How to Escape the Business Owner’s Trap
Table of Contents
In addition to guest posting on the UpCity blog, Denver Business Coach is featured as one of the Top Business Consulting Agencies in the United States. Check out their profile!
If you were to draw a picture that visually represents your role in your business, what would it look like? Are you at the top of a traditional Christmas tree-like organizational chart, or are you stuck in the middle of your business, like a hub in a bicycle wheel?
When the business is heavily reliant on the business owner themselves, we refer to this as the “Owner’s Trap.” This type of dependency on the owner makes it incredibly difficult for team members to do their jobs effectively and make it almost impossible for you to increase the value of your business. It’s easy for an entrepreneur to fall into this trap because they’re almost always working in their business, selling and delivering the services your business provides.
Don’t fret! There are things you can do to avoid falling into the Owner’s trap. When you are aware of what the Owner’s Trap is, you’ll be able to put things in place and make sure you stay out of the Owner’s Trap. We want to educate all business owners to recognize the signs and empower them to do something about it
How to Recognize You Are in the Owner’s Trap
Some big indicators of an owner being trapped by their business are that the business slows down when the owner is gone, takes a vacation, or is away from the office. Clients and customers have their own cell phone numbers and prefer to call them directly when something goes wrong. Ultimately, the biggest indicator is when the business revenue struggles to attain relatively flat growth year over year.
Sign #1: Your Staff Comes To You For Approval
Congratulations! You’ve been able to grow your team. Unfortunately, you haven’t figured out how to make your team work independently of you.
Whether you are a plumbing company, a law firm, a marketing agency, or a bookkeeper, if you have staff that asks for your approval on things you believe they should be able to make a decision on their own, you are trapped by your business. As a business owner, you need to be able to provide your staff with the training and the resources to overcome the common challenges themselves first, without your intervention.
The only time they should come to you is in situations that are out of the ordinary. When that happens, you need to document and record the SOP for that situation to refer to the next time.
Sign #2: Your Revenue is Flat When Compared to Last Year’s
Flat revenue from one year to the next can be a good indicator that you are the bottleneck in your business. You as an individual only have so much capacity. No matter how efficient you are, every business that is dependent on its owner reaches capacity at some point.
You can consider narrowing your product and service line by eliminating technically complex offers that require your personal involvement and instead focus on selling fewer things to more people. You will also need to grow capacity beyond yourself, so it is likely time to start to hire. Before you do, you need to make sure your onboarding and training processes are first-class!
Sign #3: Your Vacations Aren’t What You Expect Them To Be
If you spend your vacations dispatching orders or reviewing documents for approval, it is time to cut the cord. As business owners, we didn’t get into ownership to NOT enjoy our time off.
One thing we work with owners on is using vacations as a business growth strategy. We will work with owners to take incrementally longer unplugged vacations. When they get back from each one, we will look at all of the holes and figure out how to plug them. This can start with just a day, and grow to three months!
Each vacation uncovers new holes, and new opportunities to scale a company independently of the owner. Wouldn’t that be nice to take an extended period of time off and not worry about if your business will be okay?
Sign #4: You Know All Of Your Customers by First Name
It’s good to have a pulse on your market, but, counterintuitively, knowing every single customer by first name can be a sign that you’re relying too heavily on your personal relationships.
You’re the glue that holds your business together. Consider replacing yourself as a “rainmaker” by hiring a sales team, and as inefficient as it seems, have a trusted employee shadow you when you meet customers.
Over time, this will help your customers get used to dealing with someone else. Knowing your customers by their first name is a counterintuitive sign of being in the Owner’s Trap.
Why You Should Want to Avoid the Owner’s Trap
If, so far, you’ve either recognized that you are in the Owner’s Trap, or that the potential for getting into the Owner’s Trap, you might also be thinking that you want your business to run through you for most everything… “that doesn’t sound so bad…”
Let me show you some reasons why getting out of and avoiding the Owner’s Trap is advantageous to your overall quality of life.
I will caveat this with, as you start a business, and probably for the first few years, what I described above will likely be your life; however, KNOWING the ins and outs of the Owner’s Trap will allow you to plan for growth more strategically than simply “I want to grow revenue” or “I want to grow profit.”
Here are some reasons WHY you should work to avoid the Owner’s Trap – if these options don’t appeal to you, then owning a business might not be the right path for you.
