Many small business owners are former executives or technicians who earned considerable money through employment. Their former salaries ranged from $50,000 to $250,000 plus not including benefits. Yet, when starting a small business, suddenly their own value appears to dramatically diminished.
Due to a belief that cash flow is limited when first beginning, these entrepreneurs wear many hats such as: accounting, administrative, human resources, marketing, sales, visionary and general “go-fer. ” These hats continue to be worn as the business grows because of the entrepreneurial belief that “No one knows my business better than me” or that “I can do it better and usually cheaper than anyone else. ”
Both of these beliefs contribute to a third, mostly subconscious belief, that my time has no value. This is probably the most detrimental belief that any business owner can embrace. Why? Please let me explain.
A Typical Scenario-The small business owner decides to file his own taxes because he can save $500 to $2,000 by not hiring an accountant. Since he has 6 employees including himself, he also takes care of all personnel issues. With an emphasis on sales, he believes that he can save another $5,000 a year by designing and developing all his marketing pieces. His website is professionally designed, but he has the ability to make daily updates. He does allocate $5,000 for memberships in several organizations including a chamber of commerce, a professional association and a formal networking group. This entrepreneur makes many, if not all, of the runs to the bank and post office. And to wear all these hats, he works very long hours. At the end of the year, he looks at his bottom line and possibly he made his previous salary and then some. Now, he feels anywhere from frustrated to really great.
So what’s wrong with this picture? Simply speaking, this small business owner is working harder not smarter. If he focused on his strengths that being developing a customer base, working sales leads and building productivity or profits, would he not have the money to pay for many of those other hats that he has been wearing?
The real answer to this bad pictue is the owner's belief that his daily actions have no measurable value. By applying a $100 an hour rate to every activity, he can then do the math and see an entirely different picture of return on investment for his time. That $100 an hour is what his expertise, intellectual capitol or sweat equity is worth and in all honesty it is probably closer to $200 per hour. Until this small business owner believes that he is worth at least $100 per hour, he will probably continue to work in his business instead of working on his business. The end result is that he is losing tens of thousands of dollars while trying to save a few thousand dollars.
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