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Running a Business vs. Owning a Profit Machine
Have you ever taken a step back to analyze the nature of your business? Are you working in your business a lot or are you strategically crafting it from the outside? I've spent some time reflecting lately, and I hope sharing my insights will offer some help to fellow Fastlaners.
For context, I operate a moderately successful business in the solar sector. I am currently rebuilding to make it ready for massive scale and profitability. At 27, I am nowhere near as experienced as others, so if you have constructive criticism on my thoughts then please reply me.
The difference between a business and a profit machine.
A Regular Business often has an owner that’s busy with day-to-day operations, who is consistently busy, and always managing crises in the business. The profit might be decent but often falls short of the profit envisioned at the start of the business. This used to be my story...
On the other hand, a Profit Machine represents a Fastlaner’s ideal business. It's a business where processes are streamlined, resulting in minimal hands-on involvement by the owner, but generating maximized profits for the long haul. Every task is automated or delegated, and documented in detail to ensure you can always find the right ‘pawn’ to do the work. This is where I want to go with my business!
Transforming a business into a Profit Machine
Transforming a business into a profit machine is not easy, or everyone would have done it. I figured that an owner must have enough business and domain experience to have clarity on what is necessary to bring the business forward. This is why it’s important for entrepreneurs to start as early as possible, as they will act, learn, adjust, and grow.
What you need to know will become clearer over time as you get better and better at business. Following thought leaders like @Kak, @Johnny boy and @Antifragile really helped me to realize this. They helped me to be a little less angry at myself for not having everything in perfect order yet. I just missed (the right) business experience. The most successful entrepreneurs are, therefore, often around 50 years old. They have the skills, network, and experience necessary to bring a business forward in the right way. They detail the processes required for business operations and gradually delegate or automate them. They can do this because they know what needs to be done. Sounds simple, but you just don’t get it until you really get it. I feel like it’s slowly starting to click for me as I gain more insight into how successful companies(Profit Machines!) work.
Some of the things I believe are necessary to build a profit machine:
Holding a profit machine VS making an exit.
I always hear people talking about an exit, but why would you sell a perfectly healthy company, operating almost on autopilot, with management in place incentivized for long-term growth, generating huge amounts of cash in a market that will stand the test of time? This looks like an entrepreneur's wet dream of course, but I believe it’s really possible to build (multiple) businesses like this. If this business gives you total freedom, then why would you sell? To start something else? Why don’t you start it while you hold this profit machine and build something synergizing? Am I missing something?
So what have I learned so far:
I don’t have to do everything right at once. Of course, I'm in a rush to reach financial freedom, but I know it will come eventually. I shouldn't beat myself up for making mistakes every entrepreneur makes. Just keep on learning and growing and eventually you will reach a point where all your skills, experience and network will come together and you can really set yourself up for the rest of your life. Enjoy the process a little more
@Thanks to all the real fastlaners on this forum!
Have you ever taken a step back to analyze the nature of your business? Are you working in your business a lot or are you strategically crafting it from the outside? I've spent some time reflecting lately, and I hope sharing my insights will offer some help to fellow Fastlaners.
For context, I operate a moderately successful business in the solar sector. I am currently rebuilding to make it ready for massive scale and profitability. At 27, I am nowhere near as experienced as others, so if you have constructive criticism on my thoughts then please reply me.
The difference between a business and a profit machine.
A Regular Business often has an owner that’s busy with day-to-day operations, who is consistently busy, and always managing crises in the business. The profit might be decent but often falls short of the profit envisioned at the start of the business. This used to be my story...
On the other hand, a Profit Machine represents a Fastlaner’s ideal business. It's a business where processes are streamlined, resulting in minimal hands-on involvement by the owner, but generating maximized profits for the long haul. Every task is automated or delegated, and documented in detail to ensure you can always find the right ‘pawn’ to do the work. This is where I want to go with my business!
Transforming a business into a Profit Machine
Transforming a business into a profit machine is not easy, or everyone would have done it. I figured that an owner must have enough business and domain experience to have clarity on what is necessary to bring the business forward. This is why it’s important for entrepreneurs to start as early as possible, as they will act, learn, adjust, and grow.
What you need to know will become clearer over time as you get better and better at business. Following thought leaders like @Kak, @Johnny boy and @Antifragile really helped me to realize this. They helped me to be a little less angry at myself for not having everything in perfect order yet. I just missed (the right) business experience. The most successful entrepreneurs are, therefore, often around 50 years old. They have the skills, network, and experience necessary to bring a business forward in the right way. They detail the processes required for business operations and gradually delegate or automate them. They can do this because they know what needs to be done. Sounds simple, but you just don’t get it until you really get it. I feel like it’s slowly starting to click for me as I gain more insight into how successful companies(Profit Machines!) work.
Some of the things I believe are necessary to build a profit machine:
- As much operational freedom as possible: Try to focus on working on your business, not in it. Initial involvement in daily operations is natural, but scaling requires strict delegation and automation. This is hard for starting entrepreneurs so that’s why I feel like you don’t have to get everything right at once. I’m now where I have a business, some cash and I can start to really (re)build the business deliberately.
- Domain Experience: Domain experience will give you clarity on what needs to be done to provide as much value for your customer for as low cost as possible. [Read this thread on domain experience] Thanks to all the contributors here. It really helped me to understand its impact on shaping businesses.
- Business Expertise: Being skilled in your domain is one thing; scaling a company in it is another. Experienced entrepreneurs often peak later in life because they have experience on how to set up and run a business in the right, scalable, way.
- Strategic Vision: Envision your business's future trajectory. With experience, charting a successful path becomes much easier as you have much more clarity on what the future will bring. This is why building domain and business experience is so important.
- Financial skills: Keep an eagle eye on your finances. Growth often stands in the way of actual profit. I learned this the hard way, as I overlooked small expenses and they really added up and lowered my profits considerably. Regularly categorizing and reviewing expenses is therefore a must if you want to have a grip on your company.
Holding a profit machine VS making an exit.
I always hear people talking about an exit, but why would you sell a perfectly healthy company, operating almost on autopilot, with management in place incentivized for long-term growth, generating huge amounts of cash in a market that will stand the test of time? This looks like an entrepreneur's wet dream of course, but I believe it’s really possible to build (multiple) businesses like this. If this business gives you total freedom, then why would you sell? To start something else? Why don’t you start it while you hold this profit machine and build something synergizing? Am I missing something?
So what have I learned so far:
I don’t have to do everything right at once. Of course, I'm in a rush to reach financial freedom, but I know it will come eventually. I shouldn't beat myself up for making mistakes every entrepreneur makes. Just keep on learning and growing and eventually you will reach a point where all your skills, experience and network will come together and you can really set yourself up for the rest of your life. Enjoy the process a little more
@Thanks to all the real fastlaners on this forum!
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