Working “On” the Business Rather Than “In” the Business

There’s an old business cliche about owners/founders working “on” the business rather than “in” it.

The premise seems simple.

As the owner of the business, you should be focused on hiring a team, putting the right people in the right place, and directing operations from the top down.

But pretty much every business owner knows that this doesn’t happen right away—or easily.

Honestly, it feels elusive.

For most business owners, it feels like you are the main engine driving the business forward.

If you stop running, the business stops working.

I certainly felt this way for most of the last 5 years. I often felt a lot of pressure to push and grow and work insane hours to get things done and deliver better and faster.

I also worked squarely in the business.

Around this time last year, I was the main contact for every one of our clients—managing as many as 20 clients at a time.

As we come into the new year, we will have 15 retainer clients.

I’ll be leading just 5.

This has obviously been a huge shift for me. And it’s taught me a lot of lessons about what we need to do in order to grow the business and for me to stay sane.

There’s still some work to do here before I can say that I’m fully working “on” the business rather than “in” the business. But in the process I’ve learned that there are usually 3 things that stop business owners from making this transition:

1. Cashflow
2. Talent
3. Ego

These can each present their own set of challenges. The first step is identifying which one(s) apply to your business.

Issue #1: Lack of Cashflow

First and foremost there is the logistical challenge of cashflow.

Depending on the size and maturity of your business, you may simply not have enough profit to afford to hire someone to do work that you, yourself, can do “for free.”

There are two possibilities here.

The first possibility is this is a temporary stage in the growth of your business.

If this is a temporary situation, then you may need to simply push through—grow your business to the point where it becomes feasible. E.g., You can’t afford to hire an operations person right now, but if your business grows by 20%, you’ll be able to make that investment.

Most businesses go through this phase. Optimist did and we teetered on the cusp for the last few turbulent years.

This year, we’ve had enough stability and cashflow to make a long-term investment and made this a permanent role. (Thanks, Katy!)

The second possibility is that this is a systemic issue.

It’s possible that your business model simply won’t generate enough cashflow to replace or offload yourself in the foreseeable future.

This is where things get ugly.

Many entrepreneurs lock themselves into this path. They build themselves a prison cell—a permanent job from which they can’t escape.

This means you’ll never be able to make the transition from working in the business to on it without going bankrupt. If this is the case and you want to get out from under the day-to-day work then you have a lot of work to do.

You must reevaluate your business model.

1. Raise your rates
2. Lower your costs
3. Move upmarket
4. Pivot entirely

There are a lot of options here and the right choice depends entirely on what you’re building, what the competitive landscape looks like, etc.

Looking back at our early years of Optimist, we were on a path toward this second reality.

Our rates were too low—and our margins were too thin—to support additional overhead that would allow me to hand off my client work and operational roles to someone else.

We had to make hard changes. We had to raise rates, increase our minimum retainers, and build more margin into the services that we offer.

Over the last few years, we’ve:

• Increased our minimum engagement by 100% (from $5k/mo to $10k/mo)
• Increased our effective billable rate by ~25%
• Limited our range of services to focus on our highest-margin work
• Started charging more for upfront research and onboarding
• Let go of low-margin clients to bring on more profitable ones

These were not easy or quick changes. It took years. But if we didn’t do this, I’d be locked into leading and managing every single client at our agency in order to just break even.

So make an honest assessment here.

Are you on a path to where you want to be? Or will you be locked into hands-on work forever?

Issue #2: Lack of Talent

Another big challenge is a lack of talent.

For some businesses, you simply don’t have the talent on your team to be able to hand off or delegate core parts of the business. Sometimes it’s because your team is too junior. Sometimes they don’t have the skills or knowledge they would need to be successful at this kind of work.

If there’s a legitimate lack of talent in your organization, then you need to devote a huge amount of your time and energy to hiring and training. This is often one of the last functions to hand off as a founder.

But beware.

Ego will masquerade as a lack of talent.

You can fall into a trap where you convince yourself that no one—on your team or possibly in the world—can do the work that you’re doing. Or they can’t possibly do it as well as you.

A few years ago, I wrote about the 70/20/90 principle.

This has been a super valuable framework for me as I have brought on strategists to our team to lead client engagements.

It’s one of those roles that felt difficult—if not impossible—to find a 1:1 replacement for myself. Much of the business was built around my personal expertise and past work experience.

The framework says:

• Hire someone who can do 70%
• Train them an extra 20%
• Be satisfied with 90%

This has been helpful for me for two reasons:

1. I’ve realized it’s highly unlikely I will find someone with 100% of the same skills and knowledge I brought to this role. But that’s okay.
2. I know in advance that I will need to invest time to train and upskill our strategists. That is part of my job. I’ve invested dozens of hours documenting and building workflows that allow our team to upskill and execute at a level that felt congruent to the service I was providing to clients.

We have lots of talent on our team and within our network. But everyone has their own range of skills and experience. For a deeply specialized service that Optimist provides, it’s not reasonable to expect that anyone would be able to step right into our strategist role without an investment of time and energy to bring them fully up to speed.

There’s a reasonable chance that if you’re feeling like you don’t have the talent to replace yourself, it’s because you haven’t faced the realities of hiring—and you haven’t put in the work it would take to make that person successful.

This requires:

• Developing clear SOPs for core functions
• Documenting and maintaining workflows
• Carving out time for training and onboarding
• Identifying base skills and non-negotiable experience levels that will set people up for success

It’s also worth noting that you need to invest in talent.

We live in the “Great Resignation” era. It’s turbulent—lots of competition for talent, talent scrutinizing workplace practices and culture, and a rise in entrepreneurship.

If you treat your team as replaceable cogs, you can expect them to respond accordingly.

Depending on your business, this could be a perfectly viable model with high turnover expected.

But for key hires and important roles within your business, you have to consider the bigger picture. If you want these people to stay around and own essential functions within your business, then you need to compensate them and treat them as such.

Issue #3: Ego

I truly feel that ego is the most common bottleneck for business owners.

Especially in service businesses, your company—and your reputation—is often linked directly to your personal “brand”, your talent, and your past experience.

So trusting that to someone else is scary.

But ask yourself one simple question: Are you trying to scale your own time? Or are you trying to build a business?

These are not the same goal.

Scaling your own time can be lucrative.

But you will always be the heart of the business. You will always be deeply involved. And you will always be the bottleneck.

If you’re trying to build a business, then you need to decouple your personal identity from the company. You need to slowly let go of different parts of the business—finding someone you trust to own those functions.

To prove this to yourself, think about your business in the future.

Imagine if it were to grow 2, 10, or 100x the size.

Would you be able to own that function at this scale?

If not, then you need a plan to have someone else who is focused on this part of the business.

Do you think Elon Musk personally checks each Tesla that rolls off the assembly line?

Of course not. It would be impossible.

(I realize that’s a bit of a sick joke because of Tesla’s notorious QC issues, but the point still stands.)

So here’s the lesson: If you want to make the transition from working in your business to on the business, you need to be honest with yourself.

What is truly holding you back?

Don’t let your ego and fear trap you in a job if your goal is to run a business.