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Leverage
By SueCanyon | September 3, 2007
There’s been a lot of talk lately about leverage. Most business owners think of leverage as borrowed money. But the new definition is closer to leveraging time… your time.
Leverage, as it relates to time rather than money, is not a new concept. Back in the late 70’s my mentor would say, “We have to do the things we can do, so others can do what we can’t.” At that time, we were in an engineering environment, and the engineers were the stars. What he meant was that we needed to do as much as we could for them, so they could spend every moment doing what none of us business-types could do.
I quickly turned that around and began using the same concept, “I need to get someone to do what they can, so I can do what they can’t.” I have to tell you that the concept has made me very successful. I teach it to business owners almost everyday. But still many owners feel as if “it’s easier to do it myself than to teach someone how to do it.” But if you spent a few minutes teaching someone how to do something, after a couple of patient sessions with the trainee, then you would never have to do it again. Spending that few minutes… how much time would you save by NOT performing the task yourself? And then, how much more money could you make by channeling that energy elsewhere?
I wish I had a nickel for every business owner that I encounter who wants to “change the oil” because it “relaxes” them. Some figuratively, some literally, but taking time after a busy day to do something that you could hire done for very little cost is not good use of your time. But for some reason (we all know what it is), business owners feel that they are the ‘free’ employee, so if they do some of the drudgery work, they will be saving money for the business. This couldn’t be further from the truth. Unless you have someone else running your company so you can do just that one task that you love, your time is far more valuable than anyone else’s at your business.
And, lastly, I have owners who tell me that the reason they continue to ‘change the oil’ is that they want to show their employees that they would not ask an employee to do something they wouldn’t do themselves. Well, I have to tell you that when a woman owns and operates a moving company, it’s a valid statement. I had to go out on moving jobs and work right next to the men each time I hired new employees, because they needed to see that I understood the customers, the drivers, the teamwork involved, and that I especially understood the work. It also showed them that I cared about them, and that I cared about the quality of the work.
But once I had their attention, I didn’t have to continue to do ‘their work’. Because it is their work. When an owner keeps doing something that the employee feels is their work, they begin to question whether the work that they are performing is ‘good enough’ for you. They often think that you’re trying to micromanage, and that you don’t trust them to get the work done without your direct supervision. Some employees also think that, if your job is not important enough for you to concentrate on, then they won’t think of your work as important either. And what is the important work that they think you should be doing? The answer is ensuring that they always have work and that problems are solved in short order. If you’re not concentrating on planning and executing a strategy, how solvent will the company be into the future? How secure is their job? So, stop changing the oil, and focus your energies on finding someone who can do what they can, so you can do what they can’t.
I teach it… but this recent media focus on an old concept made me realize that I was not personally applying leverage to my business as much as I once had. Yes okay, working with the internet is leveraging my ability to get this training out to a wider audience than if I were to deliver it personally as I have in the past, but there was a problem. The effort seems to have had the reverse effect on my time. The more I offload mundane chores to someone else, the more time that becomes available to me, the more time that clients want my services, rather than giving me more time to write. Now don’t think this is a sales pitch because I have WAY too much work right now.
But I just wanted to tell you what happened when I, a female business entrepreneur, began to take a second look at leverage as it relates to my own brick-and-mortar business and life.
First, I must offer a couple of disclaimers that may not apply to many of you… One, is that my family obligations are minimal. The other is that I am a work-a-holic. Oh… you are, too?
But do we really want to be? I dearly love helping business owners, and I’m sure you love what you do too, but wouldn’t you like to tour Italy someday? Wouldn’t you like to raft down the Grand Canyon before you feel too old to get into the raft? Wouldn’t you like to get a regularly scheduled massage? Or have more time to go to the gym or to spend with your family?
For this example I have to confess that my work-a-holism is extreme. I spend pretty much every waking hour working either with my clients or on products and writings for you, dear reader. So as I examined my own leverage points, it became clear very early that the first thing I would have to do is get a bookkeeper. It took awhile because as you may be aware, I’m VERY picky when it comes to the score… yours and mine.
Once I found someone who would come in once a month, work in my office on my software, file all the government reports and taxes that need filing, and give me a proper score, a great deal of weight came off my shoulders. She works until she’s done posting revenue and costs and filing the employee reports and taxes for the month. I pay her $50.00 an hour. She’s fast and efficient, and doesn’t get distracted at anything surrounding her because she’s on my turf and she has no other responsibilities here but this one task.
It would take me longer to do that task, and I bring into the company a great deal more revenue per hour than that when my time is freed up, but what’s more important is that my mind is freed up to write, to do planning, to develop new products for you. And, I don’t have to worry about being late with government reports or tax payments.
My next problem was exercise. I need exercise as do we all. I live in the desert and LOVE to hike. But sometimes it’s far too hot to take a hike in the afternoon, and I write in the mornings. Sometimes, it’s far too cold to get out. Sometimes the wind is blowing so hard that it weakens the value of a nice hike.
Combine this with the fact that I don’t watch much television, very little in fact, but I do like to look at detective programs like Sherlock Holmes and such. They tend to be broadcast just when I should be writing. So I decided to solve both problems with the purchase of a DVR and an exercise machine of some sort.
