“If they don’t fail outright, most businesses fail to fully achieve their potential. That’s because the person who owns the business doesn’t truly know how to build a company that works without him or her… which is the key.” – Michael Gerber

Reggie T. desperately wanted to start his own business, but his financial obligations made it impossible for him to quit his job and go without a salary until he could grow a business into profitability. And with his demanding hours as a low-level manager in a retail store, he just couldn’t find any time to start a business on the side.

To say that he was frustrated is an understatement.

Then Reggie got laid off from his job. At first, he panicked, but the layoff gave him the perfect opportunity to take the plunge and start his own business.

Reggie’s hobby was martial arts. Not only was he a black belt in Tae Kwon Do, he was a good instructor. And he realized that this gave him what Michael Masterson calls a “financially valuable skill” – a skill that other people will pay for. As a result, he was able to use his expertise and teaching ability to build a small business giving martial arts lessons.

All this happened five years ago – and Reggie thought his future looked great. He was doing something he enjoyed, and he was working for himself instead of someone else.

But here’s the problem: Reggie now finds himself in almost the same predicament he was in as a retail manager. He’s working long, arduous hours, and is barely making a living.

Yes, teaching martial arts is more fun than managing a stock crew and cashiers – but because he hasn’t been able to get ahead financially, Reggie’s business feels like a ball and chain holding him down. He spends so much time keeping it going that he has no time to develop another stream of income.

Here is Reggie’s critical mistake: He built a business that is solely dependent upon him. Without him, the business will fall apart. That’s a big burden for anyone to carry. If you develop this kind of operation, you don’t really have a business. All you’ve done is given yourself a job.

Reggie sold his lessons by focusing on his personal credentials. And his students loved the way he taught. When he brought in an instructor-trainee to ease his workload, attendance dropped. So Reggie decided to bring in an expensive, highly qualified instructor.

At first, attendance remained steady and Reggie thought he’d finally found an answer that would allow him to expand. But then he ran into another problem. His new instructor built a strong loyalty with the students he taught, and decided to start his own school … taking a lot of Reggie’s students with him.

If you want to become wealthy as an entrepreneur, you must build a business that allows other people to fill your shoes. This is true of any business, not only a service business like Reggie’s. In other words, as Michael Masterson said in ETR #1050, “If you want to be able to control your own time – to come to work when you wish, leave when the whim to do so hits you, and take long, worry-free vacations – you must become replaceable.”

So… how can you build a business that will work with other people running the show? Here are some ideas:

1. Try to base your business on a service that is not dependent on your personal skills.

It’s a lot easier to grow a business if the nature of the service you’re providing makes it possible for you to hire other people to take care of your customers as well as you could.

For example, if you have a lawn-service business, your customers probably won’t care who mows the lawn so long as it’s done right. But if you’re a life coach or a masseuse, they will likely have a strong personal attachment to you, and it will be difficult to get them to accept an employee instead.

2. Groom your customers to expect that someone else may render the service in the future.

Now, I’m not saying you can’t be successful in a business where personal interaction is a big part of the service. However, you’ll need to plan ahead if you intend to start transferring your workload to an employee down the road.

If, from the beginning, you plant the seed that you have an associate who may sometimes provide your service, it won’t be a surprise when you gradually replace yourself with him. It helps to build customer confidence in your replacement before you make the actual change by talking about how talented he is.

3. Make it difficult for employees to steal your customers.

I’m not a lawyer, so I’m not offering legal advice here. But one way I successfully prevented employees from stealing my customers was to have them sign a “non-
compete” agreement when I hired them.

By keeping the contract reasonable, it was enforceable. For example, a court probably wouldn’t uphold an agreement that your employee could never start his own business in the same field as yours. But if the agreement prevents him from starting his own business within 10 square miles of your location for two years after leaving you, that could work. And two years is long enough for any loyalty your customers may have with him to evaporate.

I was advised by my lawyer that one of the elements a contract must have in order to be enforceable is “consideration.” For example, if John signs a contract to clean Debbie’s house every week for 10 years without being paid, that agreement is likely unenforceable because John is not receiving any consideration in return for his work. And consideration doesn’t necessarily have to be monetary. I always worded my agreements in a way that made it clear the employee was making the agreement in exchange for the training he was getting. According to my lawyer, the training I provided qualified as consideration.

If you don’t feel confident writing your own non-compete agreement, I definitely recommend hiring a lawyer to do it. The small amount of money you invest in doing it could eventually save your business.

I like service businesses because they often require little capital and can be started on a part-time basis. But be sure to lay the groundwork so you end up with a real business that can expand (and even be sold)… instead of just another job.

[Ed. Note: Larry Fredericks has owned and operated over half a dozen highly successful small businesses. Learn where to find a “goldmine” of investors for your business – and the step-by-step process to attract them – in his Street Smart Business” program.]