Tom Olson talks to us today about the difference between solopreneur and a entrepreneur and how it applies to the real estate investor.
As Tom tells us, solopreneurs believe that they can do anything better and faster than anyone else. Entrepreneurs, on the other hand, believe they can go further with the help of others and how setting up processes and systems first allows you to go further.
Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Tom: Hello. This is Tom Olson, and I’m happy to host you today for the REI Classroom. Today I’m going to talk to you about the difference between being a solopreneur and an entrepreneur.
Mike: This show is sponsored by passiverental.com
Tom: I’ve talked to many people and had this conversation and masterminds and in different meetings I go into, but sometimes it’s just really hard. It’s hard to understand how to set up a business that’s going to be scalable, how to set up a business that’s going to be sellable, how to set up a business that doesn’t necessarily have you in it. And so it’s really more of a passive investment, if you want to talk about, but a lot of times it takes a lot of hard work up front to create an actual business.
But I think part of it goes back to the mindset. And today, that’s what I’m going to talk about. I’m just going to talk today about the mindset between a solopreneur and the way they think and an entrepreneur and the way they think. And I think it kind of boils down to three things when it comes to being an entrepreneur. Number one is systems, processes, and people. So those are the three things, systems, processes, and people.
And I think you’ve got to be very careful and understand that number one, a solopreneur sometimes thinks that they know it all, they have to do it all, and nobody else can do it as good as they can do it, and what you have to understand is, yes, in a way you’re probably right. A solopreneur may get to make $200,000, $300,000 quicker, honestly, than an entrepreneur. But the other thing you have to understand is that being a solopreneur, yes, will get you there faster. You can go faster as a solopreneur, but you can go farther being an entrepreneur. You can help more people. You can eventually make more money.
So back to talking about the actual money part of this. A solopreneur will make $300,000 maybe a year quicker, but they’re going to be stuck at that. They may make $200,000 or $300,000, but they’re going to be stuck at that for two or three years, and they’re just hitting a glass ceiling the whole time. But an entrepreneur, the first couple of years of their business they might only make 30, 40 . . . They might lose money because they’re setting up people, processes, and systems.
It costs money to pay for people. It costs money and time to set up processes and put systems in your business, and so you might have to give money back. And so you might take money back, and you might only make $50,000 for the first couple years, but what you’ll find is year three, year four, year five, when all that stuff starts paying off, you can go a lot farther and a lot longer and help a lot more people if your business is, like mine, about helping people. So that’s the first thing I want to talk about. And I don’t have a ton of time to talk to you today about those three things, but just understand that the mindset behind that is so important.
And I think the next thing that’s very important to understand is the value. So what value does a real business have? And the real value that a business holds are in two things. The processes, which we already kind of talked about because yes, people are important in a business, and yes, people can add value to your business, but the processes are really what handle your business.
If you think of McDonald’s, so there’s a story about McDonald’s and how it started and how another burger joint started right next to it, and this other burger joint, the guy wanted to do all the work himself. The guy wanted to . . . he wanted to make the burgers, he wanted to order the burgers, he wanted to serve the burgers, and he did awesome. And people loved him, and he did good. And he just couldn’t let go. He couldn’t let go of all of those little pieces in his business. And McDonald’s started right next to him, and the exact same thing happened. McDonald’s almost went out of business, but eventually you see where McDonald’s is at today. So that’s just one example of that.
And I think the last thing that an entrepreneur has to do, this is probably the hardest thing that an entrepreneur has to do if you really want to go farther, if you really want to build a business and not really give yourself a job, and that’s let go. And letting go is one of those things that it’s just so hard for entrepreneurs sometimes to do, and I’ll give you a great example.
So we all know the owner of the Dallas Mavericks now. And he, if you look at the very first couple years that he owned the Dallas Mavericks, he was a solopreneur, really. He wanted to get in there, and he wanted tell everybody what to do. He wanted to have everything his way. He wanted to tell the refs what they were doing wrong. He wanted to fire people, and that’s how he started. And they got really close, and they didn’t win, and he was upset, and he said he didn’t leave his house for three weeks, and it was crazy.
But what did he do the next year? I think what happened, and I could be wrong about this, I think somebody sat him down and said, “Hey, you need to let go,” and that’s what he did. The next year was all about his players. He came in and said, “I want my players to have the best.” He built up people, and what happened the next year, they won.
And it’s so funny too is we as entrepreneurs, we sometimes want to take credit for everything, and we want people to praise us. And some of that’s okay, and I think some of that’s a little vanity. But what happened at the end when he did that? The next year he sat, he was a little bit more quiet, a little bit more reserved, and everybody said, “Is this the same Mark Cuban that we’ve grown to know?” And they won. And at the end of that, what did the fans do? They didn’t even praise the players. They were all screaming, “Mark Cuban, Mark Cuban.” By letting go, he got what he always wanted in the first place. And I think that’s a really good example of a mindset of the difference between a solopreneur and an entrepreneur.
Thank you very much for joining me today in the REI Classroom. I’ll see you next time.
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