Entrepreneurs have limited resources and many are their own worst enemies, often working inefficiently and constantly trying to do everything by themselves. Unfortunately, having too much on your plate can turn your dream into a nightmare. Attempting to save money by not delegating, or outsourcing work often ends up costing the business more in the long run and limits your ability to grow. Here are 5 ways to stay focused on growth and save money at the same time:
1. Spend Less Time Hiring
If you think your business is saving money by not outsourcing HR needs, think again. Your employees are an investment in the future of your company. If you make bad investments because you think it’s less expensive, you only end up holding your good investments back, and your company will struggle to grow. It is expensive to hire a new employee. Not just in payroll and training time, but also in the cost of lost productivity and growth while you find a new person and that new person learns the ropes. Entrepreneurs often don’t have the staff or the budget to properly handle the nitty-gritty details of human resources so as more people join your company, you may find that engaging a professional HR firm is the best way to help you navigate through the confusion.
2. Eliminate Phantom Work
Phantom work is busy work and/or guilt work. It’s those things that you do to avoid bigger projects, or work that you never intend to do but haven’t yet replied with an answer, or work you probably don’t need to do, but you continue to keep in your inbox because of guilt or direction from someone else. There’s no point in working on things with no purpose, and a key skill in business is the ability to say “NO” to things that take you away from your core focus. The more you say no to phantom work and time wasting (and time wasters), the more you say yes to growth.
3. Mentally Charge For Meetings
On average, people spend about 15 minutes at the start of every meeting chit chatting and “getting ready.” If you have 3 meetings a week, that’s 39 hours of wasted time per year on chit chat and getting ready! Almost an entire work week is lost. Take a look at both your own and your employee’s calendars and see how many hours per week are spent in meetings. Evaluate the cost and benefits of those meetings by placing a monetary value on the time. What is your hourly rate? Say it’s $250 an hour and you have three senior staff members also in the meeting. That adds up to your hourly rate plus their hourly rates combined. Is the meeting worth that cost? Maybe it is and maybe it isn’t but it will certainly give you a different perspective about having the meeting!
4. Outsource Payroll and Accounting Operations
“I’m good with numbers so I can do my own bookkeeping and payroll!” This is one of the most common financial myths business owners face. While it may be true that you can do your own books, that doesn’t mean you should. Accounting and payroll operations, done properly, require an in depth understanding of financial statements, cash flow analysis, wage and hour laws, federal, state and local tax laws…. this is not an area you want to be fumbling around in!
Payroll, especially, is one of those critical functions that will not directly increase sales but carried out poorly, can put your business in a world of hurt. Businesses have to comply with frequently changing employee laws and it takes considerable time and attention to keep up to date with all of them. If you don’t, there are penalties for violating reporting and other requirements. According to IRS figures, 40% of small businesses pay an average penalty of $845 per year for late or incorrect filings. That’s simply wasted money, while outsourcing the function is not a burdensome cost.
The same is true about your accounting. You may be quite capable of posting transactions to your accounting software, but do you truly understand what’s needed to have a firm grasp on cash flow analysis. real profitability by department, profit center, location, service or product line. Let alone have the ability to interpret all that data into projections to understand future cash flow needs and how to move the profitability needle.
5. Maintain a big picture perspective.
It’s easy to be overwhelmed by day-to-day details, to the degree that they all seem like big items, driving up your ever increasing workload. We suggest you block out half an hour each morning (or evening) to reflect on the end game… where you see your business five or ten years from now and what that picture looks like. This will help you eliminate things that are moving you away from that picture today. You may discover that you are spending too much time working on things that are fun or that bring in money but have little or no value when it comes to your end game goals. It may be time to let a few of those things go in order to gain back the time you need to be successful in growing your dream.
Virtual Bean Counters serves business owners and entrepreneurs with remote web and cloud-based finance applications. Let our professional accountants run your daily, weekly, or monthly bookkeeping and accounting, so you can run your business. Contact us by phone at (913) 649-1040 or click here to visit our Contact page.