Is the juice worth the squeeze?*/
Do you have a job or do you have a business?
Owning a business is a dream for many, but sometimes we forget to step back and ask, is this worth it? When working with companies, few can confidently tell me the value they add to the business is improving the overall return on investment.
Here is what to ask yourself to find out if the juice is worth the squeeze.
Do the numbers add up?
Working in the business instead of on the business is the most common trap owners fall into. So, what return am I making? In How To Self Assess Your Business, I discussed understanding your bottom line to make confident decisions. What numbers was I referring to? It included your:
- Profit and Loss Statement,
- Balance Sheet; and
- Cash Flow.
Why? Because in Australia, over 40% of businesses that close do so because of poor cash flow management. In the USA, this statistic is around 80%. On paper, how does it look? Good, bad or really ugly? Now is the time to assess if you generate a favourable ROI. To learn how to work out your return on investment, check out this step-by-step process from the Australian Government. You need to ask yourself, are you generating a return on the money you have invested? How much profit do you generate for every $100,000 you invest in your business each year? Is it 5%, 10% or 20%? When you clearly understand this dollar value, you can compare it to other investment opportunities. The questions we ask our clients when we reach this stage is:
- Could you earn more working as an employee elsewhere?
- Could you invest the funds in another investment or business opportunity?
We aren’t in the business of crushing your business dreams, but when you know your ROI, you can take the correct form of action towards profit improvement, finance opportunities, selling your business, attracting investors or an alternative investment strategy. Understanding the ROI provides you with the freedom to pivot and invest your money to reward you better; best of all, we can show you how.
Do you deliver the best return?
“It often comes down to the owner’s time vs. cost (or income loss). It’s great to learn new skills, but assess whether it’s a skill you need long-term from an efficiency perspective. I remember working as a real estate salesman early in my career and telling my manager I was going home to change the oil in my car. He chastised me for not making more sales calls which would have made me more money than the savings on the oil change. You can always hire someone to ‘change the oil in your car.’” — Curtis Way, president, RMS Group
Are you spending your time on high-value activities? It can be easy as a business owner to be an ‘all-rounder’ and take on every task as it seems “easier”. Spoiler, it never is, and what it ends up doing is costing you time, money and energy.
“It is all about opportunity cost. What are you giving up to learn something new? As an entrepreneur, when you add to your team, in personal terms, it’s outsourcing. Sure they might be employees, but it’s personal outsourcing because you can’t do it all, and your greatest value is in other areas. The great leader is the one who relies on a great team, not the one who does it all, knows it all and stands alone. The Jack of all trades will never be as successful as the master of one.” — Darryl Moore, vice-president of marketing and communication, Executrade
A sign that you aren’t focused on the most critical tasks includes missing or turning down work. When this starts to occur in your business, you don’t have the capabilities to attract or accept new opportunities due to limited resources. It should always be viewed as a wake-up call that what you are doing is not sustainable.
When you accept this truth and decide it is time to hire someone, it is essential to look at it as an investment, not a cost. Hiring someone to take the workload off you allows you to make a passive return as an investor in the business. If you are hiring your first employee, I encourage you to read this checklist from the Australian Government.
Do you love what you do?
Many business owners stare blankly at this question. We generally start a business out of a desire to fill a need, but that doesn’t always last. We at times, forget to check in with ourselves and ask if we actually love what we do.
The cruel reality is when you start a business, you’ll generally do less of what you love—starting a creative agency because you love creating content for clients? Soon that will be replaced with managing a team, handling clients, sourcing new leads and tending to stakeholder relationships.
There are certain areas to pulse check in your life to decide if your business is no longer enriching you, these are:
- Your physical health. Do your responsibilities allow you the time to exercise, get outside and eat healthy regular meals?
- Your mental health. Is your business causing you to stay awake at night, feel unrelenting stress, experience anxiety and isolate yourself from family and friends?
- Your relationships. Does your business allow you to attend important events for your child or spouse, make that birthday dinner for a friend or take a family holiday?
This is a hard and fast way to determine if what you are investing is worth it. If the numbers don’t add and your personal pulse check is coming up short as well, it’s time to re-evaluate.
Make the right decision for your business
If all these questions have left you in an even more uncertain position than before, you don’t need to feel overwhelmed. This is where Aurelius Advisory comes in; this is what we do; we untangle knots and set you on the right path. Running a business is hard, but it doesn’t need to cost you everything financially, physically and mentally. Start with booking a free strategy call