This is a guest post from Graphic Rhythm Designs.
Why did you start your venture?
If you’re like most entrepreneurs, then it was one of the following reasons:
- You wanted freedom from your routine,
- You were passionate about an idea and wanted to bring it to life,
- You desired to make more money than you do at your day job.
Irrespective of the source of your motivation, a vital issue for most small business owners is the scarcity of time. Work hours stretch into midnight and weekends as well as vacations.
For quicker business growth, you need to let go of working like an employee. Here’s what I’m talking about –
Why You Need Work On Your Business And Not In It…
Most small business owners act as the sole fireman that’s available at the beck and call during a business crisis. They are the first ones to enter the office and the last to leave because they want to lead by example. Work keeps piling up every day, and new “urgent” tasks keep surfacing on their plate.
Well if you’re stuck in such a scenario, then you’re a classic example of working in your business. But there’s a way to free your time and create space for your growth.
Instead of micromanaging and spending time with every task, you need to find out your strengths and delegate the other responsibilities. Also, give your employees the authority to make certain kinds of decisions by themselves.
Thanks to the boom of the freelance economy, you don’t even need to onboard a permanent workforce. You can hire contractors for taking care of one-off business tasks like copywriting, editing, website development, and graphic design (we can do custom designs at affordable prices for you!)
For doing the same, the first step is analyzing your market value. Let’s look at how to do the same:
Calculate Your Hourly Rate!
Most small business owners either pay themselves very little or not at all. It’s unfair because as a hard-working entrepreneur, you owe yourself a reasonable compensation.
After you deduct expenses for smoothly running your business and paying your employees, do you still have cash in the bank? If it’s a healthy amount, it means that your business is decently profitable. And depending on your business goals, you can pay yourself from this leftover cash.
Assuming that your business is in great shape financially, what would be a fair wage that you would pay yourself? A study by American Express OPEN found that the average salary for small business owners stands at $68,000 per year. However, I recommend you to refer the detailed guide by Fundera here to determine how much you can take home.
Now, how can you arrive at your hourly rate?
Step 1: Divide your annual salary by twelve (for 12 months) to arrive at your monthly wage.
Step 2: Suppose you decided to pay yourself a salary of $72,000, then monthly it comes down to $6,000.
Step 3: Considering that you work 40 hours every week and four weeks in a month, you work 160 hours in a month. So divide your monthly salary by 160 to arrive at your hourly rate.
For example: If your salary stands at $6k/month, then you earn $6000/160 every hour, which comes down to $37.5/hour.
Pro Tip: As a small business owner, you might actually put time outside 40 hours on your job. To calculate a more precise hourly rate, you also need to take the following hours into account:
- Your commute,
- The occasional legal and administrative tasks you perform,
- The non-work hours outside your workplace that you technically spend working (like checking your email on your Smartphone at home).
Outsource These Two Kinds Of Tasks
In a conversation at The Economic Club Of Washington, Jeff Bezos (Amazon CEO) said that his only job is to “make three good decisions a day.” You watch the full interview below:
Isn’t he right?
If you want to grow your business, then spending time on your business strategy and decision-making is essential. You need to create space and time in your day for the same.
A few other important tasks you need to spend time with include networking, generating leads, hiring and managing employees, and the like. These activities might not directly generate revenue but build your competitive advantage.
Specifically, there are two kinds of tasks that you can consider outsourcing. Let’s look at both of them:
- High-Value, High-Skill Roles: Keeping accounts of your business, software development, Graphic Design, Copywriting and banking requires specialized knowledge and skills. They are risky to keep for yourself. It’s best if you hire specialists that can quickly complete these high-value tasks for you. Here are a few service providers that you can use:
- Capforge for bookkeeping and taxation help,
- LegalZoom for legal advice,
- Upwork for hiring freelance software developers,
- Graphic Rhythm Designs for branding and design work
- High Value, Low Skill: Similar to the first group, tasks like data entry, posting on social media, email management etc. are tasks that need to be done, but don’t need to be done by you. Outsourcing this type of work is very affordable and easy
While outsourcing in both of the above cases, always consider your hourly rate. If you pay someone else less than you pay yourself, then hiring external help makes sense. It allows you time to focus on high-value tasks.
Most small business owners are uncomfortable with the idea of outsourcing because of the additional cost. They keep warming their desks and trying to take care of every business task by overworking.
However, it’s unhealthy and leads to burn out. For the long-term success of your business, you need to work both smart and hard. You need to streamline your workdays and free your time from low-value tasks.
I have shared how to calculate your hourly rate with examples of specific tasks that you can consider outsourcing. (And I look forward to hearing your graphic design requirements).
What are the tasks you have experimented with outsourcing? Let me know in the comments below.