Financial Independence: Does That Define Your Small Business?

I grew up in a family of small business people.  It started with my grandparents who opened an Italian restaurant in 1949 with their four high school children.  At that point, my grandfather would arrive at the restaurant at 4 am and make the pizza dough that would raise by 9 AM.  However, at 6 AM he was at Terminal Island in Los Angeles building navy ships as an electrician.  Several years later, he achieved financial independence in which he could retire from shipbuilding and work full time at the restaurant.  The restaurant supported, in part, five more of his children, and a couple of dozen  grandchildren who worked such jobs as pizza makers, waitresses, dishwashers, and parking lot attendants.

This memory of small business financial independence came to me when I read Nell Merlino’s article, Building a plan to achieve financial independence with your small business.  Nell lists three good points: Recognize your worth, get a mentor or coach, and don’t fear math.  But even with these, you will not achieve the small business financial independence if you are unable to delegate to others.  The end result is that you will end up working 80 hours a week in a business that you cannot sell and dies when you die.

The book, The E Myth Revisited by Michael E Gerber will help you understand your “worth” by leveraging your talents in supervising others.  Most small businesses cannot achieve financial independence if the owners perform all of the main functions themselves.  It is very hard to grow your business in a predictable and productive way, if you are so concerned with the nuts and bolts of the operation.  You must step back and train others.  He states that you must transform your thinking from a technician’s perspective to an entrepreneurial perspective.  For example, Michael distinguishes these views as, “The entrepreneurial perspective asks the question: ‘How must the business work?’  The technician’s perspective asks: ‘What work has to be done?'”

In most cases, if you choose a technician’s perspective, you will not achieve financial independence because you will have to solve every problem yourself.  In addition, you will not be able to enjoy (or even go on) a vacation because you will be on the phone every day putting out fires from your vacation spot.

The most important goal this year should be your financial independence.  Identify where you are in your business, where you want to be, and how will you get there.