Are you working 15-hour days and still not making money? It’s a common scene for founders and entrepreneurs: long days at the office and another month with a negative bottom line. This really wasn’t what you had in mind when you started out on this journey.
So, what gives? A closer look at the financials can reveal some critical clues about why you’re working harder and not seeing a profit. Here are a few places that you can start looking:
1. In your overheads: If your overheads are greater than your gross profit, then you need to reduce those overheads. Chances are, you as the owner are trying to cover everything, which is why you’re putting in 15-hour days in the first place. Consider delegating (or outsourcing) the items that you’re not good at or don’t enjoy.
First of all, chances are they’ll get done better, faster, (and typically for less) than by doing them yourself. The other thing this helps you do is free up your time for revenue-producing activities: focusing on the customer, the product, new product development or service down the road in revenue land.
2. Consider outsourcing some of your staff functions: This especially goes for needs that are not full-time. If you don’t need a full-time HR person on staff, then you should be outsourcing that particular function. Same thing with higher-level help. If it’s legal help, you don’t need somebody on staff for that. Same thing with a CFO.
A lot of times, outsourcing companies can do it better, faster, cheaper. By making these costs variable instead of fixed, you can allow your company to save money and also enable future scalability since you’re leveraging the cost outside your business.
3. Project outsourcing: You can consider this for some of your marketing activities. If you’ve got a marketing campaign or a new product rollout, grab onto some expertise for a very short period of time to manage that project through to its conclusion and get you to the other side. Same thing with other types of consulting.
So, if you have some issues internally where you have inefficient operations that need to be addressed, bring in somebody from the outside. Don’t consider hiring somebody on staff that you will not need at the end of the project. Hopefully, there’s a high ROI associated with those kinds of projects and you can pull that person back at the end of it.
All of a sudden, you are adding more to the bottom line as a result of the company’s or individual’s efforts on that project. By using a pay-as-you go approach, you allow your company to bring in top talent as needed rather than locking in fixed expense and then figuring out how to (or if you can) pay for it.
This additional profit will add cash required for future growth. And the other thing it will do is solve the problem of 15-hour work days. You become the conductor of the orchestra rather than the pit member trying to play all the instruments at once. Because you’ve taken out some of the fixed cost, made it variable, and allowed your company to scale efficiently, you’ll reap the benefit of decreasing your days at the office and improve your bottom line at the same time.