FROM A BUSINESSMAN INTO AN INVESTOR
The terms businessman and investor are not synonymous. Transitioning from the role of a businessman to that of an investor requires a fundamental change in thinking about business processes and your involvement in them. Oleksandr Suvorov, founder of Pet Technologies and speaker at the Forbes Entrepreneurs Forum, shared his experience.
I think every businessman feels the need to change roles at some point—to reach a new level of development and expand their horizons. After many years of working in the same business, an entrepreneur can get stuck within the confines of their "own kitchen." This can often lead to destructive outcomes: dissatisfaction with oneself and the dynamics of the company's development, too much immersion in operational processes, and getting caught in the "founder's trap."
The next level for a businessman is the role of an investor. What is the fundamental difference? Part of the answer is given by Robert Kiyosaki in his book "Cashflow Quadrant." He divides people into four types based on their sources of income: employees, self-employed, businessmen, and investors. Each quadrant reflects a certain lifestyle and approach to making money. Moving from one quadrant to another entails a radical change in thinking and behavior.
For a businessman, thinking is linear, focused on specific processes within a single enterprise. An investor, however, thinks in more global terms, as they develop various companies and manage strategies without directly delving into operational processes.
The journey from businessman to investor is not only a change in business strategy but also personal development. This transition requires a willingness to give up familiar control in favor of strategic management and trust in your team. From my experience, I can highlight four main steps on this path.
Stepping Away from Operational Business Management
The signal that it's time to stop immersing oneself in processes comes from growing dissatisfaction with oneself and one's effectiveness, and the feeling that the company is stagnating. Operations consume the creative energy that every entrepreneur undoubtedly possesses. Many signs indicate when it's time to end this deep involvement, including increasing dissatisfaction with oneself and one's effectiveness, and the sensation that the company is stagnating and that you are no longer developing but merely going in circles.
I personally experienced something similar in 2016 when my machine-building company, Pet Technologies, was seventeen years old. At that time, I launched a major project called "stepping away from operational management," which spanned three years.
Initially, I invited external consultants to the company to provide a fresh perspective on the situation and to identify problems that often remain in the owner's blind spot. The fiercer and more steadfast the consultants, the better. Be mentally prepared that 70% of your "officer" corps may leave the company. It is likely (and quite possible) these will be people with whom you started.
After the management audit, it might turn out that these are the informal leaders who are hindering the processes in the company. It's possible that these people are even working against you. This was the case for me. The consultants pointed out one of these veterans to me and strongly recommended his dismissal. I didn't heed their advice, which I paid for later. Eventually, I dismissed him after a few years, but with financial and moral losses.
Preparing for the exit, it's very crucial to decide who will steer in your place. Prepare the new captain and give him time to gain his own experience. This involves several stages that last about a year. Initially, everything goes well for the manager – you are still nearby, everything moves by inertia, but he is already at the helm and doing well. Then his ego grows, followed by a sobering plummet. If he can recover and continue, congratulations – your company has a fully independent CEO. A baptism by crisis is mandatory. If there is no external crisis, it doesn't hurt to create one artificially. I was lucky to find the right person on the team. A series of crises, including the coronavirus pandemic, quickly and effectively toughened my CEO.
Over these four years since I stepped away from operations, I haven't been in the office very often, mostly listening to the CEO and department heads rather than managing them myself. I must say that the business has only benefited from my distancing.
Under no circumstances return to operational management
Unless the company's existence or significant amounts of money are at stake, it's better to restrain yourself and trust the management.
The mental changes that accompany the transition from businessman to investor require significant effort and essentially involve a kind of "switch" in the mind. For example, sometimes there's a desire to intervene in operational processes and "take the helm." It's important to learn to curb this impulse in a timely manner, as delving into operational systems contradicts the role of an investor. You need to distance yourself from direct management and allow the team to independently make decisions and find solutions to complex situations. I admit, I wasn't always successful at this. Sometimes, I was infuriated, thinking, "Why is so much time being spent on a simple issue?"
I had to stop myself by thinking, "No one doubts that you can handle this quickly and efficiently, but it's time to decide who you want to be: an investor, a strategist, or a firefighter?" I chose the former – if you're going to go, go all the way. I learned to be patient and waited for my managers to figure things out on their own. And you know what? They did brilliantly, sometimes even better without me than with me.
The war started and many of my entrepreneur friends who had stepped away from operations like I had, began to actively return to the helm. They were driven by the fear of losing their business. But let's admit: fear is a bad advisor. Unless the existence of the company or significant amounts of money are at stake, it's better to restrain yourself and trust the management.
Directly trying myself as an investor
Trying to invest in other businesses, startups, securities. Whatever this experience may be, it is necessary, as the process itself is very important for expanding horizons and understanding how such diversification of investments suits you. I have not yet invested in stocks, but I have had experience investing in startups.
I cannot call this experience very successful—some projects have hit a dead end, some are developing very slowly. For various reasons—both objective and specific internal ones. I consider these investments as a contribution in valuable experience and knowledge gained in the process of developing each of the projects.
Ву Investing in my own education
One can learn from mistakes, or in a classroom. One does not exclude the other, and together they work more effectively.
As long as you are deep in operational processes, new knowledge, practices, and approaches pass you by.
