Saturday, February 6, 2010

Types of Business Owners

These are just my personal observations... nothing scientific yet.

The Accidental Entrepreneur

This is the person who started out with no intention of being a business person. It's the guy who starts doing side jobs in the evening, then finds that he can support himself by finding his own work. Or maybe it's the hobbyist who finds a market for their end product. My wife is experimenting with this a bit right now as she's discovering that she can charge people for decorating their parties.

These types of businesses start out as hobbies, and evolve into providing a (hopefully) reliable income that pays better than what they were making at their day job. Entrepreneurs in this category may lack formal education or training, but with ambition, hard work, and a fair bit of luck they can have a decent career doing what they love on their own terms.

The Delegator

As a business grows beyond the owner/operator model, there starts to be too much work for one person to do. Family and friends help a lot in the early stages, but eventually the owner starts hiring real employees. Now the job of the owner shifts from being an excellent tradesman (plus marketer, plus customer service, plus everything else...) to being a manager.

Managing is a useful skill in its own right. Indeed, it's an empowering force for any organization to have good management. A good manager is able to see what the terrain ahead looks like, then match those challenges to the skill sets of the available resources (employees).

I think this stage is what begins to separate the casual business owner from one that's driven to grow. The business can be largely self-sufficient now. It's possible to sit back and let things run, and skim off a passive income from the fruits of others' labor. On the other hand, the manager / owner could continue devoting attention to finding new ways to compete.

The Investor

Unlike the other two types, this guy has cash to burn. It might all be leveraged, but don't hate them for it! Investors have a lot of other things going on, so they're not going to take the hands-on approach unless they absolutely have to. Instead, they want to hire good managers to watch over their investment and make sure it grows.

Good management is like a central nervous system. It takes in huge amounts of data coming from all parts of the organi(zation/sm) and makes decisions optimal for survival and success. Just like a central nervous system, it requires overhead. Obscene amounts overhead. (See "Burn Calories By Thinking") In biology it's calories; in business it's cash. Assuming the Investor is able to find the right brain to run the business, this hands-off approach can be an effective way to gain assets passively. [edit: Kind of like beekeeping! You buy the hive, then skim off the honey that your workers produce. But you have to have a good productive queen.]

In other news...

Yep, I'm back blogging. I've re-calibrated my goals, since the consulting projects I'm behind on need to have a higher priority. My list of ideas is getting longer, but it's tough to write them out because I know I'm not even close to an expert in any of these areas. I have my thoughts and opinions, but there's no research and hardly any references to back it up.

Does it matter? In reading through various blogs there seems to be a "diary" theme. This happened, that happened, and the facts are indisputable. Since I really don't do all that much, I'm playing the arm-chair pontificator. This project has changed the way I read-- now I'm trying to keep track of where I hear various ideas so that I can attribute the sources that influence my opinions.

It'll be an adventure to see how this blogging experiment warps my perceptions going forward!