Being Busy Does Not Equal Profits Part 3 of 3
The past two weeks I’ve been sharing tactics you want to put in place as your business grows that will give you the greatest return for the time, money and effort you invest.
The bottom line is this – if you concentrate on activities that don’t generate a return for your business, you simply, don’t have a business, you have a hobby. I know this may sound harsh, but it’s the reality.
Today we are going to examine the last two return on your money forms.
Let’s begin with:
Mastering Depreciation ROI
I know big fancy word isn’t it? Depreciation is rarely talked about, but it’s an important aspect on the return on your money you need to pay attention to.
Depreciating return on investment occurs when the cost of creating a product or offering a service increases, but you don’t cut production costs or increase the price tag on the product or service. Simply put, depreciation happens when your services are costing you more than what your clients are paying you.
For example, if you run a consulting practice geared toward home-based businesses and offer Wifi services while clients wait for a consultation, you could charge a nominal fee to use this network access in your office. The fee will be small enough to cause little reaction from a single client, but add all those little fees together and you will see hundreds of dollars of extra profit over time. Your clients will value your thoughtful service, they’ll pay for your Wifi, and you’ll have done something to offset depreciation of your services.
As a savvy solo-entrepreneur, you should always be in the lookout to reduce your overhead. You also should be on the lookout for ways to add value to your offers. Find ways to give your clients more bang for their buck. And you should seek ways to increase your prices without sacrificing value.
Our last return on investment form is what I call:
Mastering Busyness ROI
Two years ago, I had the opportunity to take a workshop to write a book in a weekend. At that time I was looking for ways to increase my visibility, so it seemed like a great return on investment. Fast forward six months. I found myself caught up on other projects that were not allowing me to finish writing my book. I had a little voice that kept chiding me – “You paid money for that workshop. You made a commitment, so you need to finish a draft of that book.”
But, I just could not let go of that project. So, when there was a recent conference call available for workshop alumni, I tuned in. I wanted to know where everyone else was in the book-writing process. As I sat there listening, I asked myself, “What am I doing?”
Somehow, writing that book no longer seemed to make sense in light of where my business stood back then. It didn’t have the same power and return on investment that it once had. Things had changed. I decided I should put the book project on hold. Let me tell you – a big burden was lifted! I made the decision with clarity and the happiness was immediate. I had done the right thing.
The moral of the story?
Sometimes you make a business decision that makes sense at first, but six months or a year later things change. In my case, other tasks took over and my business changed direction. The rosy ROI for the book project no longer was the case. I laid it aside.
So many of us get stuck at this point. We feel as if we failed. But, what I realized is that goals and priorities shift as your business grows, and you need to continually re-evaluate and be willing to shift too. You need to ask: “Does doing this activity make sense for me and why?” and “Does this task serve me, and what is it costing me?” You need to be honest and heed the answers.
The bottom line is this – everything you decide to do in your business needs to have a return on investment. Therefore, make sure you take a look at your time and how you are spending it. As you plan your activities, always keep in the back of your mind that business is about cost and profit.
Remember, you started your business to have more life, not to have a life to do more business!
So, focus on increasing the return on your money in all six areas and simplify your approach to time and resource management. This will ensure a successful business and an enjoyable lifestyle.
Anyhoo, I’ve shared knowledge nuggets to help you determine when an activity is a good return on investment for you. I rarely see this topic discussed out there, but feel it is a key for you to build a successful venture. One of the most critical factors for creating a successful business is to know how to make the right decisions, positively impacting your bottom line while making you happy. The choices need to be good for you, your family and the people you are impacting with your talent and genius.
These good decisions need to be based on your core values and priorities. Take the time to pinpoint them and live by them. When you orient your work and life around core values, you will ultimately be fulfilled and inspired. Those who live and work out of sync with these values bring tension, confusion, boredom, frustration and draining obligations into their lives.