Build a Passive Income
You will be working to build a truly passive income source that can sustain you and your family
Relax and Recharge
You need extra time to recharge your batteries more regularly. Many owners work long hours that take away from simple relaxation time our employee counterparts have the luxury to. We are usually strange in that when we (business owners) are stressed, we tend to work more. By working on the architecture of your business, you will inherently gain more time, have more trust in your team, and have more time for regular, daily relaxation.
Free Up Time for Other Opportunities
You might be interested in pursuing other business opportunities. If you work a “Avoid the Owner’s Trap” strategy into your overall growth strategy, you will eventually have extra time in your day-to-day. One way you can fill up that time is by pursuing other business opportunities. Hey, if you achieved complete freedom from the day-to-day operations of your business, why couldn’t you purchase another business and do the same? One strategy our clients like to pursue after breaking free of their day-to-day is purchasing other businesses to work on or pursuing other business passions.
Diversify Your Investments
One of our clients has used the extra time he’s achieved in his main business to pursue a short-term rental business. He started an Airbnb real estate company that manages several STR properties on the West coast. This client was able to set up this business to be free of the day-to-day almost instantly after learning how to do it with his main business.
Travel More
Do you have a passion for traveling? Wouldn’t it be great to travel around the world and not worry about work? Or where your money is going to come from? Think about spending 12 months hopping from country to country seeing all the world has to offer while still collecting a lucrative paycheck, and just checking in on your business every quarter or so. Would that be fun??
More Family Time
Especially for younger business owners looking to spend as much time with their young children, having a business that produces income for them while they don’t need to work is invaluable. Breaking free from the day-to-day of your business puts stay-at-home parenting on a whole different level! By creating a business that can thrive without you, you can make so many more memories with your children
Increase Your Business’s Value
If you fully break free of the Owner’s Trap in your business, you have achieved a business that is inherently valuable to an acquirer. Most acquirers of businesses will not touch businesses that are too reliant on the owner. Let me put this into perspective with statistics:
80%-90% of any small business owner’s wealth is tied up in their business
¾ small businesses that go to market for a sale DO NOT sell
Of those businesses that do sell, most of them sell for under the listed price. These business owners sometimes then have to find another job when they expected to retire. Make sure you can cash out on all of the blood sweat and tears you have put into making your business a success!
Create an Inheritance
Alternatively, your business will be even more valuable to pass off to your children when the time is right. They will inherit an asset and the freedom you have created from nothing!
Trade Time for Dollars
If you subscribe to “Rich Dad, Poor Dad” and Guy Kawasaki’s Cashflow Quadrants, being an employee AND being self-employed (owning a job), is simply just trading time for dollars. What Guy advocates you want to be in the third quadrant, the quadrant of business ownership. This is where you trade other peoples’ time for money. That helps you move into the fourth quadrant where you can use that money to make even money. Be smart about growing your business.
There are many other reasons to pursue a strategy that removes yourself from your business. Ultimately, it comes down to our most precious resource – time. You get time back to spend it how you want, when you want, on your own terms without worrying about a paycheck. Now that is freedom!!
Hear From Industry Experts
Read the latest tips, research, best practices, and insights from our community of expert B2B service providers.
When Should You Start Working On a Strategy to Avoid the Owner’s Trap?
If owning a business that makes you money while you sleep is something you are interested in, then you should work on a strategy to avoid an Owner’s Trap scenario in your growth strategy as soon as possible. Getting to this point in business is no easy feat, despite all of the “experts” on social media. This path is full of unique challenges, HUGE efforts, major focus, dedication, grit, and LOTS of time. It can be many years before your business is at a point where it does not need you to continue to grow. The rewards of this effort are massive, so if you start this pursuit right now, your future self (and family) will thank you immensely. The day you start working with us is the day you start to focus on this pursuit.
How Can You Get Out Of (and Avoid) The Owner’s Trap
Learn How to Delegate
Delegating tasks to others is one of the keys to success. It allows you to focus on other aspects of running your business, but delegation in itself is one of the hardest skills to learn for not only business owners but for any individual. To do it effectively takes purposeful attention and a leap of faith. It takes practice and skill to successfully delegate work and you have to fully trust in the level of expertise of your team.
