Working in the business means doing the tasks that should be done by and employee. Working on the business means doing the tasks that should be done by the owner. The owner doesn’t own a business he owns a job.
An owner starts his own business in order to achieve his goal of being his own boss. He discovers that he may not have a direct supervisor anymore but his income is still dependent upon him performing the same tasks that he performed in his employment and in addition to that he is swamped in “paperwork” and employee problems. He may (or more likely may not) have a greater income, but his hours and responsibilities are so greatly increased that all he has is a bigger job than the one he left. If he had put in this many hours and this much effort for his former employer he would probably be ahead of where he is now. All that he tried to achieve was self-employment and he has achieved that.
There is a significant difference between owning a business and owning a job. Having a business means that he makes his money off the efforts of others, rather than off the efforts of his own. You should make money off of every employee; therefore any business with employees should make money.
Owning a job
Some people are content with a job. As long as they are content with the hours, inability to get away, and their current compensation then they need not be changed. When a person has a job they end up with excessive work hours. They are doing the job of one or more employee and trying to do their own job (run the company). They cannot get away because systems and controls have never been established that allow them to delegate the functions of operations to others. They have no way to really know that the functions are being properly done without being there. Their compensation is limited to the number of hours that they are willing (or able) to work. They have no hope of opening a second location because the operations depend upon the personal attention of the owner and he can only be in one place. They can never sell their business because they are the business. If they left, there would be no business. Eventually the assets are sold but they years of sweat equity go uncompensated. They are good at some of the tasks and not as good at others. As their business grows they are required to do more and more tasks that they are not good at. Eventually they get overwhelmed, fail to grow and die.
Owning a business
A business owner owns a few hard assets and his systems. Why does a 1000 square foot building sell for hundreds of thousands of dollars if it is a McDonalds? Because it has ironclad systems that produce a pre-determined return based upon location. McDonalds is completely SYSTEMS DEPENDENT. Most small businesses are PEOPLE DEPENDENT. McDonald’s systems allow for the least qualified person in each position and they are so strong that the people are irrelevant to the success of the business. Most small businesses purposely become dependent upon the most qualified person in each position and become held hostage by their employees. Since the value of most small business pales in comparison to the value of McDonalds, we can assume that a SYSTEMS DEPENDENT business is better than a PEOPLE DEPENDENT business. This can only be achieved through a conscious effort on the part of the owner to do his job rather than other people’s jobs.
In order to own a business you must try to own a business. That means that significant time and resources must be spent working on the business rather than working in the business.