Your values direct your attitudes and actions. Knowing them will help you be more decisive. When you have a crystal clear vision of the business you want and align it with your personal values – BAM! It’s powerful. You’ll find making business decisions are easier, and you’ll build a business that truly suits you. Good bye, scattered thoughts. Good bye, wasted time.
I routinely ask myself a series of thought-provoking questions as I assess if an opportunity is viable for my business and whether or not it aligns with my values and priorities. Below are those questions and I hope they will be useful to you when deciding whether or not the next opportunity or idea could be profitable.
Is this something that will make me money?
Some entrepreneurs might not ask this question or leave it for last. Not me. This is the primary consideration because this facilitates a millionaire mindset. When you make decisions from this mindset, it serves as a catalyst to take your business to the next level with less stress and confusion.
I know that taking one’s business “to the next level” means different things to different business owners. It could mean keeping your profits the same, but taking more time off to play with the kids. It could mean that you want to multiple your revenue, but work fewer days. Maybe it means you want to share what you know with the world and have a profound impact on people. But, asking this question puts a stop to confusion and information overload, and it’s a success strategy that helps you propel your business forward.
How will this opportunity get the results I’m looking for?
If an interesting opportunity comes my way, but my focus at the moment is on creating a new coaching program in the next 90 days, then I’m going to say “no” to anything that will dull my focus. This will be the general rule of thumb even if it’s on my priority “to do” list. Crystal clear short- and long-term plans for your business are essential in guiding your business decisions.
Of course, if it’s truly a once-in-a-lifetime opportunity, then I don’t suggest you do something dumb. If Oprah asks you to talk about your business on a “Women and Their Great Ideas” episode, I’d tell you to drop everything and I’d boot you onto the plane myself!
How much is this opportunity going to cost me?
If I’d stuck to my guns (no matter what) and continued writing my book, I would have had to shift the priorities of my virtual assistant, based on a shift in business priorities. Was finishing my book really a high-payoff activity? No.
In reality, I knew the new coaching program I was putting together would provide me with greater credibility, list building and income potential than taking the time to finish my book project. So, I had to think everything through and follow my gut. I had to check in with myself and my business’ goals – not just for the present, but also in the future.
Before I wrap up this post I also want to point out that cost is not merely greenbacks; it can also involve intangibles like emotional toll and physical ramifications. While a project may not cost a lot financially, it can cause you to feel drained and tired, making you lose focus, feel frustrated and lose sight of the big picture.
For example, if your desk is cluttered, this can cause energy drain resulting in a loss of concentration. Even though you sit at your desk with the best of intentions, the clutter starts eating at you. Before you know it, you are fidgeting and straightening papers and moving stuff around. Bam! Your focus is down the tubes.
Of course in this minor situation, the solution is to take some time and organize your desk. This, however, is not always possible when working on a high-payoff activity. So, it’s really important that you are clear on ALL the costs when considering a new opportunity – energy, time, focus, time away from your family, shifting the focus of your team and the money.
Also, I want to encourage you to pay attention to how you feel when you consider saying “yes” to an opportunity. Are you going to be happy when you are engaging in the tasks to complete the project? Are you going to enjoy it, or will it feel like work? Is it going to affect the lifestyle that you want to create or will it mesh nicely? These are intangible costs – things that are hard to measure – but still should be considered when weighing the cost. Listen for that quiet still voice.
And, finally, to really master ROI concerns, ask yourself this biggie: “When will the opportunity I am considering pay off for ME?”
Let’s say, for example, that you need to focus on a task that will drive value to your business in the next six months. To achieve this goal, you need to double your client list. Well, you may need to shift your focus and work on the tasks that are going to grow your list. So instead of Twittering, you might want to call strategic people you already have a relationship with to see if you can collaborate.
While Twittering is an important marketing avenue, it takes longer to see results than directly contacting a potential lead or business partner. Eventually, Twittering will help develop new relationships, but it typically takes time, whereas calling those strategic partners who already know, like and trust you, will bring the results that you are looking for in the time frame that you need.
So, stop just getting by, let’s take it up a notch or two and run your business with the intention to get 110% return on investment in everything you do.