Five Email Productivity Tips

February 21, 2013 · Posted in Time Management Tips · Comment 

Is email taking up too much time in your workday?    If you’re looking to spend less time on email, here are five quick items to test your existing knowledge and fine-tune your organizational skills.  We’ll talk specifically about Outlook®, but if you use another package, you may be able to find the same features there.

1. Folders

We all start with several default folders in our email software, such as our inbox, drafts, sent, and deleted email, but if that’s all you use, then this tip might save you time.  Consider creating additional folders to file or organize your email.

For example, under your inbox, you could have “hot,” “warm,” and “cold” folders for tasks that need to be done right now, in a few hours, and later today.  You may also want to create folders by clients, employees, business functions, products, vendors, important documents, or some combination of the above.

It’s especially useful to group certain emails together so you can work on a string all at once and not as they come in.  That way, you can minimize interruptions which can improve your focus throughout the day.

In Outlook, you can find the Folders command as a menu item with many tasks to choose from.

2. Rules

Once you’ve gotten those folders setup, you can create rules to automatically “file” emails that come in.  One great example is all those social media emails we all get.  Create a folder called “Social Media,” then create several rules to file those emails directly into that folder.  For example, all emails from LinkedIn, Facebook, Twitter, and other sites you have profiles on can go straight into that folder to be read later.  It keeps your inbox much cleaner and lowers that feeling of overwhelm too.

Look for the task bar item, “Rules, Create Rule” to get started.

3. Signature Files

If you haven’t already, create a signature file that looks professional and does a little bit of marketing for you as well.   At a minimum, include your name, company name, phone and website address.  Consider a short description line about what your company offers, especially if it’s not clear from your company name.  Finally, include a very short description about the type of client you’re looking for, a complimentary offer you have, or a brief phrase to encourage referrals.

One more thing to consider:  include your full signature on both new emails and replies, just to make your phone number and contact information all that more accessible for prospects and clients.

To get started or to edit your existing signature, go to the File menu, choose Options, Mail, and then locate the Signatures button.

4. Multiple Email Addresses

A great way to cut down on overwhelm is to have at least two email addresses.  The second, extra email address can be for email you don’t need to read as often as your client and employee email.  Send that email to a completely separate box that you only open once or twice a week.  Assign those social media emails, list emails, meeting notice emails, and other subscription emails that just don’t need immediate attention.

You can also use multiple email addresses for special tasks such as hiring.  Direct applicants to send their resumes to the separate email account.  When you are ready to review the resumes, they will be all in one place with no other email clutter.

5. Categories

A further tool to sort and organize emails is the Categorize feature in Outlook located on the tool bar.  You can create categories to group emails that are all in one folder, such as your inbox.  Categories might include functions such as accounting or sales, clients or type of clients, urgency, employees, or another grouping that helps you keep related or similar emails together.

Bonus Tip:  That Distracting Bell

When new email comes in, does your computer interrupt you and make a sound?  Worse, do you stop what you are doing and read the new email?  If you do, you will get a huge productivity boost by simply turning off the automated send/receive email feature.  Instead, schedule the sending and receiving of your email manually two to three times a day.

In Outlook 2010, go to File, Options, Advanced, Send/Receive, and uncheck “Schedule an automatic Send/Receive every __ minutes.”  After you have changed this setting, no more email will come in until you manually click the Send/Receive toolbar button under the Send/Receive menu bar item, so you are now in total control of when you want to be interrupted by email.

You will be shocked how much more productive your day is by implementing this one bonus tip.

Try these tips to boost your productivity with email.

Five Places to Find More Profits

It’s always a good idea to be on the lookout for ways to increase your profits, and luckily, there are many ways to do that.  One way is to focus on cost-cutting, and here are five places that are good to periodically review for cost-cutting possibilities.

Telephone

Re-negotiating with the phone company every one to two years is a really good idea.  Many telecommunications companies will often bargain with you or offer you a new deal just for checking in with them.

Has your business changed?  Do you need all those extra features you are paying for?  Could you do without those extra lines?  Would another phone plan save you money on long distance or international calls?

