Being Busy Does Not Equal Profits Part 1 of 3
Many of the biggest and most far-reaching investments we make in our lives are investments that have little or nothing to do with money. — Daniel Quinn
Last week I shared with you the importance of getting intimately familiar with how and where you are making money in your business. You can read that post here. Anyhoo, many of you wrote in admitting that although you knew this was an important area to keep track of sadly it wasn’t getting the deserve attention.
So assuming I lit a fire in your tuchus and you have started getting familiar with the important numbers in your business the next obvious question is – are you getting a nice return on your investment or just peanuts for your efforts?
You started your business because you wanted to be your own boss, right? You wanted to set your own schedule and write yourself a healthy paycheck for the hours worked. Basically, you went into business to gain freedom. Unfortunately, for most solo-entrepreneurs, it doesn’t work out like that! You’re not your own boss and the majority end up taking on the role of sales staff, secretary, accountant, publicist, customer service rep, financial planner and social media jockey.
Many feel stuck. You run your business as if you were still an employee at a job with no end in sight, missing out on all the fun and freedom you thought you would have when you first embarked on your journey as a business owner.
Why is this? Frankly, I think it’s because you are operating with a mindset that dictates that you learn everything and do everything. After all, isn’t it the business owner’s job to make sure things get done? Yes, that’s true, but only to a certain extent.
The good news is that most of you recognize the imbalance and seek to make things right. You are aware that you need to measure your effort, weighing it against tangible results. In other words, you want to know your return on investment (ROI) as it relates to money.
As a savvy solo-entrepreneur, for example, would ask yourself, “Are my Twittering efforts resulting in clients?” or “Am I making money from this marketing strategy?”
My father puts it like this: “Make sure your dollars come back with friends.”
Return on Investment (aka ROI) is an easy concept, but how much have you really embraced those three letters? An ROI mindset should lead you to business success, as well as peace and happiness away from the office. Yup, ROI has connotations beyond mere monetary return.
By surveying clients and through conversations at networking meetings, I realized that many solo-entrepreneurs overlooked other facets of ROI, an oversight that was sabotaging their efforts to reach goals. It’s a common mistake, and that’s why for the next couple of weeks I will focus on this topic, one that is near and dear to my own heart.
How do you know that what you’re doing will pay off?
This is such an important subject for business leaders. It’s a common area where most business owners spin their wheels. They’ve left the firm pavement of sound business practices and are stuck in the mud, spinning their wheels and missing this basic foundational step in their business. Identifying ROI properly will help you get back on a road paved with sound, rock-hard business principles.
As we know Return on investment is a critical business measurement. This component involves placing all the effort injected into your business on one side of the scale, while placing the money and benefits your business generates on the other side of the scale. The profit side should be heavier or something’s seriously wrong!
Your efforts should be generating money. That means you need to be monitoring what you are getting in return for your effort.
The expression “What you concentrate on expands” has application in the business world. If you want to expand a certain aspect of your business, you need to focus your attention and energy there. Otherwise, you inevitably will be frustrated.
For example, if you wish to add 50 members to your entry level coaching program, you need to tailor your activities on that. You need to prioritize or you will find your attempts to build your business sidetracked.
I know I’ve spoken to you about this before, but this is so important to understand! I see so many entrepreneurs failing to focus on what’s important, and they struggle as a result. Their business becomes a JOB…or worse, their business ends up being the equivalent of a hobby.
As a savvy business leader you must know with 100 percent certainty that your business efforts have a positive, consistent return on investment and are taking you where you want to go. Mastering this concept is what separates you from the other little dogs struggling for one tiny bone.
Now…remember that I’m not just talking about financial income. Return on investment refers to all aspects of your business and life – whatever is important to you professionally and personally.
Take some time to decide what’s important, what you need to grow your venture and how best to use your time. This will stop the confusion and state of being constantly overwhelmed. Then, just watch those positive results roll in.
So, before I get into the nitty-gritty of today’s post. I’m going to share why this concept has been a critical milestone in my own experience – why I was so gung-ho to incorporate it into my own decision making.
Understanding what ROI meant was one of the very first lessons I learned when I started my offline consulting business over six years ago. Later, while completing my master’s degree in business and technology, I studied the behind-the-scene details in the lives of really successful entrepreneurs and how they built their companies and enviable lifestyles.
Prior to branching out on my own and getting my master’s degree, I worked as a consultant in the corporate world with CEOs and other high-level consultants and learned a few tricks of the trade about ROI along the way. As a consultant, my job involved finding the best solutions for clients, showing them tangible options to improve their return on investment.
In graduate school, I looked at case studies in which we reverse engineered what extraordinarily successful entrepreneurs did to build their empires. I’m talking about the likes of Bill Gates, Donald Trump, Richard Branson and Sam Walton.
We studied the best business practices and brainstormed about what these people did to maximize their genius to the world, make good money and create a great lifestyle along the way. We’d ask ourselves things like, “Gosh, would Oprah say “yes” to tasks and opportunities without weighing the ROI potential beforehand?”
No! She would want to know how proposed projects were going to make her money or fulfill her in some way.
If you are thinking, “Whoa, Yvette, I’m not looking to build a huge empire or anything,” I am here to tell you that if you are building a real business, you MUST understand the value of your time, effort and resources.
This really clicked with me once I started my first company and I found myself in the trenches building my business. What I learned during my time in corporate and in graduate school just gelled. It became apparent that if I were going to be successful and create the lifestyle that I desired, I needed to practice what I knew to be true about ROI.
I made a conscious decision. Whatever I said “yes” to had to return something to me – more money, more credibility, more leverage, more “me time.” I made sure I knew the ROI with extreme clarity before I said “yes” to anything. It either had to make me more money, allow me to go out to dinner with my husband, free up my time to allow me to work with my gifts, or play with my children without feeling torn or guilty.
Now, there is a caveat. Sometimes you cannot measure the return on your investment, because the benefits might be intangible. But if you take your best guess on how the task will pay off, you’ll be less likely to find yourself in the middle of busywork or “chasing bright shiny objects.”
“Chasing bright shiny objects” is when a business owner like yourself says “yes” to every single new opportunity that comes your way – kinda like a kid in a candy shop or a pack rat dropping a nourishing nut to pick up an inedible pop top from a soda can.
Look, I get it! We creative types get fueled by looking and working on many different things at the same time. We tend to say “yes” to every new project or gadget and can be sweet talked out of our valuable time. With out a good internal compass we vacillate between tasks and have trouble measuring whether we are closing in on our goals. Our talent and energy get sidetracked.
This is a dangerous place to find yourself. Your overall business vision gets blurred, and you can’t see how opportunities fit in with your overall business strategy and goals. That’s why you need to be crystal clear about the total value of what you’ll be giving up – time, energy, and talent – when you say “yes” to something.
I’ve alluded to the fact that there is more to ROI than just money and I really would love to dive in right now and spill the beans on the other types of ROI, but then this post would turn into a newspaper. So, keep your eyes peeled on your inbox, because next week I will unveil five additional types of ROI that are rarely talked about, but will ensure a successful business and a more enjoyable lifestyle.