If you are going to remember anything as you try to grow your business, remember that time is your most precious resource. It is easy to fall into the trap that your business bank account represents the be all and end all to your growth.
Simply put, money comes and goes. Your time does not.
Unless you have discovered the secret to immortality, this is an absolute law you can’t ignore.
While you can’t create additional time, you can definitely free up the hours you have yet to spend. One of the best ways to do that is to outsource some of the tasks you perform on a regular basis.
Problem is, when you are growing a new business, it can be tough to afford one. Getting a virtual assistant seems to be a luxury the “big guys” can indulge in.
I’m here to say that’s fear talking to you. Fear of success? Fear of making a mistake?
It’s fear talking because it’s well within your reach to get a virtual assistant in this day and age. Just like hiring a piece of an accountant instead of a whole one (wink, wink…), you can own a piece of a virtual assistant using one of the simplest financial tools out there.
Budgeting isn’t a punishment tool for your business. It is an awareness tool.
Step #1: What’s coming in?
Sit down and take an honest look at what is coming into your business. All of your revenue streams. Make an honest estimate at how much you bring in per month for each.
Almost as important, also list out any expenses directly tied to bringing in that revenue. Directly. This can be things like affiliate payments or commissions. Things that if you ceased them, the revenue stream would be immediately turned off or severely damaged. These expenses are sacred. I don’t like to lump them in with the rest of your expenses as they enhance your revenue.
Step #2: What’s going out? Next, list out all of your expenses. Everything, line by line. Once you have done that, it’s time to get ruthless. For each expense, give it a rating from 1-5. A number 1 will represent an expense that has almost no effect on your revenue streams if you get rid of it. This could be a piece of software you pay a monthly fee for that you might use someday. A number 5 is something that would be devastating to drop. An example of this would be an aWeber account if you have an e-mail list.
Step #3: What’s Left Over? I know, math. You don’t like it. But, stick with me. This is simple math. Simply subtract the total of the expenses you came up with in Step #2 from the net revenue in Step #1. This is your operating profit. This is hopefully a positive number. If not, it will increase the level of ruthlessness you’ll need to have in the next steps.
Step #4: What are you worth? How much time do you spend on your business each month? I am a big advocate of tracking your time so you can make better investment decisions in your business. Let’s say your business is making $2,000 in operating profit each month. You are spending about 40 hours a month in that business. Your time, right now, is generating $50 per hour.
Step #5: Decisions Here’s where the rubber hits the road. I’ve intentionally left one piece of the puzzle out so far. I wanted to get that “worth” number out there before bringing up the fact you will want to pay yourself. Remember, you are generating $50 per hour right now. That means you should be able to generate, at a minimum, another $50 per hour for each hour of your time you can open up. You can do this by exchanging low return activities like social media or content creation for high return activities like more client time (if you are a service) or product development time (if you are product driven).
If you can buy a few hours of a VA at, say, $15 an hour, that’s $35 an hour you are generating by outsourcing. Still queasy? You really need that salary you want to pay yourself? Alright. Go back to that expense list. Anything you called a 1, or even a 2, needs to go promptly. Cut it off immediately. Even if it amounts to $30 a month, that’s two hours of a VA at $15 an hour. Do it.
The most important part of this process is to understand what you are generating for your business each hour you spend in it. The most powerful part is that this is only a starting point. Each hour of low return or maintenance work you take off your plate and steer towards creating value you get paid for means that amount per hour goes up. Hooray for that!
Some people fall into the trap of thinking they are making their business less profitable by getting a VA. However, you need to remember each task you perform in your business does not give you the same return on that time investment. The lower the return, the less likely it is that you need to be the one doing it.
This is a little different than the “conventional wisdom”. Don’t aim to outsource things you “don’t like”. Instead look to outsource things you don’t get a good return on your time investment for. I’ll admit, there’s some short term pain if you need to take a pay cut to do this. However, even if it is just a couple of hours of a VA, it’s a start. A very high return start.
You are growing your business, not maintaining it. We need to get you in the frame of mind that your time is the most valuable tool in your toolbox. That tool needs to be doing the fancy work people (customers) are noticing. That’s your services. That’s your solutions for those customers. Use that budget as your tool to make yourself even more valuable.