I read an interesting post the other day, about calculating effective hourly rates for those of us who chose not to work just in hourly sessions with 1-on-1 clients. Consider the entrepreneur who spends 5 years drawing only minimal income while building a business he then sells for a cool couple of million – effective rate $400k a year!
Or the coach who does four one-hour group coaching sessions for 12 clients at $250pcm each. Even allowing for it taking maybe as long again in marketing and networking to assemble the group, that’s an hourly rate of $750.
All those sums got me thinking about the amount of work we do to create our businesses – and the effective cost of trying to do things ourselves.
When I left corporate life, I was on about $75k a year. That means every year, I’m investing at least that much in my business – the corporate salary I’m foregoing. And when I choose to do stuff myself that I’m not especially great at, or that I don’t really enjoy, that’s the sort of money I’m effectively spending on it. Expensive!
I’m reminded of what NLP speaking trainer Topher Morrison was told by an early mentor: the only thing you should be doing in your business, is the thing that only you can do. Everything else can be outsourced. That may be a bit extreme for a small business, where everyone has to pitch in, but it’s good advice if you want your business to grow.
I use a simple grid to decide what should be outsourced – as is typical for an ex-consultant, it’s a 2×2 matrix. The two dimensions are: how expensive is it to get someone else to do it (relative more or less than your effective hourly rate), and how critical is it to what makes your business special – see the picture below. I find it very useful in figuring out what to do myself, and what to outsource.
Try it, see if it helps you.