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By Brad Sugars

Yes, saving a wage is killing your business.  And, I mean that literally …

I know. I see the accountants saying, you have to run lean to get a decent profit, right?

That’s partly true. It’s also true you need to grow to make profit. You can’t cost cut your way to a fortune.

In business, it seems there are always two sides. For example, if you’re an owner of a retail business, you need to get product on the shelf and also get product off the shelf.

In a service business, you need to deliver the service, and you also need to manage your customer base from the sales and marketing side to build a demand for the service.

So, as an owner, faced with dealing with both sides, which of those areas should you focus on?

If you want your business to be big, you need to focus on getting the business, rather than managing it once it is brought in.

That means you have to get out of doing anything in your business that doesn’t contribute directly to both top-line and bottom-line revenue.

It also means you have to start hiring people to do the things you may be already doing – things that may be more comfortable for you than selling.

And don’t think you can’t afford to start paying those wages. Truth is, you can’t afford not to.

See, many owners hide behind the “managing” side of things, preferring that process to the sales side. They spend hours doing the books or creating spreadsheets or even answering phones in the misguided belief that “busy” equals “business.”

The reality, of course, is that sales equals business, and nothing in business happens until a sale is made. Many owners also have no idea how much their time is actually worth – causing them to engage in tasks or activities that do little or nothing to grow the business.

The way forward is to start delegating routine tasks to wage earners so you can start focusing on the top-line activities that will drive revenues. You need a plan to start, however, because delegation without a system is abdication. And for most owners, there’s simply too much abdication in their companies for anyone’s good.

How do you start? By following these five steps to make sure you are fully engaged on the “bringing in” business side of things at all times in your own company.

1. Know what your time is worth. First, you need to define your value in your business over time. What’s it worth? Twenty, $50, $200 an hour? What do you currently charge for your time in your business? What should you charge? These are key questions to defining the types of tasks you should be doing to leverage your own time and value in your company.Once you know your value, you can easily see how certain tasks can be outsourced to leverage your time.Say you’ve determined your time is worth at least $100 an hour. Will you still mow the lawn, iron clothes or clean the pool at home? Not if you can get those tasks completed for less than that rate – and you will soon discover you can.For your business, you can benchmark this rate against the “Lifetime Value” of your average customer. Say you have a customer who will spend on average of $5000 a year with you and will be a customer for 5 years.

   That customer’s Lifetime Value is $25,000. Now, at your rate of $100 an hour, will you continue to answer phones or work up your monthly financials?

   I’d hope not. Especially when your time is better spent finding more “average” customers.

2. Figure out where you spend your time. Keep careful track of how you spend your time in your business for a week or two, and you’ll have a better handle on how you can adjust your tasks and activities in more profitable ways. Most owners will find very little time goes into actually getting sales, while most of it is spent on delivering the product or service, administrative or managerial tasks and functions. Remember the 80/20 rule:  80% of all results come from 20% of effort. And if 80% of your efforts are managerial in nature, you can immediately see where your sales results are at.
3. Delegate routine, administrative or basic tasks. Once you have a handle on how you spend your time, start to find ways to systemize your most routine functions and delegate them to wage earners. Start from the bottom up, and make sure you have a system in place before you place an untrained person in a position.
4. Get more training – for yourself. Take an honest assessment of your sales and marketing abilities, and if you need help – go get it. You, of all people in your company, might be the biggest beneficiary of additional sales or marketing training. You can’t get additional learning and education if you are tied to the office doing books or answering phones. Again, pay the wage to someone who can do it better and for less money than your time is worth, and brush up on the skills you need to boost your business.
5. Just do it. Get off your backside and actually start to engage with your customers. Strike up a conversation. Call and ask how they are doing. After a while, they’ll be impressed enough to start referring your business to others – which is by far the best way to leverage your “sales” time in any business.

Then, once you get enough referrals coming through your sales pipeline, you can once again become a manager – this time of a fortune.

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.