If you are self-employed, you know the feeling — some days, you wonder if it’s ever going to get better.
The 200 emails in your inbox. The constant fires you have to put out. The long backlog of projects that just keeps getting longer.
The solution — you should work on your business, not in your business.
Learn what most small businesses get wrong, how a business book from the 90s changed my outlook on hiring, and why you are actually running two businesses.
Working in Your Business vs. Working on Your Business
Most small business owners do everything themselves. They reach out to potential clients, provide customer support, keep the books, update their website, etc.
That is called working in your business. It equals execution.
And in the beginning, there is nothing wrong with that. You don’t have the funds, but you do have the time. Naturally, you become your own full-time employee.
But the more your business grows, the more you need to establish standardized processes, which can then be taught to others. This allows you to scale and frees you up for higher-level thinking.
That is called working on your business. It equals strategy.
It is at this stage that the magic happens. You are no longer a slave to day-to-day operations. Instead, you can develop a long-term vision for your business.
Think of it like racing cars. Before, you were so distracted, you could not focus on the road ahead. You were driving blindfolded.
Now, the blindfold has been removed. Your only job is to steer the car. Not only does that increase your chances for success — it is also more satisfying.
At a Glance
|Working in Your Business (Execution)
|Working on Your Business (Strategy)
|You do everything yourself.
|You teach others what to do.
|You are concerned with the micro.
|You are concerned with the macro.
|The business is built around your unique skill set.
|The business is built around standardized processes.
|You are obsessed with the perfect product.
|You are obsessed with the perfect system.
|You revise decisions every day.
|You make decisions once.
|You inhibit your team.
|You enable your team.
|Your customers perceive your face as the brand.
|Your customers perceive your brand as the brand.
|You focus on today.
|You focus on the tomorrow.
|You operate at 5000 feet.
|You operate at 50,000 feet.
|You are being run by the show.
|You run the show.
Examples of working in your business are:
- Executing the service you offer, e.g., graphic design
- Replying to a client’s email
- Having a sales call with a lead
- Writing invoices
- Doing bookkeeping
- Doing taxes
- Creating social media content
Examples of working on your businesses are:
- Setting and revising goals
- Developing standardized processes
- Doing research
- Predicting the market
- Creating financial projections
- Partnering with other businesses
- Investing in your own skills
Why This Is Hard
In an ideal world, most budding entrepreneurs would shift from execution to strategy within two to three years. In reality, that’s rarely the case.
There are three reasons for that:
- Product fixation
- Lack of vision
- Double load
1. Product Fixation
The typical founder is not an entrepreneur, but a technician.
Let’s look at a typical story.
Adam is a programmer. He works for a company that creates individualized software for B2B businesses.
Adam is excellent at this job. He always over-delivers — he writes better code, he keeps it user-friendly, and his documentation is top-notch.
But nobody else cares as he does. His colleagues are just killing time. His boss is mentally absent. Even direct competitors are not doing a good job.
That’s when inspiration strikes. “What if I started my own company?” Adam thinks to himself. “I am sure I could offer a much better product.”
And so he does, and he proves himself right. He is doing a better job than everybody else. And that expertise is soon noted. New clients keep coming in.
But soon, what set him apart — his product focus — becomes his greatest hindrance. He doesn’t have a website. He ignores sales. His books are a mess. His customer support is slow.
That is the problem of all technicians turned founders — they are so fixated on the product, they refuse to see the whole.
But a business is not just its product. It’s a complex system made up of many moving elements. And these elements need to be tied together by an overarching strategy.
The technician refuses this complexity. He doesn’t want to become a manager but wants to remain a specialist. And that is why their business never grows past a certain point — or fails altogether.
2. Lack of Vision
The second reason why most people work in their business, not on their business, is that they lack vision. They are not clear about the big picture — where the business is moving to and what the long-term strategy is.
It’s a lack of boundaries. You have never defined what you should be working on (because it relates to your vision), and what you shouldn’t be working on (because it’s outside your vision).
So, you work on whatever comes up. And when you are self-employed, there is always something coming up.
Lack of vision is really a case of lazy thinking. You don’t want to envision your business five years from now as that requires making hard decisions and setting the course. You would rather feel busy now than contemplate the future.
3. Double Load
Moving from working on your business to working in your business does not happen overnight. It is a gradual process.
That means especially during the early stages of your business, you will have to juggle. You will have to go back and forth between strategy and execution.
The game then becomes about how long you can leave the execution part of your business alone to focus on the strategy, without your business falling apart. The longer these intervals, the better.
But it’s a struggle, and many people don’t cope with it well. They get stuck in execution — because that is the more urgent of the two — and only occasionally get around to the important stuff.