This decision was very scary. Having owned a moving company, I’ve seen far too much exercise equipment become dust collectors in people’s basements for me to make just a casual purchase. I shopped very hard to find something that would fit me, that was quiet, that could be a fixture in my office, that would exercise me properly, and that my employees might use if they wished.
After months of fretting over the solution, I finally purchased an elliptical trainer from Octane Fitness. I LOVE it! And so do my employees. It feels great because they’ve ergonomically engineered it to work with the natural movement of the body. Everyone who has stepped on it is amazed at its feel and performance. (I have no sales relationship with them, but here’s their site, http://www.octanefitness.com/.)
I have it parked in my office where I can use it for any ten minutes or more that I can squeeze together. I often listen to training tapes while working out. When I need a break from writing, I can get my blood moving while watching an hour-long detective show in 40 minutes as I fast-forward through the commercials. So, now I’m getting my exercise AND listening to or watching something that I enjoy.
This brought to light for me the concept of doing two things at once. While the bookkeeper is working, I can write. While I exercise, I can train. So then I thought, let’s keep this going. Why am I doing housework? Why am I cooking?
You might be asking, “What does this have to do with business?” Well, remember that I said I was a work-a-holic, so I work even while at home. Now, while I write, my house is being cleaned. While I go to a doctor’s appointment or get my hair done, my meal is being prepared. While I exercise and listen to a training tape, my shopping is getting done.
Think about the time it takes you every week do to the shopping, the bookkeeping, the cooking, running the dry cleaning, learning that new thing you can’t seem to get to, exercising, going to your regular appointments, the massage you promised yourself (for how long?), and whatever else you have to do that doesn’t make you a dime. Including drive time, I’ll bet it’s more than 16 hours a week, six or so of which you have to take during the workweek which you feel compelled to ‘make up’ after normal hours or on the weekend, and the other ten you try to squeeze in after you get home. That pretty much takes up your entire life.
Now, think about what your life would be like if you could get all that done in one eight-hour day or less per week. What if you made all your appointments, back-to-back, on one day, including the massage? What if, on that same day your house was being cleaned, your groceries were being purchased and put away, your laundry was delivered or washed, and you still had time to exercise and listen to your training tape or watch the news?
Let’s look at the scenario now. You’ve been to the doctor, the hair dresser, the masseur, and taken your exercise. You’ve been away from work for four hours rather then six. You get home and the house is spotless, the clothes are clean and put away, and dinner is waiting for you on the table. There are groceries in the fridge, and the yard looks great!
What if these were true? The guilt of not getting the deep (or light) cleaning done in your home would be lifted. You would feel better for getting the exercise (not to mention the massage) and might even lose some weight. The six hours a week that you were ‘making up’ would be reduced to four. The ten hours that you were working around your home in the evening would turn into opportunities to split between your family and work, if you chose to. You could spend that extra work time developing new strategies for leverage or expansion rather than on the day-to-day things you work at now.
You might even be eating more healthy foods because, if you’re anything like me, you just want something to fuel you, and it has to be easy… so we rely on any quick fix, like eating out, and we eat too much or the wrong things, or both. Or we forget to eat, and then get too hungry and can’t think, then blow it with donuts and coffee. When you have someone else cook, you can always have food… the food you know you should be eating, rather than the food that is simply available.
I can hear you now, “How in the world am I going to be able to afford something like that?” Let’s figure your budget. To do this, we need to figure your value to your company. At this point, business owners either quote their hourly rate or their profit from last year, both of which are usually too low.
Let’s look at it another way. If you had twice as much revenue, how much profit would your company make? I hear you again… “Twice as much revenue means twice as much work on my part!” Well… together, we’re going to break that cycle. (Why don’t you bookmark this blog site or sign up to get e-mailed each time I put up an entry on the blog. Don’t worry, I only use your e-mail address to send you blog entries, and it won’t leave my server.)
So, twice as much revenue would generate how much profit? “Twice as much profit,” you say? No. Once you reach your break-even revenue level, your profit actually increases by the percentage of your overhead on the revenue over the break-even level. (‘Don’t know how to figure your overhead or break-even? You really need the Action Pack lessons!) So, if your profit was $30,000 last year, it might be possible to make $100,000 or more if you doubled your revenue. The value of making this change might be around $70,000. You could be well cared for at less than half of that amount.
What is the value of the lack of guilt for not getting some things done around the house and yard? What is the value of more sleep at night? What is the value of a better physique? And what is the value of more time with your family?
And how many more incredible revenue generating ideas will you discover once you get more sleep at night? How much better of a business person will you be when you have time to listen to seminars that teach the subjects in which you are weak? Can you triple your profits? You bet! But you have to make room to do it. And then get some training. (Go have a look at my website to learn more about increasing your profit by 300%. http://www.profitpowerpack.com/)
I have to tell you that I, personally, can’t believe how much more I’m accomplishing at the office and at home, how much better I feel, how much more revenue-generating work is coming to me as a result, and how easily I’m handling all of it, just because I began practicing a concept that I learned so long ago… to get someone to do what they can, so I can do what they can’t. Try it, and see how your business… your life, changes.
Let me know how you’re doing. And remember, you deserve to get paid.
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Topics: Other Mistakes, Partners, General |