Wednesday, June 30, 2010

Don't Get Too Busy to Be Successful

In my travels, many of the people I meet with are owners of small businesses, and I have found, both in my own experience, and theirs, that there is a common trap that many small business leaders fall into. That is the trap of thinking that anything I do myself is free.

On the surface, this makes sense. If you have someone else do it, you have to pay them, and that costs money out of your pocket. If you do it yourself, you don't have to fork over cash immediately. Thus, costs less, right? Wrong!

If you run a business, your business does something, and you probably have some skill in doing so. You should be building things, writing things, selling things, networking new opportunities, negotiating contracts. You should be doing all that stuff that owners do!

In economics, there is a concept known as opportunity cost. Opportunity cost is the true cost of something. It is the highest value alternative. If you are offered free Red Sox tickets and free Nightwish tickets for events on the same night, and you can only go to one, then the cost of going to the Red Sox game is nothing, since the tickets are free. However, the opportunity cost of going to the game is missing the Nightwish concert.

So, if all calls into the office ring your phone, and you answer this phone and set all the appointments, confirm all the clients, and do all the other phone work, the cost is nothing, but the opportunity cost is all the other things you could be doing with that time, like training staff, developing advertising, attending networking events, not to mention the lack of focus that such interruptions may cause.

Every business is different, and every business is in a different place financially. Perhaps you are in the place where the money simply does not exist to hire a receptionist. That is another story altogether. In that case, bookmark this post and reread it when you have some cash flow.

However, if your business has cash flow, look at what the principals of your company do with their time. Are they spending their time turning their valuable skills into revenue for the company, or are they spending their time on tasks that could be performed just as well by a high school student looking for experience in the working world?

Not sure if the principals in your company are putting their time to the most effective use? I do offer free consultations, and that is time with a very low opportunity cost.

Thank you for reading. As always, I implore you to get out an talk to real people face to face, but only in the way that is the most effective use of your time and talents!

1 comment:

  1. This goes hand in hand with another blog post I read today, One of the mistakes people make is not narrowing their focus to one audience that they can dominate and spreading themselves too thin always doing something they can't master.

    Take the term "consultant", for example. The most frustrated business owners I know are consultants, and when you ask them what they do, they give a Corporatespeak answer about business and success and return on investment. Instead of narrowing down their focus to consulting on one small aspect of a business, they choose "training" or "supply chain" or "human resources". Therefore, they end up in the situation you're talking about, where they can't grow and monetize what they do because they're caught up in the minutia of what they think they need to do (or have always done) and end up juggling a myriad of issues. Instead, focusing on a specific subset of those topics is the way to go. They're also trying to keep expenses down, file their business taxes, marketing and sales all at the same time.

    As you said, talking to people face to face is good, but talking to the right people about the very specific talents you can bring them is even better.