More time, more money – how to get your hands on both
Business owners often have a wide range of long-term goals for their business but they usually all boil back to two things – more time and more money. Here’s how to find both.
Many small business owners love what they do and spend all of their time doing it. They work long hours keeping their clients happy. Whilst this may give the outward appearance of success many have not actually considered what success looks like for them, nor how to go about achieving it.
As a business owner, do you know what you want your life to look like in five years? Some examples might include:
- More time with family
- Longer holidays
- Being able to get back to creative work and away from admin
- Not worrying about money
- General work/life balance
- Spend time on sports/hobbies
- Charitable giving
Everyone is a little different here, but I’m willing to bet that when you simmer it down, your goals essentially require more of two things.
More time and more money.
"If your business could achieve anything, what would it look like in five years’ time?"
Once we know this, it makes planning for success a fairly similar process for most small businesses and given the long timeframe we’re working with here (five years) we can be quite grand with our aspirations as we’ve got time to achieve them. Even just thinking about these things and writing down some rough plans can give you a renewed excitement and energy about the business.
Many business owners find they work all day, every day, and never really switch off. They feel if they do switch off something will go wrong, they’ll lose clients, and disaster will run rampant. The result of all this is they don’t ever take the time to truly disconnect from the business and enjoy life outside of the business.
The solution to this problem will differ depending on whether you’re a solopreneur or if you have a small team.
A key skill of successful solopreneurs is having a firm grasp on the value of their time and knowing what they are good at and what they aren’t good at (or aren’t interested in doing!). What this means is they know:
- What jobs to accept
- What to charge for those jobs
- What they need to budget with regard to external resources to handle the administration side of things (e.g. virtual assistants, bookkeepers, etc.).
This allows them to maximise their return on their time when they are working and can take time off during the year without the wheels coming off.
ACTION ITEM: Have a think about the different types of jobs you do and the different ways you spend your time – are you maximising the return for the effort spent?
For small business owners with staff the key to having more time is hiring the right people at the right time.
- Have a think about what skills you bring to the business and how they might be replicated in other team members. (This is important because if you’re called away for any reason (e.g. family emergency, illness, etc.) it means the business, or at least particular parts of it, don’t grind to a halt in your absence.)
- Once these skills have been identified have a think about what sort of training is required and who would be best placed to receive the training.
- Map out the skills you need on a timeline which will then dictate what training and hiring needs to be done and when.
Many people’s goals fall back on more cash – whether for family, themselves, or charity. Think about what your ideal lifestyle looks and what kind of income you’d need to support it. The target might seem unattainable now, but if you break it down into monthly bite-sized targets, it may not be as difficult as you think. An example might be useful here:
Sally runs a small graphic design business. She does most of the work, occasionally contracting out jobs when she is too busy. She currently makes around $75,000 before expenses. Sally wants to be earning $150,000 before expenses in five years and she isn’t interesting in taking on staff at this stage.
We’re off to a great start. We can break Sally’s target down and show that the yearly goal is to add an extra $15,000 to her current sales figures (which works out to be an extra $1,250 per month).
The first question Sally needs to ask is, ‘Can I actually handle this much work?’ The answer to this is easy to find.
If she takes the number of hours she works in a year (a standard working year is 1,650 hours), then takes off an allowance for unavoidable administration and other down time, she’s probably down to 1,200 usable hours in the year. Now it’s time to apply her hourly rate. Sally charges fixed fees for her work, but she keeps time sheets and works to an effective minimum hourly rate of $100, so let’s use that.
$100 an hour at 1,200 hours equals $120,000.
It looks like Sally physically can’t deliver the hours needed to achieve her goal of $150,000 under her current pricing model if she’s working 1,200 productive hours a year. To solve this, she could look at increasing her effective hourly rate to $125 to make up the shortfall or she could look at working more hours.
Everyone is different and Sally will need to weigh up what she wants to do here considering her lifestyle and the price sensitivity of her clients. My suggestion? Increasing the effective hourly rate by only charging fixed fees and then look at ways of delivering the service in less hours (e.g. new software to speed things along).
This shifts the conversation a little to ‘How can Sally double her revenue from $75,000 to $150,000 in five years?’ It sounds tough, but it doesn’t need to be. Try breaking the big goal down into smaller goals.
In Sally’s case we need to increase sales by $15,000 a year, which is $1,250 a month which might only be one new project each month for her graphic design business. To increase sales she could try:
- Speaking with clients to increase referrals
- Increase prices
- Get serious about her blog and create some great content
- Identify her services that yield the best profit and promote them more
- Increase her social media efforts
- Shop around for better prices on suppliers (e.g. insurance)
- Enter small business awards
There are virtually endless ways of increasing sales and they don’t all have to involve spending a lot of money, but they will involve time and commitment. List a few, give them a go and see what works for your business. Also, remember to think about any additional resources you might require to cope with the increased workload and plan accordingly.
All businesses owners want different things, but often these things can be boiled back to the two we’ve discussed above – time and money. Having a think about what you want to achieve in the long-term with your business and then putting together some long and short range plans and strategies to achieve them can be a very rewarding and eye-opening experience. Set aside some time and get started today!