If you want to learn how to delegate effectively, there are several things you should consider before assigning a task to someone else
You must be clear about what needs to get done
You should know who is best suited to complete the task
You need to set expectations for the person in completing the task
You should provide feedback when necessary after (and during) the task is completed.
Develop Trainable Systems and Processes
If you want your business to run independently of yourself, you will need to develop systems and processes that will allow you to do so. These systems and processes should be so good that they are easily self-taught. Think of creating an internal online academy for how your business operates.
The best way to create a system or process that allows you to leave your business is to first understand what makes your business tick. What are the core functions of your business? How does each function work? Once you know what those functions are, then you can figure out which ones are most important to your business. You can then focus on developing a training program for those functions.
For example, if one of your core functions is customer service, then you might train employees on how to answer phone calls, send emails, and handle social media interactions.
There are many software programs out there that can help you achieve this goal. We use Trainual. VidGuide is another one worth looking at, as is AskArvo. Then you also have course-creation platforms like Kajabi and Thinkific that can offer a more focused training program functionality. It all depends on you’re your needs are, and what will support your exponential growth!
Take a Vacation
Something mentioned earlier in the article, this is a very popular strategy with our clients. A vacation is one of the best ways to understand how your business works when you are not there. It also gives you a chance to reflect on where you are at with your business, and what you want to accomplish next. At Denver Business Coach, we have a litmus test that goes like this:
When your advisor can see it as possible, we will force you to take a 3-month unplugged vacation. When you come back, we will assess what worked and what didn’t while you were away. This will give us a clear indication of how far away you are from fully achieving independence from your business.
We certainly do not START here. “Going on Vacation” is an actual strategy we will employ with a lot of our clients. We will encourage them to go on increasingly longer vacations with the purpose of understanding where all of the holes are. When they get back, we figure out ways to plug those holes.
Are You in the Owner’s Trap?
To find out whether you’re in the Owner’s trap, ask yourself the following questions: Do I feel guilty when I’m not at my desk? Am I afraid to let anyone else run the company because I might lose control? Do I spend more time thinking about the business than doing anything else? If you answered yes to any of these questions, then you’re probably stuck in the Owner’s trap.
About the author
Steven Kohnke
Steven has a great affinity for small business success and creating valuable businesses.
Table of Contents
In addition to guest posting on the UpCity blog, Denver Business Coach is featured as one of the Top Business Consulting Agencies in the United States. Check out their profile!
If you were to draw a picture that visually represents your role in your business, what would it look like? Are you at the top of a traditional Christmas tree-like organizational chart, or are you stuck in the middle of your business, like a hub in a bicycle wheel?
When the business is heavily reliant on the business owner themselves, we refer to this as the “Owner’s Trap.” This type of dependency on the owner makes it incredibly difficult for team members to do their jobs effectively and make it almost impossible for you to increase the value of your business. It’s easy for an entrepreneur to fall into this trap because they’re almost always working in their business, selling and delivering the services your business provides.
Don’t fret! There are things you can do to avoid falling into the Owner’s trap. When you are aware of what the Owner’s Trap is, you’ll be able to put things in place and make sure you stay out of the Owner’s Trap. We want to educate all business owners to recognize the signs and empower them to do something about it
How to Recognize You Are in the Owner’s Trap
Some big indicators of an owner being trapped by their business are that the business slows down when the owner is gone, takes a vacation, or is away from the office. Clients and customers have their own cell phone numbers and prefer to call them directly when something goes wrong. Ultimately, the biggest indicator is when the business revenue struggles to attain relatively flat growth year over year.
Sign #1: Your Staff Comes To You For Approval
Congratulations! You’ve been able to grow your team. Unfortunately, you haven’t figured out how to make your team work independently of you.
Whether you are a plumbing company, a law firm, a marketing agency, or a bookkeeper, if you have staff that asks for your approval on things you believe they should be able to make a decision on their own, you are trapped by your business. As a business owner, you need to be able to provide your staff with the training and the resources to overcome the common challenges themselves first, without your intervention.
The only time they should come to you is in situations that are out of the ordinary. When that happens, you need to document and record the SOP for that situation to refer to the next time.
Sign #2: Your Revenue is Flat When Compared to Last Year’s
Flat revenue from one year to the next can be a good indicator that you are the bottleneck in your business. You as an individual only have so much capacity. No matter how efficient you are, every business that is dependent on its owner reaches capacity at some point.
