The Reality of Starting a Business (Business Owners VS Business Operators)

Now that Sabri Subhi joins me now in the studio, I really look at business as an incredible vehicle to really, like, make good and make change in the world. Hey, guys, Sabri Subhi here, and in this video, I'm going to be talking to you about the difference between a business owner versus a business operator. Now, the thing that I see just far too often is that somebody will start a business, and they'll start it because they've got a passion in cooking, and they'll start a catering business, or they love photography, and they'll start a photography business. And they kind of just get into the business, starting it by doing what they love. They kind of grow the business. And then it becomes like this crossroads and this really pivotal moment where they're like, cool, do I want to grow this business or do I want to stay as just an operator? And it's a very, very clear distinction to make because a lot of people do end up saying, yeah, cool, I actually want to be a business owner and I want to hire and I don't want to do all the editing anymore. I don't want to juliet the carrots and scrub the potatoes. I want to actually build a business that is a lot bigger than me. There's a lot of different can of worms that opens. Like, the first thing is that, like, they typically don't have any training in being an owner, in hiring people, in having a vision, in motivating a team, in building an incredible culture, in being able to train people to do what it is that they do and align the business goals with also the individual goals of the team members within that organization. When you think about it, when you look at breaking the business down into its constituent parts, you know, realistically, most people that have a business, they don't actually have a business. They have a job, right? They've just created themselves a job. Like, you come back five years later and they're just still working tirelessly and they don't have a team. And, you know, I was reading the other day, a scary statistic is that the average business owner makes $41,000 per year, which is far less than what they would make if they went and worked for somebody, right? Yet they don't get all the cool shit that you get when you work for another company. Like, they don't get paid holidays. They don't get to have a team or do any team events or anything like that. Like, typically, it's just them freaking working their ass off and really for minimum wage. And that's not a lifestyle that you want, that's not the thing that you go into business for. You typically go in there for more time, more freedom, yet that's not what most people have. Most people have a job and it's like this time hungry vampire that just latches onto the side of that business owner's neck and just sucks their blood dry and they lose the passion for what they're doing. So realistically, if you make the decision to be a business owner, if you don't want to be a business owner, that's completely fine. You can just run your own thing, be an operator, get, you know, if you do things right and you know how to do sales and marketing, then typically you can get it to a place where you do make a good living. Maybe better than what if you were to go and work for a business. However, when you make the clear distinction that you now want to be an owner and not an operator, it's a completely different new paradigm and it's a complete different mindset shift that needs to take place in order to make that possible. And when you do make that decision, it's kind of like a fork in the road, the line in the sand moment. And you're like, okay, well I need to focus on actually bringing revenue in and you need to focus 80% of your time on revenue producing activities. What are the activities that you're doing in the business that is going to move the money needle? And you need to basically outsource, delegate and hire a team for everything else. And it's not about like, you just don't want to do any of those other things. Like, there's a lot of things in my business that I don't like doing. But other people love doing and they hate doing the things that I love doing. Therefore, it's a really good match when you find somebody that you can bring into the business that loves to do all of those other things and you're like, hey, this is what you're going to be tasked with. And you want to make sure that those things that you're tasking them with are not the revenue producing activities because you want to be focused on really moving the money needle in your business. There is nothing that is more important because if you don't have money, then you can't hire a team, you can't get an office, you can't do cool shit with your team to build the culture because you're constantly in survival mode. Feast or famine, you're worrying every day about where the money is going to come from. To be able to pay your team. And when you do that, it's not a position where you're able to think long term. Because when you become a business owner, it stops you from thinking about the short term cash flow and how do I make as much immediate cash flow to then pull the money out of the business and buy stupid shit with. And that's the way that most people operate their business. They use their trading account in their business as if it's their personal bank account and they pull money out and they go and buy stupid shit all the time. When you're a business owner, you need to start having long term thinking and you need to have delayed gratification. That is, you need to think about not optimizing for yourself and your own personal interest, but the long term of where your business is going to be in five years, in 10 years, down the time and making the investments that are required right now to secure that future in the long term. And I can