Though deemed apocryphal, Louis XIV is famously attributed to saying “L’Etat, c’est moi“. This may be transliterated to “I am the State”. As an absolute monarch, the authority of the State came from le Roi Soleil. In businesses, the owners and founders are typically seen as the source of the enterprise. Often I have seen – and been guilty of – embracing a similiar spirit: Les Affaires, c’est moi. Transliterated as I am the Enterprise.
When I first started out in my first copywriting venture back in 2006, I registered as a sole proprietor with the Malaysian Securities Commission (SSM). The business name? Aldric Tinker.
As a sole proprietor, legally you are the enterprise. Unlike private limited companies, the business is not an independent body corporate, separate from its owners. And when you register your business using your legal name, the distinction is hard to make.
After my third copywriting enterprise did I learn an important lesson: whether it is a sole proprietorship, or a private limited company where the founder controls a majority of the shares, a subconscious distinction must be made.
As a business, it generates revenue for itself. It is imperative that this revenue is higher than the sole proprietor’s desired monthly stipend. Why?
Although legally there is no distinction, but subconsciously, entrepreneurs need to understand that they are an expense to their business. Just as I needed to draw my salary from my business’ account, so must they. Therefore the business needs to make more money than this obvious overhead.
Over time, I realised that many who venture into business fail to make this distinction. In fact when I was discussing this concept with some entrepreneur friends, it never occurred to them that they were still an expense to their own business. Whether they are an asset or liability to the business, that is another story altogether. But bills need to be paid and mouths must be fed.
In the past, I was conscious about the importance of having this distinction. Yet it never sank in. I could blame it on my lack of working experience. Even so, I find it more beneficial to see this as a learning opportunity instead.
The distinction cannot be limited only to cash flow.
A business owner or entrepreneur’s goal in starting a business is to provide for him or herself, not just meet ends meet every month or live in a constant cycle of plenty and famine. In time, I’m sure each and every one of us wants to scale the business or to leverage on systems.
In that case, the business owner or entrepreneur themselves need to learn to let go. Even when the business carries the founder’s name, they cannot afford to service thousands of clients across time zones in perpetuity.
It’s still a concept that I need to master; however, it is a concept that I am starting to finally grasp: the working in my business vs working on my business distinctions. Both are equally important until the tasks may be outsourced or delegated to another. Whether one or the other or both, it is important to slowly shed the “les affaires, c’est moi” approach and replace it with systems, standards, and – eventually – staff or suppliers.
Otherwise the business will definitely fail as I have personally seen in the last four or five times with my own ventures.
How to Fail in Business is a collection of weekly articles where I revisit and reflect various points along my entrepreneurial journey as I embark on the current one. You may find this article posted on my LinkedIn (https://www.linkedin.com/in/aldrictinkertoyad/), Facebook Page (https://www.facebook.com/atinkertoyad/), and at http://aldrictinker.com.