Written by
Matt Frentheway

The Mindset Shift from Employee to Entrepreneur

As one of the franchise co-founders of Legends Boxing in 2015, I've experienced firsthand the thrill and challenges of owning a part of a business. It's a journey that's both rewarding and demanding, and it all starts with a pivotal question: "Should I go into business for myself?"

Making the leap from employee to entrepreneur is a transformative decision. Corporate America often entices us with the comforts of stability, perks like company cars, and healthcare packages. They want to retain their top talent, not encourage them to venture out independently.

But here's the thing: Entrepreneurship is about more than just a paycheck. It's about building assets, creating value, and taking control of your own destiny.

If you've ever caught yourself saying, "I need a salary of $100,000" or "I want to pay myself immediately," it's time to reframe your perspective. The corporate employee mentality won't cut it in the world of business ownership.

In this post, we'll explore the fundamental mindset shifts that pave the way to successful entrepreneurship. We'll delve into the differences between the employee and business owner mindsets, and we'll uncover the true potential of business ownership as an asset-building model.

Are you ready to explore the possibility of entrepreneurship? If so, let's dive in and unlock the doors to your future!

Changing Your Focus from Employee to Entrepreneur

Transforming from an employee to a business owner requires a leap of faith and a fundamental shift in your focus. As you prepare to take on the role of an entrepreneur, there are two key changes in thinking you’ll need to embrace:

1. Focus on Cash Flow and Asset Creation

As an employee, you’re accustomed to security, or at least perceived security. A job guarantees a steady paycheck so long as you’re not laid off or fired.

As a business owner, your focus shifts to generating cash flow and building assets that grow in value over time. You may work for hours without pay until your business is profitable. But you embrace the hustle because you’re creating sustainable wealth and financial independence.

2. Focus on Costs and Benefits

As an employee, you only need to focus on your part of the overall business.

But as a business owner, your focus expands so that you consider all the costs of running your  business as well as all the benefits and returns. This comprehensive perspective will enable you to make informed decisions and set realistic expectations for your future.

With these two shifts in focus, you’ll be better equipped to navigate the challenges and opportunities of business ownership. Now, let’s take a closer look at what this transition entails and how it can shape your path to success.

The Case for Business Ownership

All employees—from front-line workers to CEOs—sell their labor and skills to the owner of the business. In return, the owner rewards employees with compensation. Essentially, employees are renting their time and skills to the owner, who then uses their work to build something valuable.

Time is money, but you hold the power to decide: trade your time for money as an employee or your money for time as an owner.

Owner Mentality: Building Assets and Creating Wealth

Let’s talk about the American Dream. You know, the dream of owning your own home.

Why do people aspire to own rather than rent? It’s not just about security—it’s about growing an asset that works for you.

If you’re considering business ownership, you probably own a home. So, think about the perks of home ownership. You’re not just handing over money to someone else. You’re investing in something that belongs to you, can be passed down, and will appreciate in value.

After owning a house, owning a business and creating wealth are a natural extension of the American Dream.

Owners recognize that short-term sacrifices are the building blocks of long-term security. Just as with homeownership, business ownership is a strategic investment in value creation.

Employee Mentality: Immediate Rewards and Limited Upside

The flip side to the owner mentality is the employee mentality. The focus here is on immediate rewards. Employees expect a regular payout, optimal working conditions, perks, and preferably a well-earned bonus. If these don’t materialize, employees can leave and work for someone else.

Because employees are so focused on immediate resources and working conditions, they don’t get a chance to focus on building assets. For this reason, the employee mentality offers limited upside potential.

If you're ready to break free from these constraints and unlock boundless possibilities, business ownership could be your gateway to achieving the American Dream on your own terms.

Do You Make More Money as an Owner or Employee?

Let's dive into the numbers and explore the differences between business ownership and a traditional job. We'll compare five years as a business owner (The Entrepreneur) versus the same time as a corporate employee (The Employee).

The goal here is to understand the give-and-take of each approach and see how business owners think about wealth creation.

Year 1: The Investment and the Income

The Entrepreneur invests $180,000 to launch a new business. There are a lot of options to fund your franchise, such as a HELOCs (home equity line of credit) or ROBS (rollovers as business startups).

The Employee, on the other hand, invests nothing. So easy!

In Year 1, The Employee earns a salary of $120,000. That clearly exceeded The Entrepreneur's $25,000 owner benefit (discretionary profit).

The Entrepreneur accepts the income difference, just like a homeowner accepts higher expenses in the first year compared to a renter. It’s par for the course of ownership.