tell you that like you're looking at like the second and the third order consequences, it's a positive first order consequence. It's always going to be a negative second order consequence, right? What I mean by that, not to be esoteric, if you're going to pull money out of the business, right, you're going to get the immediate gratification that's the first order consequence. It's a positive for you right now. But the second and the third order consequence are going to be negative, meaning that if you take money out of the business to go buy a Lambo or to do some stupid shit, then what is the second order consequence? Well, you're not going to have as much capital to invest in team, into building your brand, into advertising, in an office, in a team retreat, right? And that gives you a negative second order consequence, meaning that the long term vision of your business is really being impacted by you optimizing for your self interest. And this is how everybody does it. Not everybody, but all of the people that are operators do that. People that are business owners and builders, they're the ones that are making the sacrifices today to build a better future tomorrow, 10 years down the track. And that's really a really pivotal mindset that you need to have. You need to get very accustomed to delaying your gratification and to invest in the business. And it becomes a thing where you pivot away from having a cash flow business to an asset that you're building long term as an owner. That's what you have to get to. You have to get into Building the long term valuation of your business and the asset and the machine that is your business. You cannot get caught into the trap of being in the weeds, on the tools, on the front lines, doing the work. Right? Because most people, they're like, I can't find any good people, I can't find anybody as good as me to carry out this role, this job, rendering these raw materials and delivering a product with integrity to my clients. And that there's a few things to unpack in that. And the first one being that yeah, if you don't have enough money, you can't hire the right people. You can't find them, you can't afford them, you can't pay them. And then the second thing is that you're never going to be able to find somebody that is as good as you at the specific craft that you have built the business around. But if you can find someone that's 80% as good as you, then that should suffice, right? Because Otherwise if you're 100% hell bent on not letting anybody do the delivery because they're not as good as you, then you'll be an operator for the rest of your life and you will create a job, not a business for yourself. The other things to look at is like, well, what are the things that I need to look at if I'm going to be a business owner? Well, it's like culture, investing in the long term. And then also what are the incentive systems within your organization that allows you to scale? You're not just hiring people to come into your business just to deliver on the work, right? You need to be aligning yourself with a players that you can help them get what they want by helping them get you what you want. Right? So it's a two way street. It's not like I'm going to hire you, it's a one way street. You also need to help them get what it is that they want. And you need to look at what are those incentive systems look like. And a great example of this is, you know, FedEx. So when FedEx first started and they were like trying to do their overnight delivery, they could never do it. They could never deliver a service that had integrity in terms of quick turnaround and that is overnight delivery. They were paying their couriers per hour to deliver the jobs. So if you look at that incentive system, it's a flawed human incentive system because it's optimizing for that person to essentially take as long as possible to do their job because they get paid the Most amount of money, right? And basically what was happening is like the couriers would get together, the aircraft would get together at midnight, they would sift through all of the packages in order to try and get it delivered overnight. First of all, they weren't able to do that, and people weren't optimizing with the end goal, and they just weren't able to. And so what they tried to do is they tried to put threats in to their employees, they tried to create penalties and try to optimize everything that they possibly could so that they could deliver that service. But it wasn't possible until they changed the incentive system. So instead of paying their couriers an hourly rate, they started paying them for the shift. So it doesn't matter it took them four hours to do it or it took them eight hours to do it. They would get paid for the full shift and literally overnight they were able to do it because their incentive system aligned with the individual and what it is that they were optimizing for. Finish work, go pick up the kids from school, or hang out with their family, or watch Netflix, or do whatever it is that that individual wanted to do while still getting the maximum amount of money for their full shift. And these are the things that you need to start thinking about when you transition from an operator to a builder, you know, an owner, and building something that is much bigger than yourselves. And a lot of the time, like, more often than not, it's going to require you to basically take some sacrifices in the short term to reach that higher level of business that you're trying to build. Wherever you are on your journey, I hope this video serves you. Cheers. If you enjoyed this video, please like and subscribe. We're dropping a video like this almost every single day on YouTube, and if you've got any questions, leave them in the comments box below with hashtag heysubry and I'll do my best to get in there and get that answered.