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Posted on May 14, 2011

How to Go From Employee to Entrepreneur: Part 1

Steve Jobs with Foam Number 1 - How to go from employee to entrepreneur - Franchise HelpFor people looking to move from employee to entrepreneur by starting their first business, there's a tremendous amount to learn. Buying into a franchise opportunity is a great way to get up that learning curve while you earn, but first-time franchisees still need to know what to look for if they hope to climb the entrepreneur ladder.

With proper guidance and training, anyone can become an entrepreneur, but it's hardly an overnight process. Becoming a true entrepreneur takes time and effort, and there is a lot to experience, digest, and internalize along the way. Successful entrepreneurs learn to take responsibility for the mistakes they make, learn from those mistakes, correct them, and repeat the process over and over again. Of course, you could start an entrepreneurial voyage straight away by simply launching your own business, but few people have the resources to begin at the top of the ladder. Instead, most people begin on the lowest rung, as an employee, and, if they are tenacious, work their way up to the top.

Wherever you start your journey, these levels are designed to provide you with a framework for understanding each step in the entrepreneurial process. Whether you are running a single franchise with the goal of opening more businesses or you’re ready to create your own franchise, once you understand each level, you will begin to develop the tools you need to go from where you are today to where you want to be tomorrow.

Level 0- The Employee - For most people, the process runs as follows: you go to school, you learn, you get a job. Once you have that job, you perform and improve at your job. It may seem like you’re learning to earn, but you aren’t truly on the path to entrepreneurship. Often, time spent as an employee is wasted because it’s generally spent either keeping your head down and not rocking the boat (route 1) or working harder and harder to get better at the job (route 2). Most who follow the first route believe that the best way to not get fired is to go unnoticed and that achieving raises and promotions requires mindlessly muddling along a path someone else has drawn for them.

The people that follow the second route generally move from company to company or into and out of different positions. They may get noticed or even get raises or promotions for their work, but these employees generally never make it past the first stage of the entrepreneur ladder. The major assumption that people in this position make is that higher income equals more wealth. Nothing could be further from the truth. Too often for people in this position, a larger paycheck just means further debt because they can borrow more thanks to their extra income. Then they compound that issue by assuming that going to the next level will alleviate their issues and they start their own business to become self-employed.

Level 1- Self-Employed- This is the first step up on the entrepreneur ladder and most never get past this level in their business. Have you heard what JOB stands? Just Over Broke. Unfortunately, most self-employed people only have a JOB even though they own their business. Most people who start their own business have no idea what they’re in for. Opening your own business may be the culmination of dreams and it may seem glamorous, but that new-found sense of freedom fools people into believing that wealth is around the corner and becoming rich is just a few days, weeks or months away.

The reality is that most businesses fail within five years of starting up. These bulk of these businesses don’t fail because the owner wanted to fail or didn’t work hard. They fail because the owner was ignorant of what it takes to run a successful business. Going from the employee to self-employed is a huge step. If you learn how to step up and make it work for you it can be very rewarding, but it can also lead to a lifetime of debt and struggles if rushed into. To begin to see real rewards, you need to move to the next level.

Level 2- The Manager- To move up from self-employment and reach the next step, you have to have employees. Once you have employees, it may seem like just a matter of time until you’ll be working less and making more, but not if your employees are more trouble than they are worth. Too many business owners are working more hours, doing more work cleaning up the mistakes of others than they ever imagined. And, even worse, they probably aren’t making any more money than before.

To move from self-employed to the manager level you need to take a step back to go forward. You need to understand that vision, identity and goals are needed to be a strong manager; these traits are far more important at this level than they were at the previous levels. The manager knows how to delegate authority and empower their team members. To have a successful business, you can’t simply hire friends and family, unless they bring more than just their personality to the business. You need to recruit people with the potential to be great team members and train them the right way. When you have a strong team that doesn’t need you to hold their collective hands, you’re ready to move on to the next level, the Owner/Leader, which we will talk about in Part 2 of From Employee to Entrepreneur next week.

Brad Sugars is the Founder, Chairman and President of ActionCOACH, the world’s number one business coaching and executive coaching firm, with more than 1,000 offices in 32 countries. ActionCOACH specializes in coaching small to medium size business as well as executive teams and group coaching. You can follow Brad on Facebook and Twitter.

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