What’s Your Opportunity Cost?

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[vc_row][vc_column][vc_column_text]Are you “investing” your time working ON your business, or “spending” it working IN your business?

The challenge that many business owners face is that they are so busy working in their business that they cannot see or achieve the full potential of their business. When I speak to business owners I sometimes find that they waste some of their precious time doing low paid work that could and should be done by a member of staff, or not even earning as much as their top employees – when their income is converted to an hourly rate.

I recently took on a new client with a profitable £2m turnover engineering business, but after speaking to him I found that he was spending an hour or two each week going to the cash and carry to buy £100 of cleaning materials. When I asked him how much per hour this job was worth, he told it was an £8 per hour job – so around £12. I then asked him how much extra business he could generate if he spent this same time each week looking for new customers, or getting quotes out more quickly. He said he thought he could generate about at least £1,000 of new business each week, there was a long pause and a slightly uncomfortable “Oh I see what you are getting at….”

It is obvious looking from an outsider’s perspective that the logical thing for the owner to do is employ someone to do that low value job IN the business so that he can work ON high value work for the business. The challenge for business owners however, is that are often too busy to stop and think about what they are doing and whether it really is the best use of their time

So take this opportunity to ask yourself how much mundane work are you doing that could be completed by someone else to free you up?

What are your opportunity costs?  What value do you place on your time?  How much extra business could you generate if you employed someone to do some of the day to day work?

What would it mean to your customers and your business if you were “freed up” to follow up enquires that haven’t been chased up, build relationships with customers encouraging them to come back, or phoning existing customers to see if there is anything they require.  The bottom line is you could be spending time on vital sales and marketing, but you’re bogged down doing the day to day, time consuming work that someone else could be doing.

There’s a whole heap of things that a business owner needs to get done in an average day. Successful business owners are those that do the things that are important in maximising profit rather than concentrating on the “urgent problems” that arise every day.  Use professional advisers to help you in areas that you aren’t an expert in, (my new client was also doing the bookkeeping!), these sort of people will save you time and money.

When we get involved in business most of us manage with little or no assistance at all. Yet “a business” as an investment can and does when well-managed outperform every other type of investment. Take the challenge and look at your business as an investment, look for a return on your time as well as your capital invested.

Review what happened last year, analyse the results you achieved, see what adjustments you need to make to obtain the results you require, plan next year and look at what assistance you require to obtain the desired result.

Remember above all else, that time spent working ON your business is far more important than time spent working IN it.[/vc_column_text][/vc_column][/vc_row][vc_row full_width=”” parallax=”” parallax_image=”” bg_type=”theme_default” parallax_style=”vcpb-default” bg_image_new=”” layer_image=”” bg_image_repeat=”no-repeat” bg_image_size=”cover” bg_cstm_size=”” bg_img_attach=”fixed” parallax_sense=”30″ bg_image_posiiton=”” video_opts=”” video_poster=”” video_url=”” u_video_url=”” u_start_time=”” u_stop_time=”” bg_override=”0″][vc_column width=”1/1″][vc_column_text]

Action | Next steps

My name is James Akin-Smith and I’ve been running my own businesses for 30 years so I know what it is like at the “coal face”! I now work with business owners to help them improve their financial results, improve their teams and work less hours! If that sounds interesting I can be contacted on;

  • 07973 137470.
  • jamesakinsmith(Replace this parenthesis with the @ sign)actioncoach.com
  • https://uk.linkedin.com/in/jamesakinsmith

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