How to have businesses work for you, not you for them.
Just over 9 years ago, a brash 23 year old version of me proved his parents wrong.
They told me at 18 I needed to go to university to become anything more in life than an electronics salesman.
Challenge Accepted. I told them that by 24 I’d become financially free. I had no idea what that was, but in the end I defined it as: “Earning over $120,000 AUD per year, and only having to work less than 30 minutes per week.”
After achieving that goal with a couple of phone stores, I played the video game “Battlefield 2” for six months straight — becoming only around average skill at the game.
So I chose to combine my interests by creating a video game company.
Today I define financial freedom as: “Passively earning enough money to cover all of my needs and many non-extravagant wants.”
Every time I create a business I have a specific intention — work smart and hard for six months, then replace myself with a key person, such as a manager and/or minor owner, whom I have been training along the way.
Having done this several times now within various industries, here are my main takeaways.
1) Experience all parts of the business.
There are three basic roles within every business, and each employee can have all three within their responsibilities.
Technician: The role of doing the highly specialized jobs within that industry, i.e. Salesperson, Computer Technician, Massage Therapist.
Manager: The role of coordinating and inspiring staff, problem solving major issues and expanding the business.
Owner: The role of strategic planning, monthly board meetings and signing oh so many documents such as leases, bank loans, and contracts.
When first starting a business, it greatly helps to experience many technician jobs yourself, at least on a fundamental level, so you can then accurately manage the people you hire. From managing and understanding the pressures the replacing manager will experience, you can then work on the more macro aspects of the business primarily as the owner.
2) Incentivize ownership for the key person.
Discover your key person’s hot buttons — whether fame, fortune, freedom or a combination of these. Be prepared to give part of your business away risk-free to them for the trade of being completely free from the daily stresses of the business. A massive mistake I made years ago came about by gradually giving ownership based off revenue increases instead of bottom line profit increases. Nonetheless, this prevents having to give regular pay raises from money you don’t have, as their success is directly tied to the business’s success.
3) Leverage yourself out of the business.
Begin to give more and more responsibility to your key person, who will then delegate it on or do it themselves. Here is a modified version of the “Eisenhower Decision Matrix” that I use as my order of priority when leveraging myself out of each business.
Not important, not urgent: Leave it and allow whoever wants it done to follow you up.
Urgent & very important: Do it immediately.
Urgent, not very important: Delegate to your key person with deadline.
Very important, not urgent: Schedule into your calendar with deadline.
Important, not urgent: Add to your to-do list or your key person’s list with no deadline.
The level of importance of what the key person can take on will increase over time, as they get used to being the main man or woman.
4) Keep 2 fingers on the pulse.
Have regular checks and balances you can review each month in a board meeting covering strategic forwarding, finances and morale. Through making it my business to know what the probable, almost certain future of my businesses were, I was able to ride the good times for longer and deal powerfully with the hard times, taking affirmative action when required to shift the course of the business from disaster.
I’m incredibly grateful to every soul who’s worked towards enabling my daily life to be what it is, and look forward to what bigger positive impacts I can create in the world now, as a result of having so much time to learn, create and enjoy life.
There’s much more about this in an upcoming book by myself and Jason Chen, titled “The Financial Freedom Formula: A Formula to Create or Transform Any Business Into Your Passive-Income Machine.” Private message me for an exclusive preview.
What are your best practices for freeing your time to invest it more into what you love?
Photo credit: Flickr/deYiMW