The risk is low:  one quick call will let you know if you can save money in this area.  It’s worth it to give it a shot, and while you’re at it, you can call your smartphone provider too.

Travel

Travel is always a great area to look into for possible ways to save.  Are all trips necessary and profitable?  Are there any meetings that can be done virtually instead of face-to-face?  Virtual tools such as GoToMeeting can make travel unnecessary.

What trips can be cut this year?  Can the number of people sent per trip be cut?  Can travel arrangements be made early to save money?  Are booking dates flexible so you can compare and find the lowest rates?  Is a taxi or rent car cheaper?

Dues and Subscriptions

Paying our annual dues for the club or association we’ve belonged to forever may be a habit, but is it beneficial for your business?  We might enjoying seeing everyone once or twice a year at the meeting, but we may not necessarily have to have a membership to do that.  Sometimes paying the guest rate is more affordable than the member rate if we are attending infrequently enough.

Review a list of organizations and publications you and your employees are part of, and choose which ones you are truly benefiting from.   If being an officer in one of your organizations is not getting you any new business, then you may eliminate a time drain by bowing out and letting someone else volunteer.

Labor

As your business grows, it can be a challenge to decide who to hire next.  The first place to look before you decide should be your existing employees.  What tasks are they doing that you are paying them too much for?  For example, do you have a manager doing clerical work?  If so, you may be able to piece together an administrative job that frees your current staff from all the clerical work they are doing.

It’s worth a look to see where your current employees are being overpaid and find someone to do those parts of the job.  You’ll save labor costs and come out ahead in the long run.

Fixed Assets and Equipment

Another place to save money that can be significant is purchases of large items such as furniture, automobiles, and production equipment.  It’s a good idea to get three bids from reputable vendors so you have a choice.  Going with the lowest bid is not always a good move; going for the highest quality is.

Look in these five places, and let us know how much you find to increase your profits.  As always, if we can help, let us know.

Planning for an Awesome 2013

For businesses with fiscal years that coincide with the calendar year, the slate of revenues and expenses will be wiped clean on New Year’s Day.  Starting with a clean slate gives us a chance to reflect on our 2012 results before we enter 2013 and experience the hope that comes with a new year.

Hindsight is always valuable, and we can learn important lessons from our past mistakes that we can now more objectively look back on.  We can take those lessons and incorporate them into our plans for the new year so that we can continue to learn, grow, and prosper.

To create your plans for an awesome 2013, here is a list of questions and documents to consider in your business.

Revenue Plan

We can make budgeting more fun by looking at the revenue side first.

  • Are you happy with your 2012 revenue levels?
  • What new product or service lines can you roll out in 2013?
  • Are there any product or service lines you should close in 2013?
  • Should you raise prices?

A revenue plan is useful because it can feed into your annual budget as well as drive your marketing plans.

Staffing Plan

Business is more fun when you have the right team to support your vision.

  • Is your current team sufficient to support your business goals for 2013?
  • In what areas do you need more help?  Should you hire or outsource?
  • Are there any team members that are not pulling their weight?
  • Was there a turnover that you would have rather not had?  How can you retain your best talent?

Master Budget

Your revenue plan and staffing plan can feed into your master budget, which can be loaded into your accounting system.  Tracking actuals against plan and prior year numbers will help you determine how you’re staying on track throughout the year.

Special Projects Plan

What special projects should you consider for 2013?  This might include a move, new fixed assets, or replacing systems and processes that you are outgrowing.

Disaster Recovery Plan

Each year, we watch the news and see people and businesses that were affected by extreme weather events, fires, theft, or other disaster.  Are you protected?

  • Is all of your data backed up to a remote location that is away from your local area?
  • Do you have the necessary insurance coverage for all areas of your business?
  • Are you comfortable with the risks you are taking in business and are you prepared for the worst-case consequences of those risks?  If not, take action to reduce your risks.

Planning for Awesome

Planning helps you become more successful, and it reduces the risks of doing business.  There are many more types of plans, and it’s up to you to decide which ones will benefit your business.  If we can help out in any way, please reach out and give us a call.

