Last week I spent the day attending an excellent event run by one of my mentors. It was very much a case of practising what I preach and spending a day out of my usual environment, working on the business, and looking for ways to boost profit.
He caught me off guard with a very simple but powerful exercise that I want to share with you.
This exercise is designed to challenge our thinking around time management and delegation - two things nearly every entrepreneur struggles with at some stage.
Take the number of hours per week you would like to work in an ideal world, not the number you actually work now. Multiply that by the number of weeks in the year you would like to work.
Now you have the IDEAL (not current actual) working hours available to you in a year.
What number did you come up with?
My mentor asked whether anyone had a figure over 1,600, clearly with the expectation that nobody would. Mine was 1,840…. For anyone who knows me, this probably isn’t a surprise. 1,840 frankly feels like a holiday to me based on my current hours. Also, I just really love what I do. I love business! I can’t imagine ever stopping, I need to be challenged constantly.
Now take your ideal profit/take-home figure per year* and divide this by the annual working hours to come up with the profit you need to make every working hour.
How do you feel about this number? Are you surprised? Does it scare you a little? - it should!
*Don’t get too hung up on what this number includes. Net profit after tax? Just dividends? Dividends after personal tax? This was a room full of accountants, so you can imagine the urgent clarification-seeking questions!
What can you do with this number?
Review your prices
Do any of your current services allow you to earn this amount per hour? If not, it may be time to check your prices are correct and that you are targeting the right audience.
It is important to point out, this ideal hourly profit figure is your accumulated profit across the team. You don’t have to earn this yourself!
Delegate more
What tasks are you performing in the business or in your personal life that just don’t make sense based on this hourly profit figure? Delegate them or just stop doing them altogether.
I made the decision far too late in my journey to stop doing my own bookkeeping. When you realise you can outsource your bookkeeping for £30-40 per hour, and this is a fraction of your own ideal rate, it becomes a very easy decision to make.
Protect your time
Now you know what your time will be worth in your ideal situation, how do you feel about spending a few hundred pounds to scroll through Facebook each day/week?
If you are anything like me, this should fire you up to be far more protective and deliberate over what you spend time on. What will deliver the most value and play to your strengths? What will move you the quickest to your desired hourly rate?
Be brave. Challenge yourself!
This week’s post is shorter than others, although hopefully still as valuable.
I have been writing this newsletter now for 20 weeks straight, without missing a week - despite really not feeling like writing plenty of times!
My Fractional CFO work is growing, as is my accountancy business. We are working hard to really get momentum with our fintech platform too. All of this whilst juggling the fact that we are expecting our third child later on this year.
I wouldn’t have it any other way! In line with the message in this post, though, I have been debating the impact this newsletter has been having.
So here comes the favour. Please reach out and let me know if you value this newsletter and would like me to continue - just hit reply and let me know what you think.
If you get value from these posts, then I would be so grateful if you can help me spread the word by sharing the newsletter on socials and with other business owners who would benefit.
About the author
Luke Desmond
Fractional CFO for Tech, eCommerce & SaaS. CEO @Crisp_Acc provides virtual finance functions. Co-Founder @getvaulta SaaS Startup for accountants.