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The 5 Levels of Entrepreneurs

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There are many different levels to “being in business.” Lots of people say they play sports, but at what level? Similarly, lots of people say they’re in business, but at what level?

There are five levels in the entrepreneurial ladder, and each has its own purpose. By understanding the five levels, you can identify where you are now and how you can get to the next step.

Level 0 – The Employee

Almost everyone starts out here. However, for most people, the time they spend as an employee is wasted. Most people play the “employee” game by continually working harder, longer hours, and getting more and more specialized. They strive to learn more and more about their jobs, and they get better and better at their work. Very often they move from one company to another or from one position to another. While they may be getting pay raises, they usually continue to spend more than they earn throughout the entire period.

People in this position also miss the entire point behind being an employee: to learn. Get a job where your boss is a great mentor so that you can build knowledge (while building capital that you can use to invest in your own business).

Level 1 – The Self-Employed

Those who want a greater sense of freedom, along with more responsibility and control over their lives, typically make the jump from employee to self-employed. However, many people at this level only end up making a job for themselves. In addition, they typically don’t trust anyone else to get the job done, so they end up being trapped by the work that they’ve created for themselves. The only real difference now is that they have the headaches of being both an employee and an employer.

Level 2 – The Manager

When a business grows, the owner typically needs to hire some help. This is the stage when tasks can be delegated to others. However, the mistake that most people make at this level is hiring the wrong people or not providing adequate training for the people that they hire. As a result, they end up spending their time putting out fires created by their employees (while still trying to manage customers and the business and still doing the work). Many people at this stage feel that they are working hard and getting nowhere.

Level 3 – The Owner/Leader

The next step in the journey is becoming the owner and leader of the business. Until now, most people in business have only been glorified employees.

Entrepreneurs get to this level by hiring people they trust to manage the business for them so that they can instead focus on growing the business and maximizing profits. Being a strong leader is a critical component of this level because the leader needs to inspire the team and to define the vision and direction of the business. At this stage, they spend more time working ON the business rather than IN the business.

At this stage, the income from the business becomes passive income because the owner does not need to do much for the business to run.

Level 4 – Investor

When a business can run profitably on its own, then the owner can become an investor. As an investor, a business owner can make more money selling businesses rather than running them. They achieve this by buying businesses, building them up, and then selling them to other people. This is the stage where a business owner can start to accumulate wealth.

Level 5 – The Entrepreneur

This is the level where true capitalists operate. At this level, entrepreneurs make money by raising capital and they use other people’s money to build paper assets (like stocks, shares, franchises, licenses, and royalties). Think of it this way: True entrepreneurs use other people’s money to make money. Being at this level is the ultimate goal of every business owner.

About

Heather Yakes is an internationally recognized business coach and employee engagement expert ranking in the Top 10 in the U.S. & Top 100 worldwide. Heather is the recipient of the 2016 Business Excellence Awards Coach of the Year, the 2018 ActionMan Award for the Best Client Impact, and the 2018 Franchisee of the Year Award. She has 20+ years of experience working with Fortune 500 Companies and Big 4 Consulting.