Five Hidden Talents of Your Accountant

When you think of an accountant’s duties, you might think about traditional tasks, such as tax preparation, bookkeeping, and financial statement preparation.   Here are five additional tasks that accountants can help with that you might not think of.

1. Evaluating Current Accounting Employees

How can you know if your accounting employee is a star that does everything right, is organized, and is fast or if you’ve accidentally hired someone who talks a good game but is doing everything wrong, takes way too long based on your size company, or is making unnecessary and costly mistakes?  Your external accountant can often help you objectively evaluate your current staff and point out their strengths and weaknesses so you can create the right training programs for them, communicate the right message at review time, or take the proper HR steps you need to.  Your accountant can also help to train your bookkeepers so that they are more efficient.

If your bookkeeper is not performing at the level of pay you are providing, it can be an inefficiency in your business.  Your accountant can help you make sure you are not over- or underpaying your current staff.

2. Hiring a Bookkeeper

For businesses that have full or part-time accounting staff, your accountant can help you test candidates for technical skills so that you can make a wise hire.

3. Selecting Better Tools

Most bookkeepers that do books for one company do not have the experience that lets them see there may be “a better way” to do what they are doing.  Your external accountant can help you find or develop systems, reports, and software to supplement your current accounting system that may save you time and money.

Since your accountant can be working on as many as ten different companies in one day, they have far more experience and expertise than bookkeepers who work at one company at a time.  Take advantage of that experience to streamline your workflow and learn lots of great money-saving shortcuts.

4. Identifying Process Inefficiencies and Irregularities

The fresh eyes that your external accountant can bring to your business can often uncover inefficiencies in accounting processes that can reduce your expenses and increase your profits.  One opportunity area is listening for the “we’ve always done it that way” answer.  When that explanation comes up, usually it means that the person saying it has lost or never knew the reason behind the process, which could now be obsolete.

External accountants have the benefit of seeing dozens if not hundreds of financial statements among their many clients.  We’ve often developed the eagle eye of scoping out expenses that are out of line based on other clients in your industry and company size.  If you are paying too much for telephone, utilities, and other common expenses, we can bring it to your attention that there may be an opportunity to re-negotiate a contract or look for some kind of error.

5. Strengthening Internal Control and Taking Measures to Reduce Risk of Fraud

Developing checks and balances in your accounting system is essential in businesses where employees handle money and have access to credit card numbers and bank account information.  Your external accountant can help you develop internal controls within your accounting system that will work for the level of risk you wish to take in your business.  They can also point out reports in QuickBooks or your accounting system that facilitate controls and that can help you review irregularities on a periodic basis.

Tapping into Talent

Next time you find yourself in one of the above situations, think of your external accountant first, and give us a call.

Five Things You Can Do to Make Tax Season Smoother

November 15, 2012 · Posted in Business Tips, Management Tips, Time Management Tips · Comment 

We know we’ll never make tax season your favorite time of year, but perhaps we can make it easier.  Here are five things you can do now to smooth out the time required to pull your records together for your tax preparer.

1. Contractor Clean-up 

In preparation for 1099s, take a look at your vendor list now and identify who should receive a 1099.  Perform a mini-audit and ask for any W-9s that are missing so you can plug in your tax IDs without scrambling at the last minute.

2. Check or PSE

Also in preparation for 1099s, you’ll need to break out payments made to vendors by check versus by credit card, third party or what the IRS calls PSE, payment settlement entity.  You’ll only need to issue 1099s to vendors you wrote checks to.

3. Calculated Moves

Is there anything you can calculate in advance of crunch-time?  If you had loans, you can secure the appropriate amortization schedules.  If you have depreciable assets, some of these schedules can be prepared ahead of time.  Did you sell any major assets?  A summary of the transaction can be prepared and ready to go.

4. Playing Catch-Up

If you are behind in your bookkeeping, filing, bank reconciliations, or other accounting chores, it’s a good time to get caught up so all the routine stuff is out of the way.

