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The way I see things is that there are two different, and diametrically opposed, ways of thinking when it comes to building your business and making money.
There’s ‘employee’ thinking and there’s ‘strategic’ thinking.
If you have an employee mindset then you think that working harder is the answer… You spend most of your days doing things and trying to find more things you should be doing…
If you have an entrepreneur mindset you have an end vision in mind… Successful entrepreneurs know their vision, develop ways to reach it and continually ask, ”What is the best way to accomplish my vision”…
Yet, most business owners are the ‘doers’ of what they do
Lawyers are lawyers… Bakers are bakers… Hairdressers are hairdressers… Gardeners are gardeners… Builders are builders… Plumbers are plumbers… Dentists are dentists… Electricians are electricians… Coffee shops owners are coffee makers… Restaurant owners are cooks… And on and on…
That means they spend the lion’s share of their time doing the thing they are good at. They are literally working as an employee doing what they do.
BUT, that happens at the cost of everything else that needs to be done in your business. Those with an ‘employee’ mentality are always looking for ways to earn enough money to pay their bills, pay their staff, pay their suppliers and survive.
Entrepreneurs however build BUSINESSES.
A true entrepreneur is a completely different animal altogether. An entrepreneur has a clear vision of what they want the business to become. Because they have a vision, they can analyze their own strengths, their competitors’ strengths, the marketplace preferences and devise different strategies for achieving their vision. After reviewing the pros and cons of each strategic alternative, they pick the one strategy most certain to successfully achieve their vision.
An entrepreneur knows their biggest opportunity is always inside their business. Following their ideal strategy has almost nothing to do with how hard they work.
And here’s some inside information that may upset some people:
The overwhelming majority of business owners are nothing more than employees suffering from delusions of grandeur.
They have no strategy; they get their heads down and work like dogs…
And while they may have some arbitrary income goal, they have no vision of the business they would need to create in order to achieve it. And since they don’t have a clear vision they cannot follow any sort of detailed plan to accomplish it.
So they end up meandering around making promises to themselves and their family, but never actually moving any further toward getting what they want.
It’s obvious you want to be an entrepreneur. So the question then becomes what stands in your way of becoming one?
Poor Business Design Results In You Doing All The Work
Look, the average business has a multitude of critical functions including:
- Business building
- Market analysis
- Customer acquisition
- Customer relationships
- Legal and compliance
- Supplier management
And often many more.
But we can actually dive a lot deeper into your business, can’t we? It’s not quite that simple. We can break out each of these areas into smaller functions – the actual stuff that needs to get done. Let’s take a look at what each of these activities might consist of…
Product and Service activities include:
- Identifying products to sell
- Acquiring or developing products to sell
- Identifying services to sell
- Acquiring or developing services to sell
- Identifying logical upsells
- Acquiring or developing upsells
- Identifying logical cross sells
- Acquiring or developing cross sells
Customer Acquisition activities include:
- Ideal customer analysis
- Prospecting tactics
- Database building
- Message delivery
Finance activities include:
- Merchant account
- Accounts payable
- Vendor sourcing
- Accounts receivable
Sales activities include:
- Sales processes
- Employee training
- Order forms
Market Analysis activities include:
- Competitor analysis
- Keyword research
Recruitment activities include
- Identifying job roles
- Identifying ideal candidates
- Advertising for candidates
- Filtering candidates
- Hiring and training
- Performance measurement
- Time management
- Change management
Legal and Compliance activities include:
- Trading standards
- Terms of service
Supplier Management activities include:
Marketing activities include:
- Repeat sales systems
- Referral Systems
- Offline demand generation:
- Direct mail
- Business cards
- Voice broadcast
- Joint ventures
- Lots more…
- Online demand generation:
- Press releases
- Joint ventures
- Lots more…
Customer Relationship activities include:
- Customer service
- Getting testimonials
- Returns and refunds
Business Building activities include:
- Identifying new products & services
- Buying competitors
- Expanding premises
- New locations
And after breaking out all the activities that need to take place in your business (and by no means is this breakout supposed to be exhaustive) you are left with a business model that is quite ridiculous.
AND YOU STUCK IN THE MIDDLE TRYING TO DO IT ALL!!!
How on earth can YOU expect to handle all of those activities? How on earth can you expect to achieve what you want to achieve given everything you have to do? There is only one outcome:
Hard Work, Frustration and Marginal Results!
If you’ve ever been frustrated with your progress, overwhelmed with the amount of work you need to get done, or just plain tired – is there any wonder why?
Seriously, even if you were to have employees to do it all – don’t you see that you couldn’t even manage all the employees that would be required to get all this work done?
And here’s the really crazy part, even though this is the model that most business owners are following, do you know what they spend an overwhelming amount of time on?
Actually DOING the business they’re in!
Coaching, writing, cutting hair, plumbing, doing lawyer stuff, doing accountant stuff, baking, making coffee etc., etc… and that IS where the problem lies!
