Let’s talk business.

Starting your own business is the ultimate path to creating freedom for yourself. It’s very hard to take the driver’s seat in life if you’re stuck following the rules of another.

Lifestyle entrepreneur.But the odds are against you.

Statistically, most businesses fail. Many of the ones that are financially successful are headed by owners who have become trapped by their business. They’re forced between a rock and a hard place: they can either do everything themselves, or hire a manager at a hefty price tag, dramatically reducing their income.

The experience overall is not good, and all too often these entrepreneurs secretly long to scurry back to the simple life of wage slavery, and the security that a stable paycheck offers.

There’s a saying that “when you’re up to your neck in alligators, you forget that your original purpose was to drain the swamp.” If these entrepreneurs could zoom out for a moment and objectively look at their entire business and its processes, they might get an angle into where they’re going wrong.

In my mind, there is only a small – but critical – factor that differentiates entrepreneurs who succeed in their business versus others who struggle but never seem to get anywhere. But first, let’s divide these businesses into two categories.

“ELF” and “HALF” Business Types

In my book I discuss in detail the differences between a business that “liberates” and one that “ensnares” its owner.

What separates lifestyle entrepreneurs from those who struggle?The first type – a lifestyle business – I refer to as “ELF:” Easy, Lucrative, and Fun. This is how business should be.

The second type – the one that ensnares you, is a “HALF” business: Hard, Annoying, Lame and Frustrating. This is the way most businesses are run.

The variables that comprise either type of business are made up in key areas such as marketing, monetization, pricing, and so on.

Some other critical distinctions:

HALF business focuses almost exclusively on marketing for new customers, and runs up Customer Acquisition Costs (CAC)

ELF business maximizes the Lifetime Value (LTV) of each client, and develops processes to fully monetize each client by keeping them as customers for life, setting up a referral chain, and so on.

Another thing (unique to Lifestyle Businesses) that causes entrepreneurial pursuits to fall into the HALF category, is that the entrepreneur lacks a target rate of return. They have not figured out how much money they need MINIMUM to fund their ideal lifestyle and pursuits.

Yet another critical distinction between ELF and HALF is the presence or absence of systems. In “Buy Your Own Island,” I address systems in great detail and run you through to create them.

The Law of Accelerating Returns

Most boot-strapped “micro-businesses” (ie founder driven, usually run by one entrepreneur) follow a similar trajectory curve:

In the beginning, the entrepreneur has to run all of the operations himself. This is not a bad thing, in fact its encouraged in order to gain hands-on experience on how the business works.

At some point, there is no longer anything left to learn – at least for 90% of the processes that run the company. At this critical juncture, the entrepreneur needs to systemize each recurring process.

This is when the law of accelerating returns starts to kick in, and the processes that run the company become easier and more streamlined.

Let me give you an example. When I published my first book, it took me over 4 months to figure out how to convert my file in to the different formats – especially the .MOBI format for Kindle. Four months! Eventually I conceded defeat and paid a contractor from Fiverr $50 to do it for me.

Yesterday, I converted my latest book, “Hacking oDesk: How to Make Real Money as a Freelancer” from PDF (InDesign) to MOBI (Dreamweaver) in just ONE day. This is accelerating returns in action. The more you learn about certain processes, the easier and more efficient things become.

Systems to Replace Chaos

Systems exist everywhere, in every aspect of our daily lives. Systems run the trains that we use to commute. Plants use a system of photosynthesis to nourish and grow. Our bodies’ metabolic systems digest the food we eat and convert it to energy.

In business, systems are not limited to big, multinational corporations. Smart entrepreneurs use systems in order to create processes that are efficient, that minimize chaos, that produce a predictable outstanding result with little irregularity.

Systemizing is a simple and straightforward two-part process.

First, you need to take all of the steps, tasks, and procedures that you use regularly out of your head and document them. Then you just need to deploy, tweak, and automate the systems that you’ve created.

That’s it.

This is one of the key ingredients missing from a lot of microbusinesses that can turn the enterprise into a time-sucking, soul-sucking grind into a manageable, profit-generating operation that can be run with less than 10 hours of direct management per week.

13 Reasons to Create Systems

Still not convinced? Here’s thirteen reasons why you must systemize your business if you’re really serious about succeeding as an entrepreneur:

  1. Inevitably, if you don’t systemize, you’ll forget things. This reflects poorly on you, your team, and your business.
  2. Systems deliver an excellent result consistently.
  3. Without a system, the entire company will be thrown into chaos every time someone new joins or someone experienced leaves your team.
  4. Systems impress clients because you can anticipate their needs and concerns in advance and deliver on them before they come up.
  5. To earn more money! Each time a process is repeated, you and your team become more proficient and efficient at it. You can complete the task in less time and accomplish far more.
  6. Good systems simplify decision-making. Making decisions about what to do and what not to do is the most time-consuming activity of a business. Using systems and automation to streamline decision-making adds tremendous efficiency and speed to the business.
  7. It encourages and empowers team members because you provide them the support they need to be successful.
  8. Systems free you to relax and focus on what you do best. You don’t have to spend all of your time putting out fires and managing all the details. Instead you can focus on high-leverage activities such as engaging your creative brain and building relationships.
  9. Without systems the business shuts down once you’ve left the building. It’s not really a business. It’s a job you can’t quit – and you’re stuck working for a crazy person: yourself!
  10. When you create systems it forces you to narrow your focus and make tough decisions. There are certain things that can’t be systemized easily. Perform an 80/20 analysis of which activities offer the greatest return on time investment, which activities bring the most progress to your goals, and so on. You can identify which activities are worth handling personally, which can be run by systems, and which need to be discarded.
  11. It takes time to learn everything that you know. By systemizing it and handing it off to someone else, you’re providing that person a valuable shortcut to do what you do without going through the same time-consuming trial and error.
  12. Systemizing allows you to repeat a process and avoid all of the problems you encountered the first time.
  13. So you can take a break!

So there you have it. Systems are not the only thing that separate solo entrepreneurs who create “lifestyle businesses” versus ones who struggle but they are a big part of the game. 

For more like this, I recommend checking out Parts 3 and 4 my book. I have a special bundle for one great low price available here. Check it out, and if you don’t like it, just let me know and I’m happy to offer a 100% money-back guarantee for 30 days.