Have you thought about the investment you are putting into your business? Are you working for nothing? Or are you satisfied with the return on your personal exertion investment?
I find that about 75% of small business owners have a disconnect here. The issue of maximizing the return on each hour you work can be a tricky one, and it can be another thing that is holding you back. I call this the Hourly Rate Identity Crisis. To see whether you’ve hit this crisis, answer the questions below:
Q: How much do you charge for your time per hour?
Q: How many hours on average do you work a week?
Q: How much did you pay yourself last month?
Q: Is there a disconnect?
Chances are you have worked out what an hour of your time is worth, based on your skills and experience and the industry you are in. This isn’t where the problem usually lies. The issue is, how many hours a week do you actually earn that rate?
Time is a finite resource, so it’s crucial that you put it to good use. If you have an identity crisis here, it can spell trouble.
What activities should you be doing to give your business the best outcomes for each hour you work? Be clear about who you are, what you do and why. Think about your number-one Big Outcome. The best opportunity for your business is to build a reputation for doing one thing, then add to it. Ask yourself, what’s my one thing? What am I actually worth an hour? Why? What are the activities that I do daily, weekly and monthly that help me ensure I achieve
The next question is, how many hours a week do you work on average? Now you can calculate the following equation: What you are worth per hour × how many hours you work on average per week.
Consider the answer carefully
Now, here’s the kicker: when was the last time you took home a weekly paycheque close to that amount? Sadly, for some business owners, the answer is never. If this is you, this is a huge wasted opportunity for your business.
If you’re not taking home close to that amount each week, or even some weeks, or even occasionally, what’s the problem? If you’re not skiving off and going to the beach, then clearly you’re spending time at the office doing tasks you shouldn’t be doing. Yes, that’s right, you shouldn’t be doing! I’m not saying those tasks don’t need to be done, just that they don’t need to be done by you.
What about if you are achieving this every week? Does that mean everything is peachy? Not at all. If you are reaching this target every week, your hourly rate is too low! Nobody can work at their maximum achievable hourly rate every single hour for a whole week, let alone week after week, so if you think you are doing this, you need to increase your hourly rate. There is clearly room for you to do so, and you are currently missing out on this opportunity.
Focusing on your strengths
Once you start asking some brutal questions and facing up to reality, you will realize that a lot of time you spend in your business is wasted opportunity. Too many small business owners spend time on things that earn a low hourly rate for their skill set.
It’s a very common problem. Many entrepreneurs start out alone with little cash, so they get into the habit of doing everything themselves and trying to cut costs while they do so. This can be OK – and is often necessary – in the very early days of getting the business off the ground, but once you are past that stage, having a Lone Ranger complex will be a massive hindrance to the growth of your business.
Delegation is a wonderful thing
Have a look at what you are doing each day. For each activity you do that is not at your maximum hourly rate, you have four options.
You need a great team around you. Not good, great. And what’s the point of a great team if you don’t delegate to them?
Outsourcing: You can outsource just about anything these days without too much expense, and you can trust that the job will be done right. Some small business owners see this as a cost they can’t afford, but your maximum hourly rate will be more than the hourly rate you pay for outsourcing, so you come out in front and you can be spending your time more productively.
Sometimes you’ll find that a task can simply be done away with altogether. Plenty of businesses have old habits and systems that they could get rid of, but nobody has stopped to look at them closely. Or maybe there’s something you do five times a week that really only needs your attention twice a week.
: Can you set up processes that reduce or eliminate time spent on a task? For example, can you set up your website so that orders go directly to your suppliers and you don’t have to send products out?
Delegating and outsourcing are essential to the growth of your business, but these are two areas people often struggle with. Let’s have a look at some common challenges to outsourcing and delegating.
1 I don’t know what I don’t know
Sometimes we just become so caught up in the day-to-day craziness that we don’t even stop to consider other options. Make the time to stop, look and listen; find out what the issues are in your business and how you can address them. You can’t solve a problem you don’t know about.
