The Biggest Myth In Business: The Entrepreneur Makes Maximum Money
It’s high time you got your fundamentals sorted.
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The biggest myth about business
Tap someone on the shoulder and ask them, “what’s the best/ biggest advantage of being a business owner?” and more often than not, you will hear a similar response.
They’d say something on the lines of “Business owners make a lot of money, because they get to keep all the profit of their business.”
Well, technically, the idea is true but in reality, the situation is really layered and complex.
Let’s unfold the layers of complexity in simple words.
The Reality
As I mentioned, technically there’s no doubt in the fact that a business owner gets to keep all the profits of the business.
However, what doesn’t get spoken about (and hence not understood) enough is that the entrepreneur/ business owner is the last person to get paid in the business, and hence for a long time, the business owner hardly makes any money (if at all).
So who makes all the money?
The stake owners of the business that actually help the business to run, stay afloat and get profitable.
The Stake Owners
As mentioned earlier, the stakeowner in any business are the people/ business entities that enable the smooth functioning of the business and they will always get paid before the entrepreneur.
Let’s doubleclick on these stake owners one by one
01 - The government
The moment you make a sale, be prepared to give a slice of your revenue to the big boys and girls who are calling the shots in your state/ country.
02 - The raw material suppliers and vendors
How will you sell more if your raw material suppliers don’t get paid on time?
These are generally the people who always get paid on time, by every successful business and for all the right reasons.
03 - Social media/ advertising platforms
Unless you’re in possession of an absolutely unique/ rare/ one of a kind* product, you will need to advertise about your brand/ business online (and on other platforms) so that your target audience gets to know about your product.
On second thoughts, even if you are magically in possession of a unique business/ product/ service/ idea… How will your target customer get to know about it, and find you, unless you don’t create content/ ads on social media?
* I know they all mean the same thing, I’m purposely used them back to back for the dramatic effect
04 - Rent
How will you run and operate a business without an office/ workshop/ some place of work? This is where your landlord gets their share of your business revenues.
05 - Other service providers
Your business will need electricity, broadband, banks etc. These service providers are next in line.
06 - The team
Your team is the secret sauce that converts the raw material into finished products, makes the best use of your office space for which you pay rent, and uses the services of electricity, broadband, etc.
So now that the aforementioned stake owners have been paid, about time you make space for the most important aspect of your business, your people, your team.
07 - The administration expenses
Now with so many team members working in your office, they will need a lot of stationery, they will need a healthy supply of tea/ coffee/ snacks to stay fueled and productive. This is where those expenses get accounted for.
08 - Other miscellaneous charges
Try as much as you may, you will never be able to account/ plan for random miscellaneous expenses and the list of these is practically never ending, so let’s just do justice to them and account for them right here.
09 - Ad hoc expenses
Running and managing the business is all about fighting one small challenge after another. And sometimes some unexpected challenges/ breakdowns which can’t be planned for will need your attention, energy and money.
10 - Business expansion
What’s a business that stays flat on the growth scale in such an exciting time in the world? If you don’t plan and account for your business growth, your competition will. So you better make space in your mind, and your balance sheet and account for business expansion.
When does the business owner make money?
It’s safe to assume, chances are good that a business owner may expect to get paid after all the ten stake owners have been paid their due respect and amounts.
HOWEVER, please don’t consider this list to be an exhaustive one. It’s an indicative one, at best.
Every business will face its own unique challenges every now and then and those challenges will demand money in some form or the other.
In such cases, the entrepreneur’s slice of profit gets thinner or gets accrued for the next month/ quarter.
When do entrepreneurs get a fat payday?
Well, that’s a story (read: note) for another day.
Conclusion
I hope this note has helped you get the right perspective about the world of business.
Entrepreneurs end up taking years before they hit the profitability spot where they enjoy financial abundance.
If you’re not happy with your job/ business, don’t jump ship to start something new hoping you will make a lot of money soon in the next opportunity.
If you feel absolutely lost about your career/ business and you’re feeling helpless looking for your purpose, let me tell you this challenge/ situation is a lot more common than you’d think. I strongly suggest you consult with me for the same. Reach out to me and let’s connect.Your Thoughts!
Considering you’ve reached till this point of the post, I’m sure you must have some thoughts/ feelings/ opinions about what you’ve just read.
I’m done sharing what’s on my mind, and now is your turn to share your POV.
Tell me how you are processing the information that you’ve just read?
Do you agree with my thoughts?
Do you think I missed something important?
Do you disagree with something in particular?
Let’s continue this conversation (or ask your questions about the post) in the comments below.
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Prompt used to create the image for the note
P.S.: Image made on Meta AI using the prompt, “Imagine an entrepreneur who is paying the dues to vendors, team members, agency owners with a smile on their face”