Does this question mull about in your head regularly but is quickly dismissed by the other part of your brain that reminds you – THAT COSTS MONEY.
Don’t worry you are not alone. In fact every one of my clients have been in that boat. You see bookkeeping or rather data entry is a pretty low skilled task that business owners feel they can, and often do, absorb into their gammit of tasks to do in a day. I liken it to cleaning… yeah I can clean my house, I hate doing it, but its not a difficult task and it will save me money. But does it?
The next question, as a business owner, that you must ask yourself is, how much do you VALUE your time. I recently listened to a podcast on ABC RN that explored the notion of opportunity cost with author of book Economics in Two Lessons, by Professor John Quiggin. In the podcast, he discussed the cost of giving up opportunities, how to identify them and how to value them. This got me thinking about the decision business owners make when they outsource business functions. Business owners are quite capable of doing most functions of running a business themselves, but savvy, responsible and strategic business owners realise that by doing these menial tasks, they are forgoing so many opportunities to develop themselves and their businesses. Not only that but they are wasting the biggest resource in their business – THEMSELVES.
Let’s look at an example. Here is our avatar: 41 year old male business owner, runs a small confectionery company that wholesales products and sells at markets. Has been in business for 5 years, has 3 staff that assist with the manufacturing, packaging and selling. Business owner has a very loyal customer base and is instantly recognised by customers. The business owner expect a high level of quality control and is very hands on with all aspects of the business. The business owner has 2 kids under 5 and one on the way. Every Sunday night, after kids have been put to bed, the business owner sits down to do 5 hours of data entry, including payroll, keying of suppliers, paying of supplier and employees and ensuring the bank reconciles. Business owner intends on looking at the performance of the business, but by the time these tasks are completed, can barely keep his eyes open and knows that his daughter, who has an ear infection will be up in 3 hours.
Now if we break this scenario down in the language of opportunity cost, it looks like this:
- Cost of owners time – this is often hard to value, but if we assume that one day the business owner was recruited to perform the same tasks under an employment basis – considering their expert, technical and management experience, this will get you close to a value.
- Foregoing income opportunity by not spending that time putting in strategies to line up new customers, or packaging to dispatch orders.
- Cost of not spending time with family – well this is priceless.
So the short of it – as a business owner, YOU are the most valuable resource in your business. Don’t we wasteful, be strategic, ensure your time is being allocated in a way that will maximise your opportunities.