2 I don’t trust anyone else to get things done
This is a common problem for entrepreneurs. They are so used to being experts in their field and doing everything themselves that they are reluctant to hand responsibility to others. If you want something done properly, you have to do it yourself, right? Wrong!
The tasks for which you earn your highest hourly rate are best done by you, but let me tell you something: For most other tasks in your business, there are people out there who are better at it than you – and that’s fantastic! Chances are you are not an expert bookkeeper or warehouse manager or marketing manager or customer liaison, but too many small business owners try to wear too many hats and don’t perform any of these tasks as well as they could be done. You need to trust your staff and service providers. You don’t need to be afraid of outsourcing to Bangladesh or maybe even Russia.
3 I’m too busy
As a business coach, this response drives me nuts! The reason you think you are too busy today is that you didn’t stop and make changes yesterday. You must make the time to improve things today; that’s the only way you’ll be less busy tomorrow. Got it?
Put things in a format people can follow: Because small business owners get used to doing everything themselves, they often develop their own unique methods, and this becomes an impediment to delegation. But this is an easy problem to overcome – you just need to spend some time developing processes that you can easily pass on. It may take a bit of extra effort now, but I guarantee it will save you time in the long run.
4 We can’t afford it
Let me dismiss this one for you here and now – if you want to grow your business, you can’t afford not to delegate and outsource. Even if you are outstanding at what you do, if you don’t let go of managing the day-to-day issues in your business, you are putting a ceiling on how much you can grow, and that ceiling is how many hours you can work in a week. If you think you can’t afford it, can you afford not to? If you are this close to the edge, something has to change.
If any of these are holding you back, you have to address them – now. You need clarity about where your best work is done and what is getting in the way of growth. It might be you. The sooner you do this, the faster you will build a business that gives you the outcomes you deserve.
How to best spend your time?
To work out what you should be doing with your time, just figure out the three to five activities that are your strengths.
It can’t be more than this, or you’ll just start getting bogged down again.
Most of my clients have about five activities that they are really good at within their skill set and are their highest hourly rate activities. For most small business owners, these activities will be related to the skills that got them into the business in the first place. If you’re a graphic designer, you didn’t go into business to spend time doing the accounts, chasing new clients or firefighting problems as they arise. There are other people who will be better at these things than you, so let them do it; then you can spend your time doing what you do best.
Even if you are on your own, you can still find somebody to help keep you accountable. I’ve been getting coached for 22 years. I still get coached today. I still write a cheque for somebody to help me improve my business. Once you’ve identified these activities, answer this question: How much of your time each week as a percentage is invested in these specific tasks? The difference between how much time you could be spending on these tasks and how much you are spending on these tasks is your gap to creating a business that at some point will give you freedom of time and freedom of money.
Your long-term goal is to spend 80% of your time on your highest-rate activities. No matter how well you do, you won’t get to 100%. As the leader and key decision-maker in your business, you will always be required to spend some time on more mundane decisions and tasks. The most successful business people I know are at 80%, and that’s great.
Even if you’re on your own, this is achievable. There are all sorts of excellent outsourcing services that cater to small businesses. Trust yourself to find the right people and guide them well, and then trust them to do the job for you. Give them good systems, wind them up and let them go. The world has become a smaller village, and the days of dodgy overseas outsourcing are gone.
Once you start to address these harsh truths about how you’re spending your time and you start walking the walk, you will quickly learn that you shouldn’t be making the coffee, going to the post office and chasing unpaid bills. It’s about having a strategic mindset. How will your next hour best be used to grow your business? You have to hold yourself accountable, and this can be tough because it can mean facing the fact that you haven’t been working as well as you could have been. I see it all the time: People think the solution to a struggling business is to work harder, but it’s not. It’s to work better.
Stefan Kazakis is a business strategist, sought-after presenter and speaker and author of the book From Deadwood to Diamonds. He is a futurist and an inspiring communicator with the voice of experience. For more information, visit www.stefankazakis.com or email info@ stefankazakis.com.