Passing on the Procrastination Busting Baton! Post 2!
Carrying on from the first post in this procrastination busting tips series of blog posts, here is my second instalment!
When should I start outsourcing? Can I afford it?
One of the things that a lot of people struggle with when they first start their business, generally involves something to do with pricing structure. Don’t worry we’ve all been there! Some industries may have a ‘going rate’ for an XYZ consultant, but even still there are people I have met who think “am I really worth that”, so to try and get them into a different mind-set, I use the following. (Oh, and yes, you are totally worth it! 😉 )
When talking to a potential new client, I get them to work out their cost per hour. Or decide on the figure that is what they effectively wouldn’t want to get out of bed for less than. They don’t have to tell me, but it’s really important that they know it for themselves! There are many calculators that you can find on the internet, or pay your hard earned cash to a business consultant to use, but, as a basic formula I suggest the following as a starting point…. You can then modify it to suit as you see fit!
- Work out your total personal monthly costs (bills, mortgage etc that you need to cover from your salary/pay) + Total monthly business overheads
- DIVIDED by 4
- DIVIDE this number by total number of hours per week you *ideally* would like to work on client ‘stuff’
- Double that figure (allows for holiday/sick pay, the taxman’s slice, pension & NI contributions, ad-hoc expenses & emergencies, business admin hours, outsourcing, and growth opportunities!)
So for example…. If your personal bills are £1,000 per month, plus regular business outgoings (phone, office rental, rates, staff wages etc) are another £750 then figure (A) would be £1,750. Divide this by 4, equals £437.50 (minimum) per week that you need to make just to cover your regular, budgeted ongoing costs. Divide £437.50 by how many hours you want to work a week, on client ‘stuff’, typically 30-35 if you are running your business full time? Let’s use 30 for the sake of argument. This equals £14.58, when we times by 2, you get £29.16 (Are you still following? Good!) So let’s again (for arguments sake) round up to £30 per hour.
Whenever I meet someone at an event who says they are busy, but not doing the things they love (or their core business offering), but wanting to grow their business, I always tell them to outsource – although yes I might be biased. Most of the responses that I get back are “But it will cost me money”. Yes, this is true – however, let me get you to think about it in a slightly different way…
If your minimum hourly rate (that you’ve worked out using the above formula) is £30, then why wouldn’t you outsource your expenses to bookkeeper who might charge £20 per hour? For every hour of work they do, that gives the potential for you to earn an extra £10 per hour! Remember, this is a MINIMUM charge per hour. If you work in an industry where the ‘going rate’ is double what you’ve worked out then happy days! That gives you plenty of scope to outsource your procrastination busting tasks and do more directly billable client work. Does it still make sense for you to do stuff you hate, when you’ve got the opportunity to earn more money doing things you love? If you decide that actually you want to work LESS hours, but earn the same money (and who wouldn’t right?!) then you can use this formula to work out what figure to start from to make this happen…
The same figure (A) of £1,750 divided by 4 is still £437.50. When you only want to work 20 hours per week you get £43.75 (once you’ve factored in tax, NI & growth) – so it makes even more sense to outsource your tasks!
So if you’ve got a presentation that you need putting together, documents that need formatting or a social media plan that you want to follow, give me a shout and let me help you earn to your full potential!
To read the other blog posts in the series once they are published, click here!