Level Four: The Entrepreneurial Investor

With a business that generates profits, the entrepreneur who has succeeded this far can begin to accept another exciting challenge, that of managing money so that it works to produce more money. Investing for maximum returns involves smart leverage of assets, and the entrepreneurial investor will often leverage the success of the first business to create a second or third company based on the same model or system.

By franchising the original venture or buying other healthy businesses, the investor can get into the career of not just selling basic products and services, but of selling entire businesses. The goal, of course, is still to turn a profit. So rather than remaining at the helm of these companies the investor will buy them, ensure that they have valuable equity or attractive allure and potential, and then sell them to other entrepreneurs or would-be entrepreneurs. The focus becomes finding, buying (and perhaps refurbishing) businesses, in the same way that a real estate investor locates homes, rehabs them, and then flips them for a profit.

The challenge is to avoid falling back into the role of running a business as an administrator or manager, and to meet this problem with a viable solution the entrepreneur will typically appoint someone else to take the reins of the company as the president or CEO. Then the investor becomes more of a director or silent partner who shares in the profits while enjoying the relief of not having to share the routine responsibilities of running the business from the inside. 

This all becomes possible because the entrepreneur has not just created a business but has also designed excellent systems for keeping it going. Rather than dealing on the level of isolated actions and reactionary tactics, in other words, the entrepreneurial investor has risen to the level of broad and comprehensive strategies that work across all sorts of products, services, and economic cycles. Working smart replaces working hard, and the rewards – both financial and personal – are abundant.

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Level Three: The Attitude of Owner/Leader

The entrepreneur who attains the level of an owner/leader enjoys remarkable benefits by knowing how to step aside and let the business – and those employees working in it – operate as a profit center not reliant upon the owner’s constant hands-on participation. This kind of entrepreneur has created an organization that is more self-sufficient and self-sustaining, and by doing so has created more wealth, personal freedom, and free time.

Rather than being the only person who could get the job done the best, this leader has passed that torch of responsibility and expertise along to others who now enjoy for themselves a greater level of career achievement. The owner/leader can therefore focus not so much on sales and revenues, but on net profits. While the business continues to run smoothly – and generate more transactions – the owner/leader concentrates on fine tuning it for increased profitability while letting others handle the day-to-day operational details.

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Level Two: The Managerial Perspective

Those with a managerial outlook are often in a great position to succeed as entrepreneurs, expect for two big misconceptions that lead to massive problems. Many managers believe that if a business is not working, the solution lies in hiring more employees. They throw extra bodies at the problem, but this only aggravates the situation because it fails to address the underlying root cause of the difficulty or lack of profitability. Another mistaken belief that is common to this mindset is that the route to success is through growth – not profit growth but overall structural growth of the enterprise itself. Once again, bigger is not necessarily better unless and until the fundamentals are sound and efficient. Growing larger to fix the problems of a small business only generates a much bigger company with problems that are expanded, magnified, and much more expensive to remedy. Many managerial entrepreneurs go into bankruptcy thanks to vigorous growth, but they never figure out why.

A third misstep common to the managerial attitude is that the entrepreneur wants to be the boss, even if that means sacrificing the talent or potential of employees. To give orders and be in charge requires no great skill or aptitude, but to be a leader – one who knows how to inspire and train others to rise to greater heights – is a rare quality. Managers who become leaders succeed because they accept the challenge and responsibility of ensuring that others under their wings also succeed and flourish.

By getting the most out of employees, managers themselves are able to delegate aspects of their business to others and set higher goals. Those who say they can’t find good employees usually mean they lack what it takes to attract or create good employees – and as a consequence they also lack what it takes to succeed as an entrepreneur. But those who not only manage but also lead can rise to the next level and become owner/leaders – one step closer to the real definition of an entrepreneur

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Level One: The Self-Employed Mindset

The emotional driving force behind the self-employed person is not security but a desire for greater control over his or her life, career, and destiny. Relinquishing that control to a boss every day from nine to five is not their idea of happiness, and they believe that they could do their job just as well without an employer – and perhaps without the need for other employees. They want more autonomy. They want to do things their own way. And they usually begin by creating a situation where they do the same type of work they did while an employee, but they figure out how to do it by themselves and for themselves.

Unfortunately, many of the primary objectives of the person setting off to become an entrepreneur with the self-employment mindset are pitfalls or traps. Because they want to go it alone, they often do so at their own peril. By not taking help from others they not only cut themselves off from valuable talent, intelligence, feedback, and experience that others could offer in the form of assistance, but they also create a situation where they will never experience freedom. 

Many small business owners with a strong do-it-yourself attitude only succeed at creating a new job for themselves, not a new career or profitable company. And as a solo performer, their job becomes all-consuming. They never get a day off, they always bring work home with them, and they work overtime with no financial compensation. Their motto is “Why have someone else do it when you can do it better yourself?” and they often promote their business by telling customers “When you deal with this outfit you only deal directly with me.” Soon they get burned-out, and a great majority of these self-employed people fail in a short amount of time and wind up going back to work for someone else.

They make the mistake of not envisioning a business that will run by itself without their constant supervision and handholding, and they don’t picture creating an enterprise that thrives on involving others in a teamwork effort. One of the greatest blunders is that these self-employed entrepreneurs try to replicate the same job they had before, in the same area of experience, selling a product or service they already know. While it may seem counterintuitive to strike out in a different direction and into unfamiliar territory, that trajectory puts one into a position of learning, being open-minded, and relying upon others for help. Those ingredients contribute to a recipe for entrepreneurial success because they force one to evaluate the entire business system from a new and fresh perspective. And they set the stage for working on the business without having to actually be physically in the business on a day-to-day basis.

That premise of designing a business that works for its owner – rather than the owner working for it all the time – is vital for becoming a real entrepreneur versus becoming simply the most important employee of one’s own selfemployed venture. Those who understand that fact can rise to the next level of entrepreneurship. 

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The Five Levels of Entrepreneurial Development

Brad Sugars, a world-renowned business author and founder of his own international franchise with nearly 1,000 offices worldwide, identifies five different types or levels of entrepreneurial mindsets, patterns of thinking, and belief systems.

They begin with the basic level of the employee – and an understanding that good employees often evolve into great entrepreneurs but that to become an entrepreneur one has to first adopt a perspective and seek out a role above and beyond that of an employee. 

The employee sets goals mainly to impress others, to avoid confronting fears – including the fear of personal freedom and success – and to conform to a comfort zone rather than pushing to learn more and gain new experiences. 

Because of self-imposed limitations, employees prefer to follow someone else’s game plan, and they lack the desire to become a self-motivated and self-reliant entrepreneur. 

They focus primarily on personal security and their emotional motivation derives from a fear of insecurity and a desire to be within the comfort zone of a secure situation. 

Those who want a greater sense of responsibility and control over their lives and have the confidence to experiment with that possibility often rise up from the ground level of employee status to the first level of entrepreneurship. They do this by becoming self-employed. 

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