Tax Ramifications and Intangible Benefits

There’s a bit more to the story. The Entrepreneur's owner benefit is worth more than it seems due to tax advantages. For example, a $35,000 car can be a direct business expense, while The Employee needs to earn more to buy the same car after taxes. The same applies to expenses like daycare.

The Entrepreneur also has more flexibility in setting up retirement programs, and she can explore affordable healthcare options with tax advantages.

In the intangible department, The Entrepreneur appreciates the freedom and control that comes with business ownership, even in a challenging first year.

Year 2: Growth and the Benefits

In Year 2, The Employee receives a 5% raise, earning $126,000.

The Entrepreneur's gross revenues increase to $420,000, and owner benefit more than doubles to $60,000.

The Employee still has an advantage in take-home dollars, but The Entrepreneur is building a business foundation.

Year 3: An Unexpected Setback

In Year 3, The Employee earns $132,000, while The Entrepreneur faces a major setback—a market downturn impacts the business, and owner benefit drops to $30,000.

It's a rough year, but The Entrepreneur is determined to recover.

Year 4: The Road to Recovery

The Entrepreneur works tirelessly to turn things around. By Year 4, the business is back on track, with gross revenues of $480,000 and owner benefit climbing to $75,000.

The Employee, now earning $138,000, still has an advantage in take-home dollars. Plus, the employee only worked 45 hours a week, while The Entrepreneur worked 60 hours a week.

When you divide The Entrepreneur’s pay by her hours of work, she isn’t earning nearly as much as The Employee, even after years of investment.

Year 5: Better Than Ever

By Year 5, The Entrepreneur's hard work pays off. Gross revenues soar to $540,000. After some cost efficiency improvements result in cost reductions, the owner benefit reaches $100,000.

The Employee earns $144,000. Still winning the annual salary race, and winning the hourly income race by an even bigger margin.

But… maybe the Entrepreneur has built a valuable asset with the potential for continued growth.

The Verdict

So, who made more money?

The employee. By a lot!

However, these aren’t the only numbers that matter.

Let’s take a closer look at what’s going on.

Advantages to Being an Entrepreneur

1. You Get to Create an Asset

Let's talk about the most crucial aspect of this discussion: the creation of an asset. How does the asset value created by The Entrepreneur compare to the asset value of The Employee's job?

The answer is simple: The Employee's job has an asset value of ZERO! Employees don't own their jobs. Their employer can let them go at any time.

On the other hand, The Entrepreneur has created a valuable asset with their initial investment. By working hard and building a successful business, The Entrepreneur now has the option to sell the business.

So, what's the value of this business? While valuation methods vary, a common valuation is three times the owner benefit. In this case, the business could be worth around $300,000. The positive growth trend and cash flow make it attractive to potential buyers.

2. You Can Pursue Financial Freedom

Ultimately, asset building is about creating wealth and increasing your net worth. While The Entrepreneur's initial investment may have seemed like a setback, within five years, they built both cash flow and asset value that surpassed The Employee's earnings.

But that's just the beginning. The Entrepreneur can leverage growth by opening additional locations. Imagine two successful locations after ten years, each generating $340,000/year in cash flow and a business worth over $2 million.

This is how wealth is created in a free market economy—investing capital and building value. Steve Jobs took $1/year in salary, but it didn’t matter. He had created something of value and amassed billions in net worth from owning a piece of it.

Most millionaires in the United States build their wealth through businesses, not salaries. On average, self-employed people are four times wealthier than workers.

If your vision includes building significant net worth and achieving the freedom to pursue what matters to you, then business ownership is a path worth considering.

3. You Can Unlock Exponential Growth

Beyond the immediate wealth creation, business ownership offers another powerful advantage: the ability to scale. As an entrepreneur, you're not limited to one, two or three locations. You’re definitely not limited to a fixed salary.

As a franchisee, you have the freedom to expand your business, borrow money, use what you borrow to make more money, explore new markets, and unlock exponential growth.

If you work outside of a franchise, maybe you’ll decide to take on even more risk for an even higher reward. You can franchise your business concept, and develop new products or services.

Each time you expand your business, you grow your cash flow, creating even greater wealth.

The scalability of a business is a unique advantage that employees in traditional jobs just don't have. As a business owner, you have the opportunity to transform a small venture into a thriving enterprise.

4. You Get to Make a Lasting Impact

Business ownership is not just about financial rewards; it's also about creating a legacy. As a business owner, you have the opportunity to build something that lasts beyond your lifetime—a venture that can provide for future generations and contribute to the greater good.

