuck," he says.

It may mean you have to dumb down the business and offer a service that others can offer at a lesser premium, thereby paving the way for your eventual replacement. It may mean selling the business or restructuring. Every business start must also have an owner's escape plan.

Maguire says scaleability is also essential. Don't go into a business without the ability to hire, train and hold people accountable, he says. "If you have all those you will get a business to a reasonable size."

Linda Murray, founder of Athena Coaching, believes it is crucial to focus on personal and professional strengths and adapting those to the business.

Potential business owners need to identify a vision for themselves and their businesses.

"You may need to restructure the model - or come up with a business that works for you as well as you working for it. Identify your strengths - work in your strengths, rather than working in areas you don't know. Hire others for that."

Murray, whose coaching business focuses mostly (but not exclusively) on women, says women's professional pressures tend to be more acute as they are juggling business with their family obligations but both men and women have similar challenges putting the right structures in place.

"A lot of small-business owners don't start out with a commercial mind and struggle to invest the time to get clear on the right structure," Murray says. "Many women have good intentions, but personal and professional goals often come into conflict with each other. Women have a greater tendency to under-promise in the pursuit of over-delivery, while men tend to be the opposite."

She tends to help the self-employed move to a business mind-set and the business owners to build better strategies.

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