Eventually, this double load proves to be too much. It’s like having two businesses, not just one. As it wrecks their health and their happiness, they throw in the towel.
My Story — How Not To Do It
It is easy for me to point out these blunders as I have committed them all myself.
I Start an MMA Gym
In 2007, I started a mixed-martial-arts gym. I was set on turning my lifelong passion — full-contact martial arts — into my business.
Like your typical founder, I was obsessed with my product — teaching.
My angle was that I would bring an academic approach to MMA. I would teach my students concepts. I would show them the little details that made all the difference. I would turn nerds into sophisticated fighting machines.
In a sport where most coaches would hardly bother to explain anything, this would set me apart.
From Specialist to Universalist
So, I threw myself into teaching while ignoring everything else. I completely focused on my students and thought that would be enough.
But after about a year, I was still at only 15 students — not anywhere close to making a living.
At this point, I had to admit that my teaching-only approach was not sufficient. I wasn’t doing any marketing, I had no idea what accounting was, and we didn’t even have our own location.
I shifted gears and went from coach to small business owner. I created a website and studied SEO. I read business books about accounting. I learned to do my taxes, and how to sell prospective students.
Within another year, we went from 15 students to 80 students, and eventually to over 300 students.
I Have No Life Anymore
On the outside, things were looking great. I now owned a successful business. On the inside, I was miserable.
I was doing everything myself. Teaching most of the classes. Talking to new customers. Answering calls. Replying to emails. Updating the website. Doing the taxes. Traveling to competitions on the weekends. Doing my own training in the mornings. Cleaning the gym at midnight for two hours.
I had no life outside my business anymore. I was my business. If I wasn’t there, things didn’t get done.
I had painted myself into a corner.
That’s when I found “The E-Myth Revisited” by Michael Gerber.
Michael Gerber and “The E-Myth Revisited”
The person to establish “Work on your business, not in your business” as a modern business paradigm was Michael Gerber.
In 1995, he published a short book called “The E-Myth Revisited.” In it, he explained how most business owners start out as specialized technicians when they really need to be entrepreneurs.
If your business depends on you, you don’t own a business – you have a job. And it’s the worst job in the world because you’re working for a lunatic!Michael Gerber
So, you need to hire people. But just hiring and hoping for the best won’t cut it. You must also create standardized processes, which you then teach to your employees.
It is here where Gerber introduces his key idea, what he calls a “turn-key operation.” Essentially, you are supposed to treat your business like a McDonald’s franchise — a readymade business model that you could sell. This will force you to put universal, well-documented systems in place. Hand somebody the manual, and they can do what you do.
This concept will give you back your life.
Once you recognize that the purpose of your life is not to serve your business, but that the primary purpose of your business is to serve your life, you can then go to work on your business, rather than in it, with a full understanding of why it is absolutely necessary for you to do so.Michael Gerber
The Reason Behind It All — Freedom
Reading “The E Myth Revisited” was a revelation for me. Gerber understood the pressure I was feeling and proposed a solution that made sense.
So, I started treating my MMA gym like a franchise.
The first thing I did was to hire coaches — or rather rear my own coaches, as there were few qualified prospects around at the time.
Next, I hired someone for all things administrative. After that, I hired a bookkeeper. And finally, I got two cleaners to make the gym shine.
For each of these hires, I created written, easy-to-follow manuals. They covered everything, from how to add a new student into our banking system to airing out the gym after class.
The transition was not always without hiccups — I was still dealing with people. But the day came when I was sitting in my office at the gym, with class after class going on, and me doing — nothing.
I was finally free of my own business.
That is the core of it — by working on your business, not in your business, you eventually gain freedom.
This freedom manifests in different ways:
- Pick and choose. You can choose which parts of the business you will participate in and which parts you will stay away from.
- Take time off. You can take time off from your business. You can go on vacations, spend time with family, or engage in hobbies.
- Pass it on. You can pass your business on to a successor, like a child.
- Sell it. You are also free to sell the business at any point. Somebody else can easily take it over and start making money from day 1.
How To Work on Your Business
The transition from working in your business to working on your business doesn’t happen overnight. Management is a complex new skill set. But the following tactics will help.
1. Understand Yourself
Not every business owner needs to build systems. There are business models that really can be executed by just one person. Freelancing, small-scale content creation, or coaching all fall into this category.
It all comes down to what you want.
Certain personality types would rather not oversee other people. I myself lean that way. I love working with coaching clients, but that is different from dealing with the same few people every day. I prefer autonomy.
The downside — if you are a one-person show, you won’t be able to scale. Big money will elude you.
But there are also entrepreneurs who genuinely enjoy working with large teams and scaling their businesses up.
