So many people have used furlough as the catalyst to start their business, but others, who might aspire to be business owners, are still held back, sometimes by circumstance, but often by their own limiting beliefs.
It begs the question as to whether there is such a thing as an entrepreneur mindset, or indeed an employee mindset and actually whether a barrier to prospective business owners is that they still think like an employee and what they really need is a switch.
My default position is there is absolutely a difference in mindset between an entrepreneur and an employee. It hit me, when in Cypher’s early days; I played golf on a Friday afternoon with a friend who’s an employee. While I love a game of golf as much as the next person, while he enjoying his freedom on the course that afternoon, all I was thinking was how much work I was going to have to do at the weekend because I’d chosen to be out of the office on Friday. Having time off is very different if it’s your business compared to when you were an employee.
Working for an unlimited company
One of the main differences between an entrepreneur and employee mindset is the concept of barriers. As an employee we are conditioned to respect certain defaults; for example, the role we do, the business we work in, the hours, the pay -effectively the overarching parameters within which a business generally works. There is usually a certain rhythm and routine and a monthly predictability to it. Subconsciously while you operate in a safe space, there is also an inherent creative limitation in the role.
As an entrepreneur, you can enjoy unlimited thinking, even unlimited possibility. Entrepreneurs by nature allow themselves to believe what is truly possible and then go all out to achieve it. An entrepreneur’s mindset allows for an extra bit of performance, an extra bit of drive and an extra bit of enthusiasm for what the possibilities are.
Dealing with payment pressure
Usually, employees get paid weekly or monthly. Generally, other than seasonal or performance related bonuses, they know what will be in the pay packet each month and have a regularity to their lifestyles that is supported by this sum. For entrepreneurs, it doesn’t need to be that way. As an entrepreneur, you could make £200,000 in a month and then nothing for a full year. And actually, if they did that, entrepreneurs would focus on the freedom and opportunities this model presented to create more in the time they have freed up.
That’s not to say entrepreneurs don’t suffer financial stress. The financial reality is that life is structured around monthly payments; your mortgage, your bills and as an employee-you would hope- your monthly wage covers this. But for new business owners, especially those that were recent employees, one of the biggest stresses is wondering whether the business can provide them with an income in three months’ time. The trick is to look past that because it will. The challenge is actually whether you can spend enough time building your brand and your culture and understand what you want to do to make it more successful.
More money, more problems
One of the big freedoms of being an entrepreneur is to be able to access more funds from your business. But once entrepreneurs get up and running they have a habit of just taking money as, and when they need it. Sometimes though, they don’t realize how much they’re taking or alternatively, they don’t take enough because they’re scared that the business will run out of cash. Our job as accountants is to do some basic tax and business protection planning to make sure they’re taking the right amount out of the business so they’re not leaving themselves or the business short or paying too much tax.
Some entrepreneurs need time to break down the monthly rhythm, while some need to build it back up.
The danger of not pivoting quickly from the employee to entrepreneur mindset is that you make very short term decisions. If you retain the employee mindset, which is largely dictated by your monthly pay, you base your business decisions on short-termism. Am I going to make the £3,000 I need this month? You take on bad clients, do the wrong type of work, and neglect the pipeline at the top of your funnel because you are focused on whoever can pay you today. It stops you making space for the real entrepreneurial thinking that you need for months 12 18 or 24.
Learn Unlearn Relearn
We did a whole podcast on having to learn, unlearn and relearn how to do business in 2021. Shifting from an employee to entrepreneur mindset is a perfect example of this because there’s a lot about being an employee you need to unlearn and then relearn in order really become a phenomenal entrepreneur. One of the important learnings for any would-be entrepreneur is that everything you do needs to have some profit in it, and if it doesn’t, you need to stop doing it. Whether that’s working with specific clients, offering certain services or selling certain products, if it doesn’t generate a bottom line you’re better off doing something different with your time. As an employee you probably don’t have to make these decisions.
Business owner v owning a business
It can become apparent that the wrong mindset can actually provide solid blockages to business growth. Without an entrepreneurial mindset, you may end up with a new business that’s worse job than you had before. It will have all the hallmarks of a job; you are a slave to the nine to five, it doesn’t earn any money if you’re not there, but because you’ve lost the benefits of being an employee you might actually get paid a lot less, for a lot more stress and a lot more hours.
To be able to create something that can grow, you need to be able to think past yourself as the only employee or as the only mechanism for making money. It’s important to make the step from employment to business ownership to make it something bigger than just you, the individual.
Shifting from Employee to Entrepreneur mindset
There is a fundamental shift available for all business owners to move from an employee to entrepreneur mindset. This distinction is often really helpful for people to see where they are in their journey. For example, I don’t consider myself an accountant anymore, I own an accountancy business. It might sound twee but it is fundamental to my mindset of what I do as my day job. I think what you tell people you do clarifies where you are on the spectrum between employee and entrepreneur; are you a plumber or do you run a plumbing business?
The more we realize is possible with entrepreneurship, the more we can harness the full power of this state of mind and realise all the opportunities it brings. A more entrepreneurial mindset, will enable you to think more long-term, make better decisions and be more at peace with yourself and where your businesses is. But it’s not a failure if you don’t have a 100% entrepreneur mindset, even if you’re 10 years into your business, because it’s a skill you learn, it’s not a switch you can flick.