As the DOER of what you do you can ONLY ever get paid a little more than an employee doing what you do would get!
Make no mistake: the chart above is the chart of a person who is sadly lacking in strategy. It screams EMPLOYEE!
And the solution to having too much is not to go get more. I hope that you are NOT one of those DOING EVERYTHING YOURSELF AND WONDERING WHY YOU’RE SO OVERWHELMED?
Now, before you jump to the conclusion that I’m recommending you outsource or hire some people; recognize the problem goes much deeper than that.
I’ve only peeled back the first few layers of this onion; if you really want to get at the truth, we’re going to have to get a little more personal.
Playing ‘Copy Cat’ Is Not A Business Strategy
Let’s return to our previous conversation about strategy. My big question to you is: Do you have a strategy?
A good friend of mine was talking with 3 times New York bestselling author Robert Ringer about business strategy and the lack of it amongst small businesses in general.
And Robert pointed out that whatever industry you look at you’ll find that 80% of the providers look almost exactly the same. They all look and act the same way. And that, he asserts, is a monumental mistake.
It was a great observation for two very important reasons: the first reason is that it’s true and the second is that this is not a strategy at all.
And it’s this type of thinking that reinforces all the issues we’ve already surfaced earlier.
This, my friend, is not an entrepreneur’s strategy; rather, it’s the way Lemmings die.
Don’t worry though, the problem is not hopeless – actually, if you identify with anything you’ve read so far you should feel a sense of relief, because the truth is you’ve been working harder than you need to for a fraction of the results you deserve.
Truth be told, there are endless people you could employ or outsource to manage the functions we’ve just spoken about.
BUT, the reason so many business owners find it so hard to relieve themselves of activities they shouldn’t be doing is because that relies on one thing. YOU having enough customers to pay for outsourcing the employees you need to make all those things happen. And THAT is where the rubber meets the road.
Your ultimate success is not dependent on you doing every single function of your business. But it IS dependent on you attracting as many of the best, high paying customers as possible
And that comes down to your skill in marketing.
But I’m getting way ahead of myself here. I still have loads more I want to share with you.
Do You Know What An Hour of Your Time is Worth?
I don’t mean to get all philosophical on you, but have you ever really thought about your time – it’s your life. If you really think about it, time is all you have.
Moreover, there’s no such thing as free time. You can’t save free time and use it later. You have leisure time but it’s not free time. When you waste time doing tasks in your business which are things someone else could do and then rationalize to yourself that you were just doing them yourself in your free time – you actually just wasted some of your life.
It’s not leisure time unless you’re choosing to do things like go swimming, go on vacation, spend time with your family, friends or work on your hobbies etc, rather than anything else.
All right, so what’s this got to do with your business? EVERYTHING!
The reason you’re not making the kind of money in your business or working the amount of hours you want is that you have not made it a point to continually increase the worth of your time. Let me be redundant here for the sake of clarity…
All time has value; and the way you think about time and think about yourself will affect everything that happens to you inside and outside your business for the rest of your life. In short, you have to value your time before anyone else will.
I’m always shocked at how many people don’t have any idea what the value of their time is, or how to increase the value of their time. So, the question is, “what is your time worth?” Do you know what your time is worth?
Do you know what your time needs to be worth to achieve your income goals?
If you don’t know what your time is worth and what it needs to be worth, then you cannot make effective decisions on what activities you should be spending your time on and what activities you should have others do for you.
So, let’s roll up our sleeves and figure out together what the value of your time needs to be to get you where you want to be.
First thing we need to do is decide what you actually want.
And no need to be shy here. You started your business for a reason and if it wasn’t to make money and give you more life then I’m afraid this can’t help you.
So, first off, write down the top ten things you want in order from most expensive to least and write next to them how much they’d cost you a month. Your list will probably be longer than 10 but this will get the old juices flowing and you can expand on it later.
Oh, and when you’re figuring out the monthly cost of big things like houses then it’s up to you HOW you do that. You can put what the mortgage cost would be or what you need to actually buy it in X amount of time.
So, wha’ do ya’ want????
List everything you want and put a monthly cost next to each.
Now just add up the monthly costs to give you the total amount you’ll be earning every month.
Multiply that little number by 12 and you have your yearly MAGIC NUMBER.
So you now have a new financial target to get to. How can you do it?
You need to make some changes if you are going to get there, and what you need to do is change the amount of money you’re able to generate per hour worked.
I’ll walk you through it…
- How much do you want to earn in the next 12 months? _______
- How many days do you work a week? _______
- How many hours a day do you work? _______
- How many productive hours a day do you work? _______
- How many productive hours a week do you work? _______
- How many weeks per year do you work? _______
- Total available hours right now to produce desired income: _______
- What you must generate in an hour: _______
On the first line above enter the amount you need to earn in a year. Then fill out the number of days a week you work and the number of hours per day you work.