But there are downsides here too. The bigger you get, the more headaches you will experience. In large groups, incompetency grows exponentially, while competency only grows linearly. This is known as Price’s law. Eventually, this dynamic will bring your organization down.
As I said, it all depends on what you want. So, do some soul-searching before you commit to a business model that might not be in line with your character.
2. Get to 50,000 Feet
To stop working in your business and start working on your business, you need to create space for higher-level thinking.
Our highest priority is to protect our ability to prioritise.Greg McKeown
There are different ways to do so.
I like to block out a regular strategy session on my calendar, for example, the first half of every Friday. For a couple of hours, all is do is think about my business, what’s going on, and how to take it to the next level.
I advise you to change your environment for these sessions. This will help with gaining a new perspective. Find an empty conference room, or leave the building altogether. Go to a quiet coffee shop. Better yet, find a quiet place outside. Being in nature is the ultimate creativity hack.
Another thing I like to do during those sessions is to talk to myself. I know this sounds strange. But having discussions with yourself aloud will get the ideas flowing like nothing else. It works even better than journaling.
These weekly strategy sessions are the foundation. But you should also have larger timeouts each year, dedicated only to thinking.
For example, Bill Gates is known to go on “think weeks” twice a year, where he secludes himself in a cabin. The only thing he will bring is a bunch of books to get the creative juices flowing. Why not try that out yourself?
3. Start With the End in Mind
Ask yourself in writing, “What is the goal of my business?”
Be as specific as possible. “I want to get rich” is not very specific. “I want to double our revenue within the next six months so I can pay for my kids’ tuition” is.
Once you have your goal in place, work backward.
If you want to double your revenue in six months, think about what needs to happen by the end of month 1, by the end of month 2, and so on.
Then break this down even further. Define what needs to happen on a weekly basis, and finally on a daily basis.
Only when you have your dominoes lined up, do you start implementing.
Note: Do not worry about your initial goal too much. I have started businesses with a certain goal in mind, only to revise it later. That is perfectly normal. Your understanding of what you want will increase as you act.
4. Identify the Few Essential Activities
An entrepreneur always has two jobs. You want to spend as much time on the mountaintop as possible, thinking about strategy. But occasionally, you will have to come down to the valley and execute.
When you do execute, make sure it matters. Only spend your time on activities with the greatest ROI.
Let’s look at what those are.
In essence, there are only six different activities in any business:
- Getting people to pay attention to you (marketing)
- Getting people to buy (sales)
- Creating your product or service (manufacturing)
- Delivering your products or service (logistics)
- Managing your financial resources (accounting)
- Building a team (leadership)
While all of these need to happen, some are more important than others.
I’ll start with the ones that most business owners should spend less time on.
Manufacturing and logistics are at the top of this list. This is where the technician lives, what they obsess about anyway. So, you don’t need to put even more time into this.
Likewise with sales. If you have a customer in front of you, most people will try to sell them, however clumsy. It’s like a dog treading water.
Accounting is often ignored during the early stages of a business but then gains attention once the IRS wants your money. So, that too is taken care of.
Now, leadership is a different story. Having the right people will make or break your business. You should allocate a significant amount of time to that.
But the most important activity is marketing. Companies that do this well will eventually outgrow all of their competitors. Companies that ignore marketing will stagnate or go under.
Ironically, the first two things that companies cut back on during a crisis are hiring and marketing. This reveals their mindset — they only care about the operational now (working in), not the strategic tomorrow (working on).
You must be different. You must prioritize leadership and marketing above everything else.
5. Develop an Investor’s Perspective
Imagine yourself as an investor in your company.
Where a CEO is often too close to the business, the investor has no such affliction. He only cares about the long-term perspective for growth. And that requires a strategic outlook.
Thus, ask yourself — “Would I bet my personal savings on myself?” If not, identify the sticking points that would currently scare off an investor.
6. Find Sparring Partners
You need people to keep you in check, to tell you as they see it. These sparring partners could either be fellow business owners or it could be a coach.
The advantage of your peers is that they understand what you are going through. The downside is they might not be blunt enough. It’s often a case of, “I tell you how great you are, and you tell me how great I am.”
A coach is less likely to play this game. They have no prior connection to you, and they don’t crave your approval. The downside is that they can be pricey.
7. Hire Early
I have a tendency to put off hiring somebody for way too long, and many other founders have too.
The problem is that, in the early stages of a business, you are reluctant to spend money as you are not making much yet. That is understandable.
There are two ways around that.
One is the freelancer route. Only hire help as you need it. This will keep your overhead low.
