Time is a finite resource. It’s also money. Are you spending yours in ways that will maximize the wealth of your business? It’s easy to assume that you doing all the work in your business is going to cost the least, but it may actually cost the most.
Consider my client Susan who has a consulting practice. She consults primarily 1:1 and offers her services through fixed price packages that she’s developed. Looking at the pricing is a key component in finding and fixing leaking profits. But it’s not the only area. When we started working together, I asked her to track her time every day. We agreed she would track her work in three categories: 1. Client; 2. Marketing; and 3. Administrative.
After collecting data for three months, we went back and analyzed what was happening with her time and how it was impacting her business. Here’s what we found.
Susan was spending 25% of her time on actual client work, 30% on marketing and the rest … 45% on administrative work. Without going any further, that was eye opening. But we went further. I analyzed what the impact on revenue would be if Susan spent more time on marketing and less on administrative tasks. After crunching a few numbers it became clear that every hour she spent on marketing her services turned into $1,000 of revenue 30-60 days later. Further, with her inferred hourly rate of $700, it was nothing short of completely nuts that she be doing all the administrative stuff she was doing.
It turns out that she could hire administrative support for about $20/hour. This enabled Susan to delegate almost immediately fully two thirds of the ‘admin stuff’ she had been doing. What the potential from this? Let’s take a look. Now don’t freak out, but this will involve a bit of math.
Looking at the situation with the following:
During the months she tracked her time, Susan averaged 40 hours/week of work time (yes, I know you hard charging entrepreneurs often put in twice that —- that’s an issue for another article). Using the percentages previously noted, this means that each month (4 week month) she was spending on average, 40 hours on client work (25%), 48 hours marketing (30%) and 72 hours on admin (45%).
Hiring her assistant costs $20/hour x 15 hr/week x 4 x 1.25 (taxes/benefits) = $1,500/month.
Offloading just half of her administrative task freed up 36 hours/month for Susan to spend on marketing and client work — both of which she much prefers! Based on the previous data that showed every hour spent on marketing resulted in about $1,000 of future revenue Susan was able to direct her time to significantly increase her revenue and client base. In fact, in a 90 day period, her sales were up 30% over the previous year. And her administrative support costs were covered in an hour and a half of marketing effort (bring the revenue in) and about two hours of client work (do the work). The remaining 32 hours turned into an increase in monthly sales of over $12,000. So far.
Ok, ok so I can almost see your eyes glazing over. Try to pry them open for another few sentences — I’m just getting to the good part. The point.
The point is that it’s worth truly determining how you spend your time. Not guessing. Actually tracking it. And trust me, for those of us for which time tracking is akin to torture, know that you’ll survive and come away from the process with incredibly useful data. Susan was able to increase her sales by 30% in a very short period of time because she learned how to use it more effectively in her business. That’s a profit leak worth plugging. And that’s without even getting to the rest of the profit improvement opportunities in her business. Think of the possibilities!
Susan has big plans for 2017 and she’s in a great position to achieve and exceed them because of this work. What are your plans for 2017? Are you focused most effectively to achieve them? Does your company have profit leaks that continue to hold you back?
Consider tracking your time. And if all this resonates with you and simultaneously confuses you, book a strategy session with me so we can explore your confusion in more detail. There’s a link somewhere in this ezine where you can do that. I’ll meet you on the phone with my ‘de-confuser’ and ‘profit leaks spotter’ glasses on.