But what is productive time?
Productive time is time spent directly generating income. So what percentage of the time are you productive?
Before you answer, consider this:
One study of Fortune 500 CEOs estimated they had 28 productive minutes a day
Another one estimated it at 38 productive minutes a day.
I know, it sounds crazy, right?
Only 28 or 38 minutes a day?!
But think about what a CEO does and how much time they actually get to focus on profit building activities.
Since you don’t have the same level of responsibilities as a Fortune 500 CEO you can have a lot more productive time. But productive time doesn’t appear like magic, you have to be focused and disciplined.
Here are some examples of non-productive time; talking to friends, surfing the Internet, checking and reading email, answering your phone, studying and learning time, checking Web site stats, organizing your desk and cleaning.
Of course, I’m not suggesting that you shouldn’t spend any time on these activities. You need to spend time learning, and you do need to talk to your friends. I’m simply pointing out that this is not what we would consider productive time. These activities are maintenance. This is what you have to do. But you cannot consider that time as productive time because it doesn’t build a business, it doesn’t increase your income, it’s just there. You have to do it, that’s part of life.
Productive time is time spent creating products, marketing products, improving your marketing process, managing money making projects, setting up joint venture deals, and creating scalability in your business.
But there is even something more profitable and strategic than productive time, I call it super-productive time.
Super-productive time is when you create a system around any of your moneymaking activities. Examples of super-productive time would be: creating systems that create products and creating systems that market products.
All right, I think that’s more than enough explaining, let’s get back to you and the number of productive and super productive hours you have a day. Do you have an hour of productive time a day? 2 hours? What’s your most conservative estimate at this point?
Unless you have really focused on maximizing your productive time before, I wouldn’t think that you have more than 3 hours of productive time a day. Remember, we are talking about income generating activities only!
Now, here’s a completed set of questions so you can see how this whole process works.
- How much do you want to earn in the next 12 months? $250,000
- How many days do you work a week? 6
- How many hours a day do you work? 10
- How many productive hours a day do you work? 3
- How many productive hours a week do you work? 18
- How many weeks per year do you work? 48
- Total available hours right now to produce desired income: 864
- What you must generate in an hour: $289.15
Here we have the goal of making $250,000 annually. We work 6 days a week and spend approximately 10 hours a day in our office or shop or whatever. We have estimated we’re able to squeeze out 3 hours a day of productive time. This leaves us with 18 hours a week completely focused on building revenue.
Multiply the 18 hours by 48 weeks and we have 864 hours a year to achieve our goal of $250,000. This means that we have to generate an average $289.15 of net income for each productive hour that we have.
The Easiest Way To Boost Your ‘Hourly Rate’
If you are asking yourself “how on earth could I achieve my hourly rate, everyday?” the answer will not be found in doing more of what you do now or looking at what your competition is doing or hiring more employees or blindly spending more money on marketing.
The answer is that you need to build a scalable business that provides you, the business owner, with the maximum amount of leverage possible. And by leverage I mean leveraging YOUR TIME.
Think of McDonalds… When Ray Crock bought McDonalds from the McDonalds brothers, they had one outlet. There are now over 31,000 McDonalds restaurants.
Ray didn’t spend all day, everyday, in each restaurant flipping burgers… He learned to LEVERAGE his time…
And this is why knowing your hourly rate is so important. It exposes you, maybe for the first time, to the reason why you aren’t making the kind of money you always dreamed about. And the answer is your business is not currently set up to help you achieve and then surpass your hourly rate!
Your hourly rate serves as the barometer for which activities you should personally be spending your time on and which activities you should be outsourcing to other people.
The trick is to consistently focus on those activities that can raise your hourly rate and delegate or OUTSOURCE the rest
So how can you raise your hourly rate?
Well, you have to focus on the part of your business that has the highest pay off.
The thing that makes the BIGGEST difference to the amount of money you collect each day.
And what dictates how much money you make every day?
Well… the amount of new customers you generate and the amount of money existing customers spend with you…
And what dictates how many new customers you attract and how much repeat spending they shower you with?
Ultimately, your fastest way to create the income you deserve is by attracting MORE customers and getting them spending more money.
The highest pay off activity in your business will ALWAYS be marketing.
And when you look around at all the most successful businesses, then at their head will be an AWESOME marketer.
- Apple is an awesome company. Steve Jobs was an awesome marketer.
- Microsoft is an awesome company. Bill Gates is an awesome marketer.
- Virgin is an awesome company. Richard Branson is an awesome marketer.
But you don’t have to be a Steve Jobs or Richard Branson to achieve your goals.
You do, however, have to firmly commit to NEVER EVER falling into the ‘employee trap.’ You must consistently take action to outsource or delegate each and every activity that does not make the highest and best use of your time. You’ll be VERY glad you did…