5. Getting Organized

When the year ends and the tax documents start arriving, place them in a special folder or stack so that all the papers are together.  Scan them in and place them in a specially labeled folder on your PC.  You’ll be more organized than ever.

When all of the mundane items are completed early, it leaves time for the more important conversations, such as discussing new ideas for tax reduction, ways to operate your business more efficiently, and planning for your future.

If we can help make your tax and accounting tasks easier during any time of the year, please reach out and give us a call.

Six Quick Productivity Tricks So You Can Go Home Early

If you have an endless to-do list, you’re not alone these days.  Most of us are constantly looking for ways to work smarter and get more done.  Here are six quick tips to help your productivity so you can go home early.

1. Group tasks.

If you have lots of errands to run during the week, why not set aside one day or a part of a day to get them knocked out all at once?  It saves start/stop time and may also save gas and time getting dressed up (if you work at home).

You can also try grouping tasks such as personal care appointments, doctor’s appointments, sales calls, and client visits.  Your schedule will be freed up in big blocks of time so you can focus on creative projects without having to constantly watch the clock.

2. Use checklists.

Checklists are best when you have a task you need to repeat.  They’re great when you’re stressed and don’t want to forget a step (such as in packing your suitcase for a trip).  They’re also great for tasks that repeat infrequently (Now how did I do that last time?)

Stop and take a minute to create your checklist the next time you perform a routine task that you will repeat in the future.  You’ll thank yourself the next time.

3. Organize your email.

If you are using Microsoft Outlook for email, consider getting it to work as hard as you do.  As your email comes in, you can have Outlook sort the low-priority emails that come from lists, Google alerts, social media notifications, and subscriptions into folders.  Create a subfolder in your inbox called “lists.”  Then set a Rule to have that type of email go into the “lists” folder.  This one step will substantially de-clutter your inbox.

4. Delegate more.

If you’re a little wary about delegating, try this exercise:  Look at your to-do list and put an hourly rate next to each task that you are doing.  If someone paid you to do that job, what would you get on the market?  Then look at the tasks with the lowest dollar value next to them.

If you feel your time is worth more than the lowest rated tasks on your lists, it’s time to help someone else out who is unemployed so you can be freed up to use your more valuable skills.

5. Order online.

When is the last time you’ve been to the office supply or pharmacy when you know they deliver?  (Yeah, me, too. Enough said.)

6. Avoid long learning curves.

Whenever you realize a task will have a really long learning curve, then it’s a red flag that it’s time to find someone to hire to do it for you.  Here are several examples:

  • Doing your taxes and researching all the tax law changes
  • Installing a new accounting system and customizing it
  • Learning about every new social media platform out there
  • Writing a legal contract
  • Creating a report
  • Troubleshooting a computer problem

The cost of going through the learning curve can be dozens of hours of your precious time lost compared to bringing an expert on board who can perform that task in a matter of hours or minutes.

How did these six ideas compare to your favorites?  I hope you picked up an idea or two so you can get home earlier.

Five Favorite Freebies You Can Steal

If you’re looking for ways to boost your productivity, technology is a great place to start.  The good news is there are many free options available.  Here are five favorites you might not know about.

1. Bridge lines.

If you need teleconference lines, you’re in luck:  there are many high-quality options that are completely free.  You can have several people, even hundreds, dial into a line and conduct a meeting or training session via the phone.  You can record the session and download the recording as an MP3 file that can be played on an iPod.

Some of the more creative ways to use these free teleconferencing services include:

  •  Staff meetings when someone is absent so they can listen later.
  • Free teleconference, providing tips to all your clients.
  • Free teleconference, allowing prospects to call in and sample what you offer or find out what you’re like to work with.
  • When you need to record anything. (You often need 2 people on the line to be able to record, but not always.)
  • To record a quick training session or how-to that can be distributed later.
  • To have a client record a testimonial you could put on your web site.
  • To record a meditation or therapeutic session you can listen to over and over again.
  • If you’re a coach or trainer, you can record the client training session and give the download as a service perk.

Our favorite:  http://www.freeconferencecallhd.com.

