Chapter 18
I was talking the other day with my favorite type of entrepreneur, a young person who has found a niche, started their own company in that niche, is hard working, street smart, and creative in operating and growing his business. So there he was in his store, I.D. Drake's Men's Consignment and Music, head down on his computer, posting and writing descriptions for sale items. Good and conscientious, right? Not so fast.
We got to chatting as we normally do and Ian began to describe the new store he is designing and planning on opening in the next few weeks. He just needs the time to finish the design work, he says. Meanwhile, he is alone in his current store posting away one laborious post at a time. So I ask him why he hasn't hired someone else to do the manual labor of uploading these images and descriptions to the website. Here is where he makes the classic new entrepreneur mistake:
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Ian: |
Norm, if I hire someone to do this, I'll have to pay them what, $10 an hour? So that means that those items will need to sell at a price that at least covers the cost of the person working, and quite a bit more to turn a profit. If I do the work and post the images I know that I'll at least make a profit when something sells. I nodded my head and continued looking around his shop. Tons of great stuff in here. |
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Norm: |
Let me ask you something. Do you think your time and effort is worth $10 an hour? |
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Ian: |
Of course. |
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Norm: |
So you would pay yourself at least $10 an hour to work on getting your next store open? |
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Ian: |
Sure, I definitely would do that. |
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Norm: |
Then why aren't you doing that? Ian looked at me in an “I'm not tracking” kind of way. |
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Norm: |
If you agree that your time and effort is at least worth $10 an hour, then why don't you have someone else in here right now doing this work for $10 that is taking up your time and keeping you away from opening up your next store? |
It's always nice to see the lightbulb go off. Ian was making the classic cost versus time mistake that so many new business owners and entrepreneurs make. They look at a task that needs to be completed and say to themselves, “Well, it's definitely cheaper if I do it myself.” And in the beginning it is. When you first start a business it is cheaper and smarter for you to do the tasks and jobs at hand. First off, you know what needs to be done (in theory). Second, you learn what is important and how to actually do the damn job. At this point you are in operator mode, and you stay in that mode up until the point where your success starts to illuminate new opportunities.
Ian was trading $10 an hour, maybe $50 over a five‐hour shift, for delaying opening a store that he expects will double his monthly revenue. For 50 bucks! He admitted that he regularly spends more than that on dinner or drinks and doesn't give it a second thought. Yet here he was on a slow day at his shop doing manual labor when he could be a day closer to opening the next store that will generate much more than $50 a day.
He should have an assistant in there doing the photo uploads and caption writing. And when he pays that person $10 an hour or whatever it is, he won't be just paying that person, he will be paying himself in time.
Time is the most valuable thing that I have ever received from owning my own businesses. To work on my own schedule. To have the freedom to pursue what is important to me. Time to coach my kids sports or stay fit or just freaking think and listen to weird albums on my vintage grandma stereo record player.
Paying that assistant is an investment in himself. It's cheap and the ROI/ROT (return on time) is huge. As soon as you identify that there are more important tasks or ideas that you need to/want to work on in your business, hire somebody to do the things that are keeping you from doing them. To make it work psychologically for yourself (I say this because I know that oftentimes hiring someone else to do work you don't want to do is more a psychological barrier than a financial one), convince yourself that what you are paying that person is really just what you are paying yourself to do a more important job.
Go ahead, pay yourself $10 an hour. You are definitely worth it.