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When you go into business you have hopes and dreams about the increase in money you will earn and the freedom it will give you. For many small business owners they find once they take on staff, running a business doesn’t quite live up to their dream. They even find themselves paying their staff more money than they are earning themselves. They watch their profits disappear like water into wages each month. So what is wrong with this picture? Well unless you are a registered charity, pretty much everything.
As a business owner you take all of the risks, therefore in return you should be receiving some rewards for your efforts right? In order to grow your business and serve more customers, taking on a team to help you is a necessity because it will become impossible to do it all single handedly forever.
So if you have got a team onboard but have now found that rather than making more money you are making less, here are four areas you can focus on to get you back on track.
What are you delegating?
There is often a temptation for business owners to delegate their least favourite tasks out first. These are often things like their marketing, sales and finances.
They give these areas away first because they see themselves as being not very good at them and they would rather keep the product/service delivery part, in fact the part they know best, for themselves.
The problem with this strategy is that if you haven’t gained a good understanding of everything you are delegated, it’s not delegation it’s abdication of responsibility.
Michael Gerber in his book The E-Myth, talks about this common mistake that small business owners make. When you abdicate you don’t know if your team are doing a good or bad job until after things have gone wrong because you didn’t take the time to understand it first. When you delegate, you are asking someone to be responsible for something that you already know about to act on your behalf.
Failure to delegate effectively can be an expensive mistake. It can lead to unhappy customers, costly corrections, low staff morale and ultimate loss of profits.
There is no need for you to become an accountant or a bookkeeper before you pass over your accounts, but you do need to have a good working knowledge of your businesses financials so you know you are basing your decision making on numbers you know are right and understand.
If there is any area of your business you don’t understand, you must make it your mission to master it.
What are you focusing your time on?
So you have got someone into your business and they have taken over some of your current workload, which means you have more time to focus on other things, hooray!
If you find yourself flittering away the time on tasks that aren’t bring more revenue into the business then it is inevitable that you will very soon find yourself earning less money than your employees.
To grow your earnings you must focus your time on activities that will bring more money into your business. So that means understanding the activities that for your business will generate more income. Some examples could be, new business generation; building your referral network; improving efficiencies within your business; carrying out highly paid revenue generating work; developing and bring to market a new product.
How much are you paying for your team?
We all need help to grow our business but are you getting help in the most cost effective way? Many business owners end up paying out more than they need to or can afford to in order to get the help they need. Here are a few ways you can get the help you for less.
• Outsource your administration and other tasks to a full or part time VA abroad at a much lower price.
• Find a low cost freelancer on sites like Fiverr.com or Upwork.com. This is great when you don’t need someone full or part time, plus you can utilise the services of a variety of specialists from video editing to digital marketers, who could offer you more effective help than just one employee.
• Offer support to university students looking for work experience through an internship. They get the vital experience to help them get into work when they graduate and you get some much needed help in your business now.
• Take on a trainee or graduate and train them up the way you want them.
Are you charging enough?
An easy way to give away your profits is to not charge enough for your product or service. Many business owners are scared to charge the market rate because they think low price = more customers. In fact it can often lead to the exact opposite and many people treat lower cost alternatives with a large dose of skepticism because they associate low cost with low quality. Unless you are Aldi or The Reject Shop competing on price is not a great strategy for differentiating your products and attracting new customers.