You’re an entrepreneur. You’re monetizing your passion and growing a business that will make an impact on people.
But, the thing is, you’ve also got to market this business so people know it exists.
So, what do you do? Do you learn everything you can and DIY it? Or do you take the leap and outsource it to someone who knows what they’re doing?
Making any type of investments for business growth can be scary, especially when you still feel like you’re in the early stages. You want to be able to grow your business, but you also don’t want to grow so fast that your revenue can’t keep up!
Some people invest in a team right off the bat, taking a riskier approach to aggressively pursue higher income potential from the very start. Others prefer to bootstrap their business for as long as possible – DIYing everything they can to keep costs at a minimum while they figure out how to bring in revenue.
How do you know when it’s the right time to outsource? The answer is different for everybody, but I’m going to walk you through the decision-making process so you can figure out the right answer for you!
Know Your Role
Outsourcing and growing a team is a long-term business decision, so we need to consider your long-term goals before making any moves!
What is your ultimate goal for your business?
If you’re planning on capping out your business’ growth and keeping it small, you may intend to stay a “solopreneur” indefinitely. This is often seen in women who are just trying to generate a small side-income to contribute or find something productive to work on in their free time. If this is you, maybe you aren’t investing in outsourcing – but you will be investing in resources to help you DIY! (So stick around – you’ll still learn something here!)
However, a much larger group of entrepreneurs out there are aiming for growth. Whether you’re building your freedom business to stay away from a 9-5 or simply pursuing a mission that lights you up every day, you need your business to be streamlined and scalable.
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If that’s you, you’re going to have to consider how you want to grow your team, because you will need help. Take it from someone who stubbornly tried to do everything herself for too long – and failed (miserably).
So start thinking now about what you’re good at. Most likely, it’s going to be the thing that you’re in business to do! If you’re a blogger, you create content. If you’re a website designer, you design websites. If you’re a bookkeeper, you work with numbers. Know your gifts and know what brings money into your business. That is what your role is.
Everything else is on the periphery! They’re the support team – the marketing, administration, customer support, web development, and whatever else sits on the sidelines is probably going to be someone else’s job one day. Even if you’re not ready to outsource it yet, knowing that you’re willing to, will help you plan strategically ahead of time.
Know Your Finances
Once you’re willing to ask for help and once you know where you need help, the next question becomes: “Can I afford help?”
This is where people’s opinions differ. Some will tell you that making scary investments is a sign of your commitment to your business – that you will be rewarded with a greater return for your willingness to make the big moves.
We’ll talk about Return on Investment in a minute, but I will say that I’m a risk-averse numbers gal, so I’m not a fan of that approach. Instead, I choose to plan intentionally for every dollar that moves in and out of my business. I work with the numbers that I know; making major business decisions off of “predictive math,” also known as “wishful math,” isn’t my style.
So instead, I recommend setting aside a small percentage of every dollar you make to go into a future business investments fund – even if you don’t know what you’re saving for! Having the money set aside will mean that when an unexpected opportunity opens up (for example, your favorite social media manager has finally opened up a new spot!), you’re ready and able to take advantage of it!
Actually, I recommend using percentage-based allocation for all of your business budgeting! It’s a much more effective way to budget for variable income versus trying to project your income. Plus, this will allow us to know that everything important is covered so we can spend the remainder guilt-free!
Percentage-Based Budgeting
If you’ve ever heard of the Profit First system, this may sound familiar. But here are some suggested percentages for the primary areas you should be allocating your money towards:
- Profit – Approximately 5% – let this serve as your business’ emergency cash cushion and guarantee for profit!
- Taxes – Approximately 15% – for paying your income tax liability. Always consult a professional for a personalized recommendation.
- Owner’s Pay – Approximately 50% – a fund where you can draw your paycheck from. Only draw your desired salary and leave the rest so you can start providing yourself a consistent income!
- Operating Expenses – Approximately 30% – for paying all your business expenses. I recommend designating a chunk of this money every month to go towards your future investments (for example, put 25% towards regular expenses and 5% to savings for a total of 30% to business operations).