You can consider narrowing your product and service line by eliminating technically complex offers that require your personal involvement and instead focus on selling fewer things to more people. You will also need to grow capacity beyond yourself, so it is likely time to start to hire. Before you do, you need to make sure your onboarding and training processes are first-class!
Sign #3: Your Vacations Aren’t What You Expect Them To Be
If you spend your vacations dispatching orders or reviewing documents for approval, it is time to cut the cord. As business owners, we didn’t get into ownership to NOT enjoy our time off.
One thing we work with owners on is using vacations as a business growth strategy. We will work with owners to take incrementally longer unplugged vacations. When they get back from each one, we will look at all of the holes and figure out how to plug them. This can start with just a day, and grow to three months!
Each vacation uncovers new holes, and new opportunities to scale a company independently of the owner. Wouldn’t that be nice to take an extended period of time off and not worry about if your business will be okay?
Sign #4: You Know All Of Your Customers by First Name
It’s good to have a pulse on your market, but, counterintuitively, knowing every single customer by first name can be a sign that you’re relying too heavily on your personal relationships.
You’re the glue that holds your business together. Consider replacing yourself as a “rainmaker” by hiring a sales team, and as inefficient as it seems, have a trusted employee shadow you when you meet customers.
Over time, this will help your customers get used to dealing with someone else. Knowing your customers by their first name is a counterintuitive sign of being in the Owner’s Trap.
Why You Should Want to Avoid the Owner’s Trap
If, so far, you’ve either recognized that you are in the Owner’s Trap, or that the potential for getting into the Owner’s Trap, you might also be thinking that you want your business to run through you for most everything… “that doesn’t sound so bad…”
Let me show you some reasons why getting out of and avoiding the Owner’s Trap is advantageous to your overall quality of life.
I will caveat this with, as you start a business, and probably for the first few years, what I described above will likely be your life; however, KNOWING the ins and outs of the Owner’s Trap will allow you to plan for growth more strategically than simply “I want to grow revenue” or “I want to grow profit.”
Here are some reasons WHY you should work to avoid the Owner’s Trap – if these options don’t appeal to you, then owning a business might not be the right path for you.
Build a Passive Income
You will be working to build a truly passive income source that can sustain you and your family
Relax and Recharge
You need extra time to recharge your batteries more regularly. Many owners work long hours that take away from simple relaxation time our employee counterparts have the luxury to. We are usually strange in that when we (business owners) are stressed, we tend to work more. By working on the architecture of your business, you will inherently gain more time, have more trust in your team, and have more time for regular, daily relaxation.
Free Up Time for Other Opportunities
You might be interested in pursuing other business opportunities. If you work a “Avoid the Owner’s Trap” strategy into your overall growth strategy, you will eventually have extra time in your day-to-day. One way you can fill up that time is by pursuing other business opportunities. Hey, if you achieved complete freedom from the day-to-day operations of your business, why couldn’t you purchase another business and do the same? One strategy our clients like to pursue after breaking free of their day-to-day is purchasing other businesses to work on or pursuing other business passions.
Diversify Your Investments
One of our clients has used the extra time he’s achieved in his main business to pursue a short-term rental business. He started an Airbnb real estate company that manages several STR properties on the West coast. This client was able to set up this business to be free of the day-to-day almost instantly after learning how to do it with his main business.
Travel More
Do you have a passion for traveling? Wouldn’t it be great to travel around the world and not worry about work? Or where your money is going to come from? Think about spending 12 months hopping from country to country seeing all the world has to offer while still collecting a lucrative paycheck, and just checking in on your business every quarter or so. Would that be fun??
More Family Time
Especially for younger business owners looking to spend as much time with their young children, having a business that produces income for them while they don’t need to work is invaluable. Breaking free from the day-to-day of your business puts stay-at-home parenting on a whole different level! By creating a business that can thrive without you, you can make so many more memories with your children
Increase Your Business’s Value
If you fully break free of the Owner’s Trap in your business, you have achieved a business that is inherently valuable to an acquirer. Most acquirers of businesses will not touch businesses that are too reliant on the owner. Let me put this into perspective with statistics:
80%-90% of any small business owner’s wealth is tied up in their business
¾ small businesses that go to market for a sale DO NOT sell
Of those businesses that do sell, most of them sell for under the listed price. These business owners sometimes then have to find another job when they expected to retire. Make sure you can cash out on all of the blood sweat and tears you have put into making your business a success!