2. FileZilla.

The FileZilla client version allows you to transfer large files between computers that are connected to the Internet using FTP (File Transfer Protocol).  It’s handy for many reasons:

  •  When you need to load large files such as videos or audios to your website
  • When you need to upload something to an artist, a transcriptionist, a warehouse, or other supplier
  • When you have documents such as white papers that you want people to have access to but don’t want to have to keep contacting your webmaster

Download the FileZilla client and find out more here:  http://filezilla-project.org/

3. Gmail.

It’s just a great idea to have a backup email address in addition to the primary email address you use.  Gmail is perfect for this.

Go one productivity-boosting step further, and make your gmail account the one you use for all that email you don’t need to read as frequently.  This could include notifications from social media like Facebook, Twitter, and LinkedIn, blog notifications, list posts, Google alerts, and any other nonproductive email, you don’t need to respond to.

Open your Gmail account less often than your primary email (even once a week if you dare) and gain that productivity boost.  You’ll have freed your inbox from a bunch of clutter and can focus on your clients’ and employees’ emails instead.

Visit this site to find out more:  https://mail.google.com

4. WordPress.

WordPress is free blog software that you can install on your web site or blog site.  Once installed, it’s super-easy to use for both blogging and a website.  You can add photos, graphics, white papers, videos, and audios to the library to put on your blog or your site.

It’s also great for search engine optimization; the search engines love it and will rank you higher when you blog and post fresh content.

Visit http://wordpress.org/ to find out more.

5. Ning.

Ning is a community platform where people can come together and post a profile, participate in discussions, join a group, and interact.  Not all business models will benefit from Ning, but many of you are involved in a club, church group, nonprofit organization, or community where Ning could be very helpful.

Ning is almost free, at $19.95 per year or $2.95 per month, but it’s such an amazing platform, I include it here.  Whenever you’d like to have a private (or public) community of people who are joined by a common interest, Ning can provide that extra online community connection that can help you group interact and bond even more.

Find out more about Ning at http://www.ning.com.

What are your favorite freebies?

Five Bottlenecks to Avoid that Stump Your Business Growth

As a business owner, you have likely acquired many skills and are wearing many hats in your business.  Although admirable, your versatility can often lead to slower growth for your company.  This happens when you become the bottleneck.  Here are five places to check to make sure you haven’t become the bottleneck in your own business.

1. Managing everything.

It’s definitely good to keep tabs on everything that’s going on in your company, but once your company grows, you may find yourself inundated with information.  Instead, try managing by exception.

You don’t really need to know everything that’s going on in your company; you really only need to know when things do not go smoothly, or when there are exceptions.  Design a set of management reports that allow you to see these exceptions easily without having to wade through a bunch of information.  This will save you time and help you focus where your expertise and skills are needed most.

2. Doing too much production.

Probably the most common small business mistake is working in your business instead of on your business.  If you’re still generating billable work or working too much in production, it should be work that no one on your staff can do and work that requires a very high skill set.  Otherwise, it should be delegated to staff.  And if you don’t have staff, then they need to be hired.

3. Not doing enough marketing.

As a business owner, you are the key person that will be bringing in business, forging partnerships, and creating new opportunities for revenue.  If you spend your limited time doing other things, marketing often goes undone.  Not marketing enough can dry up the pipeline, cause cash flow problems, and get a company in trouble really fast.

4. Being the only one who knows how to do something.

When employees have to wait on you to show them how to do something, you can easily become the bottleneck in the process.  As you train each employee, do it only once by writing procedures for the task as you train.  That way, you never have to train anyone on that task again.  The newly trained employee can show others, and you can be out of the loop, freed up for more important things.

5. Having to review and approve everything your employees do.

A great employee is one who is empowered to make as many decisions as possible without further layers of supervisions getting involved.  Often, a decision can be “cookbooked” so that the decisions can be pushed down the lower layers of management.  Take a look to see if any of the decisions that you are making can be documented and pushed down so that you don’t have to get involved.  That way, your employees will have the right balance of authority in order to do their jobs.

