How to Build Your Business and Escape the Self Employment Trap

The traditional way to build a business is to build an owner reliant, Level Two business. In a Level Two business, you as the business owner gather up the reins of power. All decisions are run past you. You create the plan, you lead the execution of that plan, you do all the hiring. You meet with all the key clients and perform most of the important work of the business. Sure, you have people to help, but they’re there to do just that-help-not to lead or take ownership of central parts of your business.

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The core knowledge of how to manage and direct it is locked up in the gray matter of your brain. If something should happen to you, your business would crumble helpful resources. If you manage to somehow escape for a short vacation, you probably sneak your laptop or iPhone with you on the trip and check email when your spouse and kids aren’t looking.

What’s the real reason typical Level Two business owners want all the control? It’s the fear that if they don’t stay in control, things will go wrong. They’re afraid that their staff will screw up and they’ll lose a customer or face a lawsuit, or even that the company will fail. So they clutch at the security blanket of control, never seeing that it binds them in a trap that holds them in their businesses forever.

Remember the scene in Godfather III in which Michael Corleone (played by Al Pacino) wants to get out of the family business? He turns to his sister Connie and says, “Just when I thought I was out, they pull me back in!” Well, that’s exactly how many Level Two business owners feel over time.

If your business revolves around you and your personal production, as you become more successful, you’ll smack up against the ceiling of how much you personally are able to produce for your business. You can personally only do so much and run so fast before you just can’t do any more.

It eventually corners you in the Self-Employment Trap -the more success you have, the more trapped you become inside your business. You’re so busy doing the “job” of your business that you can’t step back and focus on growing your business. As you grow your sales by personally producing more, you take on increasingly more overhead. That means each month, your starting point requires you to run even faster just to cover your fixed costs. It traps you firmly inside the suffocating blanket of your Level Two business.

In the traditional Level Two approach, you try to escape by personally working harder. But that’s like stepping on a treadmill and saying that the way to get off is to simply run faster. Not so. The faster you run, the faster the speed of the treadmill. You take on more overhead and hire more employees, but you put them into a Level Two model that merely increases your personal pressure to produce. And what happens if you ever stop running? You come crashing off the treadmill and your business dies.

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