While the above percentages are general recommendations, they’re not always the right fit for everyone! To get a more personalized set of percentages for where your business is currently at (and/or where you want it to be), you can connect with Katie via Instagram where she shares all of her tips!
Intentional Money Management
Traditional Profit First recommends you manage these funds in at least five separate bank accounts (an account for income, profit, tax, owner’s pay, and expenses). While this is an excellent system, not everyone loves the idea of all those bank accounts.
Because Profit First relies on very specific principles to guarantee success, the only alternative I recommend is the budgeting tool You Need a Budget (YNAB), which is a virtual cash envelope system that effectively mimics the bank accounts in a way traditional budgeting software does not.
The point of this percentage system is for you to be intentional with your money management. You can easily look at the $3,000 in your bank account and think that spending $1,000 on outsourcing will be a safe move. But did that $1,000 already have a job? Does it belong to the government for taxes? To a payment plan, you already signed up for? To a bundle of subscriptions that you forgot you had?
Having a deliberate, visual plan for every dollar you have in your account(s) is the key to making smarter spending and investment decisions.
Know Your ROI
So we’ve considered what you want to outsource and whether or not you can afford it. Now we need to determine how we’ll know if it was worth it!
A huge consideration for any new investment is whether or not you’re going to receive a return on that investment.
Return on Investment (ROI) can have multiple meanings depending on your context. From a financial perspective, you’re usually looking for a tangible calculation.
For example, you invest $500 in advertising and track your sales. You determine that $1,500 of sales came directly from your advertising efforts. A $1,500 Return divided by a $500 Investment means your ROI was 3:1, or 300%. In other words, for every dollar you invested, you earned $3 back. Not bad!
However, ROI may not always be so easy to calculate. Sometimes the return on investment is more of a long-term change in your business that’s harder to quantify.
For example, hiring a brand designer to change how people visually react to your brand doesn’t really have a specific metric you can track for that. Or it’s an investment that will have indirect returns, like hiring a bookkeeper to save you about 3-6 hours a month (and a major migraine). Again, this may not lead directly to an increase in revenue!
So how can you know when you’re making the right investment? How can you determine if it was worth (or will be worth) the money?
The only way is to start getting involved with the numbers of your business and being self-aware about your role in your business.
If you’ve been using Google analytics to see that your sales page only converts 0.5% of visitors, you’ll be able to see an improvement when you hire a copywriter that brings that up to 2.5%.
If you have streamlined client workflows and know how much time it takes you to complete a project and how much every hour you put in is worth to your clients, you’ll be able to determine the value of freeing up 10 hours a month on marketing tasks that you don’t enjoy doing.
If you pay attention to your mind and body and realize that constantly fighting for visibility and awareness is draining you of your enthusiasm for your business, you’ll be able to feel the difference when you hire a marketing strategist who can do more for your brand with less stress.
When you know your business, you’ll be able to see the changes. Sometimes you can assign a dollar figure to it, other times you’ll simply feel the change. The point is that you take the time to analyze it – otherwise, you risk wasting a ton of money and disguising it as an “investment.”
Make a Plan for Your Investments for Business Growth!
Making a new business investment can be a scary move, but it might also be the best thing for your business (and yourself!).
Take a minute to think about what you want your business to look like in the near future. Think about what you want your job to look like in the near future. Do you want to run every aspect of your business? Or do you want to do what you’re best at, and let others do what they’re best at?
Chances are, the latter sounds a lot nicer for most of you.
So start making a plan. Know your business today so you can find the person that brings new growth tomorrow. Get intentional with your funds so that you can actually afford to make the right investment that your business needs. Save up in advance so you don’t have to go for the cheapest option; you can go for the right option.
Meet Katie, from The Lazy Source
Katie is an accountant-turned-entrepreneur who loves being creative as much as she loves a good spreadsheet. Her mission is to remove the risk and uncertainty of self-employment income and teach purpose-driven digital entrepreneurs how to build a profitable business that serves the life of their dreams. She specializes in the relationship between business and personal money management, helping the two to work together! She’s also known for being a nap lover, buffalo wing addict, and overly-obsessed dog mom.
Send me a DM @katie.morewithmoney and say hi! | Visit Katie’s website
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