Create an Inheritance
Alternatively, your business will be even more valuable to pass off to your children when the time is right. They will inherit an asset and the freedom you have created from nothing!
Trade Time for Dollars
If you subscribe to “Rich Dad, Poor Dad” and Guy Kawasaki’s Cashflow Quadrants, being an employee AND being self-employed (owning a job), is simply just trading time for dollars. What Guy advocates you want to be in the third quadrant, the quadrant of business ownership. This is where you trade other peoples’ time for money. That helps you move into the fourth quadrant where you can use that money to make even money. Be smart about growing your business.
There are many other reasons to pursue a strategy that removes yourself from your business. Ultimately, it comes down to our most precious resource – time. You get time back to spend it how you want, when you want, on your own terms without worrying about a paycheck. Now that is freedom!!
Hear From Industry Experts
Read the latest tips, research, best practices, and insights from our community of expert B2B service providers.
When Should You Start Working On a Strategy to Avoid the Owner’s Trap?
If owning a business that makes you money while you sleep is something you are interested in, then you should work on a strategy to avoid an Owner’s Trap scenario in your growth strategy as soon as possible. Getting to this point in business is no easy feat, despite all of the “experts” on social media. This path is full of unique challenges, HUGE efforts, major focus, dedication, grit, and LOTS of time. It can be many years before your business is at a point where it does not need you to continue to grow. The rewards of this effort are massive, so if you start this pursuit right now, your future self (and family) will thank you immensely. The day you start working with us is the day you start to focus on this pursuit.
How Can You Get Out Of (and Avoid) The Owner’s Trap
Learn How to Delegate
Delegating tasks to others is one of the keys to success. It allows you to focus on other aspects of running your business, but delegation in itself is one of the hardest skills to learn for not only business owners but for any individual. To do it effectively takes purposeful attention and a leap of faith. It takes practice and skill to successfully delegate work and you have to fully trust in the level of expertise of your team.
If you want to learn how to delegate effectively, there are several things you should consider before assigning a task to someone else
You must be clear about what needs to get done
You should know who is best suited to complete the task
You need to set expectations for the person in completing the task
You should provide feedback when necessary after (and during) the task is completed.
Develop Trainable Systems and Processes
If you want your business to run independently of yourself, you will need to develop systems and processes that will allow you to do so. These systems and processes should be so good that they are easily self-taught. Think of creating an internal online academy for how your business operates.
The best way to create a system or process that allows you to leave your business is to first understand what makes your business tick. What are the core functions of your business? How does each function work? Once you know what those functions are, then you can figure out which ones are most important to your business. You can then focus on developing a training program for those functions.
For example, if one of your core functions is customer service, then you might train employees on how to answer phone calls, send emails, and handle social media interactions.
There are many software programs out there that can help you achieve this goal. We use Trainual. VidGuide is another one worth looking at, as is AskArvo. Then you also have course-creation platforms like Kajabi and Thinkific that can offer a more focused training program functionality. It all depends on you’re your needs are, and what will support your exponential growth!
Take a Vacation
Something mentioned earlier in the article, this is a very popular strategy with our clients. A vacation is one of the best ways to understand how your business works when you are not there. It also gives you a chance to reflect on where you are at with your business, and what you want to accomplish next. At Denver Business Coach, we have a litmus test that goes like this:
When your advisor can see it as possible, we will force you to take a 3-month unplugged vacation. When you come back, we will assess what worked and what didn’t while you were away. This will give us a clear indication of how far away you are from fully achieving independence from your business.
We certainly do not START here. “Going on Vacation” is an actual strategy we will employ with a lot of our clients. We will encourage them to go on increasingly longer vacations with the purpose of understanding where all of the holes are. When they get back, we figure out ways to plug those holes.
Are You in the Owner’s Trap?
To find out whether you’re in the Owner’s trap, ask yourself the following questions: Do I feel guilty when I’m not at my desk? Am I afraid to let anyone else run the company because I might lose control? Do I spend more time thinking about the business than doing anything else? If you answered yes to any of these questions, then you’re probably stuck in the Owner’s trap.
About the author
Steven Kohnke
Steven has a great affinity for small business success and creating valuable businesses.