Whether you choose to pass your business on to your children, sell it to a new generation of entrepreneurs, or use its success to support charitable causes, your business can leave a positive and enduring mark on the world.

Your legacy as a business owner is not only measured in dollars and cents but also in the customers you delight, the jobs you create, the innovation you foster, and the positive change you bring to your community.

Even from a selfish perspective, there are tangible benefits in this area. Living a life of purpose and impact is one of the most profoundly positive things you can do for both your mental and physical health, and your longevity. You’ll be less likely to suffer heart attacks, strokes, and dementia.

(Just be sure to take care of your health while you’re busy scaling. 🙂)

5. You Get to Be Your Own Boss

One of the most rewarding aspects of business ownership is the freedom and autonomy it brings. As your own boss, you have the power to make decisions, set your own schedule, and chart your own path to success.

For me, personally, this is one of the most addictive parts of being an entrepreneur. I love the ability to wake up and decide how to spend my day. After putting in 40-50 hours a week building my business, once it was scaled, I spent no more than 10 hours a week on it for years until I sold it.

This freedom extends to every aspect of your business—from the products or services you offer to the way you market and brand your company. You have the creative liberty to shape your business in a way that aligns with your values, vision, and goals. Even if you choose to open a franchise location, you still have a choice in what kind of business you want to build.

The Employee's Dilemma and the Owner’s Advantage

The journey from employee to entrepreneur is paved with choices and trade-offs. As you weigh your options, it's important to understand the fundamental differences between the two paths.

While being an employee offers a sense of stability, it also comes with limitations. On the other hand, being a business owner presents both risks and unparalleled opportunities for growth and fulfillment.

Let's take a closer look at the dilemmas faced by employees and the advantages that await aspiring business owners.

Risk with Limited Upside

Employees lean away from risk. They get a steady paycheck and they get to keep their savings in the bank. Their work feels stable, until it isn’t.

In exchange for their illusion of security, they have two consequences:

  • First, they can be downsized or fired any day. Most companies strive to automate and reduce costs. Even the most white collar workers are vulnerable, especially in the age of rapid AI developments.
  • Second, their financial growth has a ceiling. They may receive raises and promotions, but their pay is always limited to what someone else decides to pay them.

Risk with High Reward

Business owners lean into risk. They don’t need the illusion of security; they know that they’re taking a risk and they get comfortable with that. They invest their resources to launch a venture, knowing it may not go as planned.

In return for this approach, they reap two benefits:

  • First, they cannot be downsized or fired.
  • Second, when their business thrives, they reap the rewards.

Let’s break down the rewards a bit. The rewards include:

  • consistent cash flow
  • favorable tax treatment
  • the creation of a valuable asset
  • the security of owning a reliable money-making system
  • the opportunity for financial freedom
  • the possibility of exponential growth
  • the chance to make a lasting impact
  • the autonomy to be your own boss

It’s not bad! And it explains why a lot of business owners are not too fixated on their earnings per hour during their first years in business.


Becoming an entrepreneur is an empowering decision. It will open the door to limitless possibilities and the chance to shape your own destiny. As you transition from the employee mindset to the owner mindset, you're taking the first steps toward financial independence, creative freedom, and the opportunity to make a meaningful impact in the world.

But you don't have to go it alone. As someone who has owned non-franchises, franchises, and co-founded a franchise, I'm uniquely positioned to help you navigate the journey ahead. I'm passionate about helping people like you find the RIGHT business—one that aligns with your personality, values, and vision for the future. If you’re interested in franchises, I'm here to provide guidance, support, and expertise every step of the way.

The best part? My services are free to you, as I'm compensated through commissions from franchises for connecting them with qualified candidates. So you can rest assured that my focus is on helping you succeed and thrive as a business owner.

Together, we can unlock your full potential and create a future where you have the freedom to live life on your own terms. Whether you dream of building a legacy, achieving financial security, or making a positive impact in your community, the path to entrepreneurship is a journey of discovery, growth, and fulfillment.

So, are you ready to take the leap and embrace the mindset of a business owner? If so, schedule a 15-minute chat and let's start this exciting journey together. Your future awaits, and I can't wait to see what you'll achieve.

Matt Frentheway

As a successful franchisee and entrepreneur, I can help you find the best opportunity to realize your dream of being a profitable franchise owner. Using my proven process as a franchise consultant, we’ll define your goals, narrow the field, and select the best franchisor for you to achieve financial freedom.