Most of the work I do with our customers is help them develop businesses that provide personal wealth and create enterprise value. This is an important part of the wealth management process. Having a sustainable business that provides predictable cash flow is a worthy goal of any business.
At the same time I often find the language that our customers use to describe themselves doesn’t help them take appropriate actions towards reaching the goal of predictable cash flow. I see our customers often refer to themselves as small business owners or entrepreneurs. Both descriptions help them take actions that often aren’t in their best interest.
Here are some reasons I think words are important and why you don’t want to be an entrepreneur:
Entrepreneurs don’t develop sustainable businesses – Entrepreneurs are great at starting businesses. They don’t often take them to the next stage where they become predictable. If an entrepreneur doesn’t make the step to become a private business owner, they’re business doesn’t often last.
Entrepreneurs hate systems – Most of the entrepreneurs that I encounter will do everything in their power to not have systems in their companies. They believe and rightfully so that a new business needs to have flexibility to become successful. At the same time, once a business starts to have any predictable behavior, systems need to become part of the deal.
Entrepreneurs have little respect for cash flow – If a business doesn’t develop positive cash flow it can’t continue to exist. Of course there are exceptions where businesses get a huge amount of outside capital to build size before getting to positive cash flow, but they are few and far between.
Entrepreneurs care little about developing predictable cash flow – For an entrepreneur it’s all about the idea and developing that idea. Once the idea is developed then the hard work of developing a business must start. Many businesses never make it to the next stage because the founder is a great entrepreneur but doesn’t have the interest or discipline to make the business into an enterprise that can last.
I believe it’s positive for a business to have an entrepreneurial spirit. At the same time there are other skills that need to be brought to bear to move the business from an entrepreneurial beginning to a privately held business that provides ongoing value for the owner and the stakeholders of the business.
Much of this is the language that you use to describe yourself and your business. Are you an entrepreneur or are you a private business owner? If you’re a private business owner you likely have an entrepreneurial side but you don’t describe yourself as an entrepreneur.
What do you think? Please contact me at Jpatrick@stage2planning.com or click here to set up a conversation with me on this topic.
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