The Myth Of The Hard-Working Small Business Owner Part 2

posted on May 20 by Tim Conley in the Uncategorized category

In Part 1 (http://localmarketingmastery.com/2009/04/the-myth-of-the-hard-working-small-business-owner-part-1/), I mentioned the biggest strength and the biggest weakness in entrepreneurs, which are coping with the unknown (strength) and conservatism (weakness).  Here in Part 2, I will cover how to reawaken the strength and minimize the weakness.

Also, I’ll talk about how to stop killing yourself with ungodly hours and increase your income.

Let’s get rid of the weakness first.  No sense in continuing something that is harming ourselves and preventing the success we want and deserve.

Think back to when you started your business, did you know how things would turn out?  You had a goal, but did you know you would succeed the way you imagined it in your mind?  For me things never turn out the way I planned.  The end result is typically a surprise.  My friend, Joe Polish, marketing genius extraordinaire, calls it a strategic byproduct.  You set out to achieve one thing and end up with a different yet better result.

Somewhere along the way, you started trying to control the outcome to the point of not taking action.  Conservatism can easily go unchecked.  On one hand, you need systems to run your business so that you can scale and leverage your business to greater heights.  But what happens with most small businesses is the owner clamps down on the business trying to keep things the way they were or working in a certain manner.  If you have ever thought, “Why should I hire someone who can’t do it as well as I can?” you are falling victim to your own conservatism.

The best way to handle your conservatism is to get outside your comfort zone.  Doing something you are afraid of, no matter how small, works your ambiguity coping muscles.  I’m not saying to embrace the unknown just to embrace it–no, you still need a plan as to where you want your business and your life to go.  Without a plan, you will just be wandering aimlessly outside your comfort zone.

For a business to grow, the owner must leverage other people, knowledge, equipment and systems so that she can stop wearing all the hats and focus on her vision of the future.  Two things I have seen prevent growth is the business owner lets expenses expand as more sales are made and not understanding how much her time is worth.

With the first, it is so easy to justify spending money…on anything.  Sometimes it is for business other times it’s to buy groceries or pay the mortgage.  I have met too many entrepreneurs who are spending their early stage business income on living expenses when they should be using the money for growing the company so they don’t have to be a slave to their own business.

If you commit your company’s income to too many expenses, you’ll never have enough to use for leverage.  I’m saying this from experience.  I’ve burned myself out of two businesses by spending ahead of my revenue.

As for the second, you might think my prior advice would conflict with knowing how much your time is worth.  You should get paid for your work, but sometimes that payday comes 3, 6, 12 or more months from your start.  However, if you know how much you want to earn and how much each of the jobs you are currently doing, you can determine quickly if the work should be hired out to someone else.  I haven’t met any business person yet who isn’t spending a significant percentage of his or her day on tasks that someone else would be willing to do for much less than the owner’s time is worth.

Getting out of this trap of working long hours with little time off each year can be accomplished with small steps.  First, set aside at least one hour each week for vision planning.  Vision planning is deciding and articulating why, where, what and when of your business and your life.  It is not for making to-do lists for the week.  You can make those after you have dedicated an hour of focused thought on your goals and direction.

Second, find out how much you are worth per hour and then list all recurring tasks/jobs you do that can be accomplished by someone else for less than your hourly worth.

Here’s an example: If you want to make $100,000 annually and take 4 weeks off for vacation, your time is worth $52/hour.  Any recurring task that you can hire out for less than half your hourly worth should be outsourced.  Meaning the person you hire should have a total cost to you of less than $26/hour.  Many, many tasks in even the smallest of businesses can be outsourced for under $10/hour.

So, you hire someone for 4 hours per day 5 days per week.  That saves you 20 hours that you can now use elsewhere.  At a cost of $200 per week.  Here’s the best part: your worth is still $52/hour which gains you a potential to bring in $1000 more per week.

Here is what you do with the newly acquired time:

1. Dedicate at least 5 hours to working on your business–marketing planning, improving your sales funnel, creating joint ventures, etc.
2. Dedicate 10 hours to selling–not working on a sale, but actual selling.  Getting face-to-face with people that are 8,9, & 10s on a scale of ‘ready to buy’.
3. Reward yourself and your family by taking the remaining 5 hours as personal and family time.  This is a must!  The whole point of having a business instead of a job is so you have the freedom to build the life you want not live for your business.

Let’s play a little more with the numbers.  You bring in $1000 more per week minus your cost of goods sold (hypothetical: 50%) leaving you with $500 minus the $200 for your part-timer for a profit of $300 per week or $14,400 per year in increased profits.  Just need to do that 7 more times to have an annual net profit of $100,000.

I can hear your thought, “Yeah, right!”  It may seem impossible where you are right now.  The power of leverage also gets compounded.  I won’t talk about compounding in this article, but once you build momentum, you’ll find that you can reduce your workload down to 4 days a week and 40 weeks each year and still make the income you desire.

When you are able to work on your business, you’ll see new ways to leverage your time, the time of others and automation.  This leveraging will compound.  You’ll have more time to work on your business, which will uncover new leverage points.  That will lead to more sales and profits allowing you to outsource more of your workload and the cycle continues.

Back to not having any time.

If you literally can’t afford to hire someone else you have two things that you can do that will have an immediate impact.

1. Calculate how much time you spend selling.  Not talking with prospects, getting to know people, etc, but face-to-face closing—asking for the sale.  Got that number?  I bet it is a really small number and that’s why you can’t afford to hire someone.  Now, double the number of hours you are asking for the sale.  As in Glengary Glen Ross, you should be ABC: Always Be Closing.  “Coffee is for closers only.”  (I love that movie.)  Don’t tell me you don’t have time to sell.  Procrastinate everything else if you have to, just close more.  Stop chatting with prospects and start closing them.
2. Can’t do #1 for some reason?  Go get a job.  Seriously.  You’ll work 40 hours a week instead of 112 and probably take home more money.  If you don’t want to give up your entrepreneurial dream, spend your evenings and weekends managing other people who will do the selling and the administrative work.  And don’t tell me that would be a lot of work, because you’re already working more now.

OK, I’m off my soapbox.

Let’s recap.  Embrace ambiguity.  The unknown isn’t that scary.  Don’t be too conservative.  Life is ever-changing and you should change with it.  Sell more.  Hire people to replace all tasks that have to be done to people who can do them for less than your hourly worth.

I am willing to answer any questions or comments.  So, please participate and comment below.

Tim Conley

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