How did you measure up on these five high-bottleneck areas?  When you can clear up the bottlenecks in your business, your firm will be able to grow even faster.

Ten Things You Might Not Think to Delegate But Should

June 28, 2012 · Posted in Business Tips, Cost-Saving Tips, Time Management Tips · Comment 

Just about everyone suffers from a lack of time to do all the things they want, or even need, to do in their business.  One of the solutions to freeing up your time is to delegate.  The question is, what are the most effective tasks to delegate?  Here are ten ideas for you to consider (or reconsider) to free up your valuable time for more important things.

1. Social media.

We didn’t even have social media ten years ago, but now that we do, it can be a major investment in time.  Some companies ignore it completely, not wanting to open that can of worms, but done well, social media can have a great payback.

Rather than ignore it or take up your important time, turn it over to an intern or recent college grad who probably knows more about it anyway!

2. Grocery shopping.

You might think this is only for rich people, but it’s simply not true and very cost-effective.

Grocery shopping is a personal task, but time doesn’t distinguish between work and personal; it keeps marching on.  Set up a grocery list and find someone who wants to work part-time (your housekeeper might know someone).  You’ll be able to free up several hours per week, plus you’ll likely be helping someone who needs the money.

The money you pay to your shopper is not a business expense.  Instead, they may be a Schedule H employee, so you’ll need to keep your books separate or alert your accountant.  Also check on any liability issues with your insurance company if they will be driving on your behalf.

Once you get past a few small setup hassles, you’ll love this.

3. Your email.

How much of your email could be handled by one of your employees?  Set up separate emails by function and not by people so that your employees can take over more of this ever-growing task.  Anything that you respond to the same way over and over again can be drafted in a procedure.   Employees or a virtual administrative assistant can be trained on what to send to whom.

4. Training employees.

Once you get one employee trained, that employee may be able to train additional hires, freeing you up from having to do so.  Well-written procedures will go a long way to reduce training time, and even writing procedures can be delegated to the right person.

5. Vendor research and purchase.

Need to find a hotel to host an event?  Or a webinar company?  Or a project management system?  All of these items require research to find good vendors, and as business owners, we may tend to do this ourselves when we can write up a few guidelines and give the task to a capable employee who would enjoy researching the topic and writing up some options for you to review.

6. Hiring.

Hiring can be one of the most time-consuming tasks of all.  I’m definitely not suggesting delegating the final decision on hiring, just the search process.  I’ve heard of business owners who delayed hiring because they froze at the sight of a 6-inch tall stack of resumes they had to go through.

It might pay to hire an agency to do the screening for you so that you are presented with only the finalists.

7. Bookkeeping.

Bookkeeping is also one of those time-consuming tasks, with two added challenges:  everywhere you turn, there are deadlines and regulations, plus it requires special skills that need updating frequently.  All of this screams to be delegated when possible.

8. Sales.

When you first start your business, you are generally the only one selling.  To get it off the ground, you eventually need a team of people to help you sell your goods and services.  As your sales team gets better and better, you can delegate larger and larger sales opportunities to them.  Who knows, if you’re not natural at sales, you may have employees who are better at this than you.

9. Writing.

Writing can be extremely time-consuming for some people.  Great writing requires a long learning curve, so if writing is not a core skill for you, you may want to look around for someone you can delegate or outsource this task to.  This includes things like writing procedures, web sites, job descriptions, marketing copy, proposals, and even something as small as thank you notes.

10. Calendar scheduling.

All that back and forth phone tag, email tag, postponements, cancellations, and other scheduling challenges can be delegated to free you up for making even more appointments.

Your time is incredibly valuable, and the only way to make it more valuable is to accomplish increasingly valuable tasks that only you can do while delegating the tasks that other people can do.  As a general rule, anything that is not in your core skill set or core business is fair game for delegation.  If someone else can do it faster, then it’s fair game for delegation.

Think about what you’re spending a lot of time on (and possibly spinning your wheels at the same time).  This is a task that can possibly be delegated, so oyu can free up your time for more important things.

