A Level Two, owner-reliant business is the traditional way to start a business. You hold the reins of the company’s Level Two business as the business owner. You make all the decisions. You are responsible for creating the plan and overseeing its execution. You meet all key clients and do most of the work for the company. You have people who can help you, but they are there to assist and not take over your business’s central areas.
Your brain’s gray matter contains the knowledge necessary to manage and direct your business. Your business would collapse if something happened to you. You may escape on a short vacation and bring your iPhone or laptop along. This will allow you to check your email while your spouse and children are not looking.
What is the real reason Level Two business owners want total control? Fear that things will go wrong if they don’t keep control. They fear that their staff will make mistakes and lose customers or that they will be sued, or that the company may fail. They clutch at the safety blanket of control and fail to see that it is a trap that binds them to their businesses forever.
Do you remember the scene in Godfather III where Michael Corleone (played brilliantly by Al Pacino) wants to leave the family business? His sister Connie looks at him and says, “Just as I thought I was out…they pull me back in!” That’s how Level Two business owners feel all the time.
Although the traditional model is still viable and can be used to create a Level Two business, there are three major pitfalls.
The 3 Mistakes in Building Your Business Level Two
Pitfall 1: It limits your income and your potential for success.
Your business will revolve around you and your production. As you get more successful, your ability to produce as much for your business will increase. You can only do so much and so fast before you can’t do anymore.
Pitfall 2: This puts everyone in greater danger. Suppose you stop working or get injured; your business dies quickly. This can be dangerous for your family, employees, customers, and investors.
Pitfall 3: You end up in the Self-Employment Trap. The more successful you are, the more you will be trapped inside your business. Your business is so busy with the “job” that you don’t have time to focus on your business’ growth. You will have to take on more overhead as you increase your sales and produce more. This means that each month your starting point will require you to run faster to pay your fixed costs. This traps you in the suffocating cocoon of your Level Two business.
What’s the solution to the Self-Employment Trap, and how can you get out?
The traditional Level Two approach focuses on personal effort and working harder to achieve your goals. This is like saying you can run faster on a treadmill. It’s not true. You can run faster than the treadmill, but it doesn’t matter how quickly. Although you hire more people and take on more overhead, the Level Two model only increases your pressure to produce. What happens if you stop running? Your business goes under the wheels of death when you stop running.
Escape from the Self-employment Trap
You can only do a job if you have a business to do it for you. Building the infrastructure to make your business more profitable and increase market value is key.
It is important to build your business with the end in mind. The future is the day. It only requires your attention sometimes. Building a Level Three company is similar to raising children. You have to give your baby a lot of attention from the moment you are born. This takes a lot of your time.
You are the engine that drives your business forward in the beginning years. Your business will have many roles and need more than formal structures or systems. As your organization matures, like when your children start school, you create breathing room. Your business will continue to be profitable if you can consistently generate sales.
You will face a critical decision point as you enter Level 2. At this point, you have to decide whether you want to stay in your Level 2 job or build your business into a strong independent entity that is independent but still benefits from your involvement. As a parent, your goal is to raise independent and self-supporting children. Your goal is to build an organization that can stand on its own.
The traditional Level Two approach requires you, the owner, to work harder and do more work on your business.