The other option is to say up money so that you can pay someone for the first six months. After those six months, the problem usually has taken care of itself. Since you were able to scale faster, you can now easily pay for that person.
8. Accept the Difference in Drive
By their nature, entrepreneurs are dissatisfied with the status quo. They are repelled by the mediocrity they see all around them. That’s why they start their own shop.
But once they had some initial success, something ironic happens. To scale their business further, they now have to work with the people that they were initially repelled by. The ones with the employee mindset — “I’ll get there when I get there.”
That can lead to conflict. You want everybody to be as driven as you are. When you stay late every day, why shouldn’t they?
But the truth is, employees are right to take it easy. It’s not their company, it’s not their passion project. Also, there will be no lavish payout for them if your business takes off.
There is no point in lamenting. Instead, you must try to leverage the employee mindset as best as possible, both through performance-based incentives as well as candid feedback. But ultimately, realize there are limits to your employee’s commitment.
9. Understand the Role of Training
Training is both undervalued and overvalued.
It’s undervalued because we don’t provide enough of it.
Most people don’t want to bother with mentoring somebody. The thinking goes — “I could get stuff done instead of training this noob.”
Of course, that is shortsighted. You might get more stuff done in the moment; but long term, your unwillingness to train will cost you. They will not be as effective as they could be.
On the other hand, training only goes so far.
I’ll give you an example from my content marketing agency. You can train a writer all you want — but if that person was not at least a decent writer to start with, there is no way you are going to turn them into an excellent writer. You cannot overcome decades of prior education — or the lack of it.
In such instances, you need to cut your losses. Hire a different person that has more potential.
10. Prepare for Repercussions
“Work on your business, not in your business” might be exactly what your organization needs. But that doesn’t mean that everyone will embrace it.
When I first switched from working in my business to working on my business in the context of my MMA gym, I experienced quite a bit of blowback.
My students had grown accustomed to me teaching all the classes, personally answering all the emails, and even acting as their psychologist from time to time.
When I started outsourcing these tasks, some people felt let down, even offended. They could not understand how my time became more limited as the business grew.
The same thing will happen to you.
With some people, you can explain yourself, and they will get it. With other people, no amount of explaining will do. You must either learn to ignore them or say goodbye to them.
11. Invest in Yourself
An important part of working on your business is to keep investing in yourself.
Only when you stay up-to-date with your market, new technologies, and best practices will you remain competitive.
This should be a daily thing. For example, I have made it a habit to listen to a different marketing podcast every day, usually while working out.
Those 45 minutes or so have made a tremendous difference for me. I have acquired entirely new skill sets, have driven more traffic to my customers’ websites, and am better prepared for market changes.
I strongly recommend you do something similar. It doesn’t have to be podcasts, it could also be reading books by thought leaders in your industry, or regularly watching expert videos on YouTube. Whatever you are most likely to stick with.
12. Get Healthy
Juggling both strategy and execution will push you to the max.
Therefore, it’s crucial to get your health in order. The more personal energy you have, the better your chances of striking the right balance.
The number-one thing is sleep.
You cannot burn the candle from both ends. You must get sufficient rest. The most important tactic is to go to bed at the same time every night, even on the weekends. Your body needs that regularity to get the deepest rest it can.
Second, avoid all processed foods. If it doesn’t grow in your garden, walks on four legs, or swims in the sea, don’t eat it.
Work out every day, preferably from home. Cranking out two-hour sessions at the gym might be good for your ego, but it’s not sustainable. 20 minutes of intense body-weight training is more than enough for even the most athletic businessperson.
13. Regularly Evaluate
To make sure you work on your business, not in your business, you need to do check-ins with yourself. Once a month, ask yourself the following questions:
- Are the processes that I put in place really freeing me up?
- Are my employees sticking to the protocol? Or are they winging it? If so, why?
- During my strategy sessions, am I really doing my most impactful work? Or am I getting sidetracked by shiny objects?
- What does my quality of life look like? Do I feel good about my work and my private life?
14. Get Different Inputs
Once you get to a certain level of automation, it’s important to stay in touch with what’s going on on the ground.
For that, don’t just rely on one person. Have a wide variety of people report to you about everyday issues.
Encourage people to tell you how it is. Don’t get angry with them if they do, or they will start feeding you curated information. That is why tyrants fail.
15. Always Have a Backup
When you replace yourself with other people, understand that most of these people will eventually leave your organization.
Therefore, it’s essential to always have a backup.
Ideally, you would hire two people for the same position. “Two is one, one is none” is sound advice.
If you cannot afford to hire two people, at least start a peer-to-peer training program.
Have each person in your company train another person, based on the process manual you originally created for them. These backups won’t be perfect, but they will at least keep things running while you find an adequate replacement.