Life Beyond the Profit & Loss Statement – Do You Know Your Lifestyle Ratios?

Each month, you may anxiously await the reports that provide the numbers that help you manage your business.  Revenue, net income, total expenses, and payroll costs are just a few of the items that you may be monitoring on your profit and loss statement.  Those numbers will help you meet and improve your business goals, but the question is, what numbers are you using to determine if you are meeting your life goals?

It might be fun to come up with a few lifestyle ratios to help you measure and move toward your personal goals.  Here are a few for your consideration:

Passive vs. Active Income

If you’d like to work less as time goes by, then you’ll want to create your passive vs. active income ratio.  Make a list of all of your sources of income (not just business) in a spreadsheet.  You might have interest income, rental income, and investment income along with your business income or salary.

Then write down how many hours you spend working to earn each type of income.  For interest income, it is likely to be very little.  Investment income will only include the time you take selecting your investments and managing your portfolio. If you are active in your business, this will be the lion’s share.

Income is passive if you spend almost no time earning it.  Income is active if you spend time earning it.  (These definitions correlate to your time spent, not the IRS definitions.) Put the income in the appropriate column, passive or active.  You can allocate if necessary.

In the example below, this person is well on their way to retiring.  They also might question why they are spending so many hours working so hard for a fraction of their monthly income!

Income Monthly Hours Passive Active
Interest Income $5,000 0 $5,000
Rental Income $6,000 2 $6,000
Investment Income $20,000 1 $20,000
Business Income $10,000 167 $10,000
Totals $41,000 170 $31,000 $10,000
Passive/Active ratio 76% 24%

 

The “aha” comes when you see the numbers.  The numbers often drive people to action.  You might decide to be more intentional about moving your income to passive sources so you can do the things you want to do.

Leveraged vs. Unleveraged Revenue

Leveraging your business revenue is a way to work less while making more money.

Measuring leverage is business-specific.  Examples of revenue that are not leveraged include seeing clients one at a time and selling hours-for-dollars services without a staff.  Revenues that are partially leveraged include group programs such as classes and events like webinars and conferences as well as hourly consulting that your staff performs with your limited oversight.  And revenue that is fully leveraged includes product sales.  Once the product is developed, it takes little incremental time to sell (unless you’re in retail).

Here’s an example, assuming this business owner has a staff of five people.  Both hourly consulting and training classes are partially leveraged because the business owner spends time teaching, consulting, and supervising.

Revenue Leveraged Unleveraged
Book sales $500,000 $500,000
Hourly consulting $3,000,000 $2,500,000 $500,000
Training classes $2,500,000 $1,500,000 $1,000,000
Total $6,000,000 $4,500,000 $1,500,000
Ratio 75% 25%

 

If your revenue streams are flexible, you can work on moving more of your business income over to the leveraged side.  To create more leverage in the example business, the owner could sell or develop more products, hire another teacher, hire an additional consultant, and/or hire someone to review the consulting work of the employees.

Days Off vs. Days Worked

This ratio measures how much time we are able to spend away from the office.  It’s simple to compute, and you can estimate it if you don’t track your time.

Assuming a 5-day work week, there are about 250 working days in a year, not including about 10 holidays.  Estimate the numbers of days you were off, and divide by 250.  For example, if you took 5 1-week vacations from work last year, that would be 25 days, resulting in 10%.  This assumes you worked the rest of the year.

Your Lifestyle Goals

What’s on your “bucket list?” (This is a list of things you want to do in your lifetime before you die.)  Figure out the metric that will get you thinking about doing your dreams sooner rather than later.

You can have fun with metrics and ratios in and out of your business.  Here are some more ideas to think about:

  • The number of customers you have that really fit your ideal client and how many more you need to go.
  • How many countries (or states) you want to visit each year vs. how many you’ve already visited.
  • How many volunteer hours or dollars you spend vs. how much more you like to.

When you put your goals into numbers and on paper, they seem more real and achievable.  You can get an “aha” just by computing these ratios.  Hopefully, life beyond the profit and loss statement will get you closer to your dream life.

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