Are You Self-Employed or Do You Actually Own a Business?

One of the things I’ve always liked about Robert Kiyosaki’s Cashflow Quadrant is how simply it distinguishes between four different ways of generating income:

E — Employee
S — Self-Employed
B — Business Owner
I — Investor

For many accountants, the natural entrepreneurial path is E → S.

You leave your employer, hang out your shingle, find some clients and start your own practice. Maybe you work virtually. You control your schedule. You choose your clients. You set your fees. And you may make very good money.

But personally, I’m not a big fan of the S quadrant as the destination. Not because there’s anything wrong with self-employment, and certainly not because I think everybody needs to build a giant accounting firm.

It’s because I’ve seen too much life happen.

A death in the family. A serious health challenge. The unexpected loss of a major client through no fault of your own. A child or parent who suddenly needs you. Something happens that requires you to step away, and the business doesn’t know how to function without you.

When you’re the primary producer, rainmaker, relationship manager and problem solver, everything is connected to your ability to keep showing up. That’s a lot of risk concentrated in one human being.

Bigger Isn’t Necessarily Better

Most business training models I’ve encountered have some version of the same destination:

More.

More revenue. More clients. More employees. More locations. More profit. Grow from six figures to seven. Then eight. Build the bigger team. Climb the next mountain.

That was never our design philosophy at CPA MOMS. Our intention was to help women create businesses that supported work-life harmony—businesses designed around the life you actually want to live rather than lives designed around the businesses we happened to create. That distinction matters.

I don’t believe moving from S to B requires building a massive company with layers of management and dozens of employees. In fact, adding people and complexity simply for the sake of growth can create an entirely different set of problems.

You can absolutely be a B with a relatively small team, great systems, quality clients and a deliberately simple business model. A multi-six-figure virtual accounting firm with a capable team, excellent clients and an owner working perhaps 15–30 flexible hours a week can be an extraordinarily successful business. I would take that over a much larger firm that consumes the owner’s life any day.

The goal isn’t bigger. The goal is better designed.

The Risk of Being the Business

The accounting profession makes it particularly easy to become successfully self-employed because we are the product. Our knowledge creates the value.

You can build a substantial practice around your own expertise and labor. You can have administrative help, great technology and even a few employees or contractors while the economic engine still depends primarily on you.

You’re the rainmaker. You’re the relationship. You’re the technical expert. You’re the final reviewer. You’re the person everyone comes to when something goes wrong. Take yourself out of the equation and things begin to wobble.

That’s why revenue doesn’t tell me whether you’ve built a B. Dependence on the owner does.

A $500,000 practice can still essentially be a very successful job for its owner. And there’s nothing inherently wrong with that—provided you understand the vulnerability you’ve created and consciously choose it.

My concern is what happens when life makes the choice for you.

Small Teams Have Risk, Too

There’s another side of this that doesn’t get discussed enough.

You build a small, beautiful firm. Maybe you have two or three fantastic team members. You’ve delegated the work, created systems and finally stopped doing everything yourself. Then one of those people leaves.

Suddenly, you’re back in the saddle. You’re serving clients, reviewing work, recruiting, interviewing, training and trying to keep everything moving while replacing a person who represented a huge percentage of your delivery capacity. Ask me how I know.

This is one of the tensions of designing a smaller B. A small team can create tremendous leverage without creating a lot of complexity—but each individual person represents more key-person risk.

So the answer isn’t simply “hire a team.” The question becomes:

How do I build enough redundancy that my business isn’t dependent on me—or on any one other person?

That may mean cross-training. Documented processes. Contractors or strategic partners who can provide surge capacity. Technology and automation. Enough margin to absorb disruption. Client relationships distributed across the firm. A recruiting pipeline before you desperately need one.

You don’t necessarily need more people. You need a more resilient design.

Moving From S to B

To me, that’s the real transition from Self-Employed to Business Owner. It’s not the day you hire your first employee. It’s when you begin separating the value the business creates from your individual labor.

People are part of that. So are systems, technology, pricing, processes, financial reserves, client relationships and the way knowledge moves through the company.

The question changes from:

How do I get all of this work done?

to:

How do I design this business so the work gets done well without everything depending on me?

And I’d add another question now:

How do I make sure it doesn’t become dependent on someone else, either?

That’s the kind of B I’m interested in. Not necessarily bigger.

More resilient. More valuable. More flexible. More capable of supporting you when life doesn’t go according to plan.

The 30-Day Test

Here’s a simple way to see where you are:

If you disappeared from your firm for 30 days, what would stop?

• Would clients still be served?

• Would invoices go out and money come in?

• Could your team make decisions?

• Would prospects get followed up with?

• Could someone handle a client problem without texting you?

• Would deadlines still be met?

• Would revenue continue?

Now take it one step further. What happens if your most important team member disappears for 30 days? That second question may tell you just as much about the resilience of your business as the first.

Whatever breaks identifies where you still have concentrated dependence.

You don’t have to eliminate every dependency. You probably can’t. But you can choose which risks you’re willing to live with and intentionally design around the ones you’re not.

This Is About Harmony, Not an Empire

I want to be careful about something because this is where a lot of entrepreneurship education loses me.

The purpose of creating leverage isn’t so that you can immediately fill the newly available space with more growth. You finally get yourself down to 25 hours a week and someone says, “Great! Now let’s double the firm.”

Why?

Maybe you want to pick your kids up from school. Maybe you want to care for an aging parent. Maybe you want to travel. Maybe you want to volunteer, write a book, start another company, take care of your health or spend Wednesday afternoon doing absolutely nothing productive (please do).

Or maybe you genuinely want to build a $20 million accounting firm. Wonderful. The important thing is that you chose it.

CPA MOMS was never about teaching women to build businesses so successful that there was no room left for their lives. We wanted to prove that there was another way. You could build a highly profitable, professionally run accounting business with quality clients, good people and modern systems—and still have a life that mattered outside of it.

That’s work-life harmony.

From B to I

There’s one more reason I care about getting beyond owner dependence.

A business that can operate beyond you isn’t only a source of income. It can become an asset.

A transferable accounting firm may eventually be sold. It may acquire other firms. It can potentially create distributions that aren’t directly connected to every hour you personally work. And those profits can be invested into other assets.

That’s where B begins creating access to I. It’s also why decisions about clients, recurring revenue, profitability, systems, team, documentation and owner dependence matter long before you’re thinking about selling.

You’re not only creating this year’s income. You’re building something that may eventually have value without you.

So, What Are You Designing?

Instead of asking only:

How do I grow my firm?

I’d ask:

• What do I want my firm to make possible?

• How much money is enough?

• How much do you actually want to work?

• What role do you want the business to play in your life?

• What happens if you need to step away unexpectedly?

• Where are you the single point of failure?

• Where is one team member the single point of failure?

And what would you need to change so the business could support you through the seasons when life requires more of you somewhere else?

That’s a very different definition of business success. And for me, it’s a much more compelling one.

We spent years mastering accounting. Now let’s master the business of it.