Are you missing out on the opportunity to work ON your business?
The challenge many small business owners face today is that they are so busy working in the day to day operations of their business that they fail to look up and see the full potential of their business. It’s an easy trap to fall into, but it is also a significant hurdle to sustained, profitable growth.
We all know that one person who seems endlessly busy yet never seems to have enough time or money. They often complain that despite working all available hours and more, the business revenue grows nominally at best, declining at worst.
How many times have you heard, “I haven’t given myself a raise in years.”
That’s because, usually, when you take a deeper look at that business, it’s to discover that they are not even earning as much (when their income is calculated back to an hourly rate) as their top employee may be.
A while ago, we had a client who owned a roofing business. This client used to work each week doing the manual work himself. When asked how much it would cost to employ someone to do the work he was doing, he replied “ about £500 per week”. He was then asked how much extra business he could generate if he spent this same time in a week looking for new customers. He said he could generate about £3 000 worth of new business in a week.
It’s obvious, when you take a step back and view this scenario objectively, that the logical thing for the owner to do is recruit someone to work in the business, thereby freeing the business owner to work on the business and generate more sales.
In every business, there are mundane tasks that can be completed by a junior hire or even a temporary worker. There are also areas of a business that may be more effectively managed if outsourced to an expert in that particular field, i.e. an accountant. More cost-effective too if the business owner is given back the time and headspace to focus on those tasks and strategies that will increase revenue and stimulate growth.
Opportunity cost – “Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another”. – Investopedia
It’s about opportunity (cost)
These are opportunities that are easily overlooked if the value of every option available is not adequately considered and evaluated against the others. Understanding opportunity costs makes for more robust decision making, improved strategic thinking and ultimately a better business.
Take a few minutes now to think about these three questions:
- Do you know your opportunity costs?
- What value do you place on your time?
- How much extra business could you generate if you hired someone to do the general operational tasks?
What would it mean to your customers and your business if:
- You could engage in value-adding customer service like following up on enquiries before they go cold or nurturing existing customers?
- There was ‘extra’ time for you to focus on developing solid sales and marketing strategies?
- You had the capacity to network with other business owners and create mutually beneficial alliances?
- There was room in your diary for analysis of results and test and measure indicators?
Imagine your business leaping from average to incredible.
No one will deny that there are plenty of things that a business owner needs to make sure gets done each day. But the secret for success is to only apply your time (and mind) to those tasks directed at maximising profit while leaving the daily humdrum to others. Using professional advisers to help you in areas you aren’t an expert in will also save you time and money.
So often, when we start up a business, we feel we have to do it all ourselves. This is self-defeating and simply not true.
Rather think of your business as an investment, one that can and will, when well managed, outperform every other type of investment. As with any other investment you make, aim for a return on your invested capital as well as an hourly rate of pay in excess of that of your top employees.
Take the first step and review what happened last year, analyse the results you achieved, consider what adjustments are needed to ensure ROI. Then start planning for the coming quarter and year, and put actions in place to get you to the results you require.
Because at the end of the (hopefully for you now, shorter) working day, time spent working on your business is far more important than time spent working in it.