When you start in your business, it’s often just you sitting at your kitchen table and doing everything yourself.
Over time, maybe you bring in some outsourcers to help – a virtual assistant who you pay by the hour; an accountant; someone to help with your social media or copywriting or tech.
But when you get to the stage where your business is secure – when you’ve got those higher-level clients and the sales are rolling in – the time comes where you need to invest in more people to help you, in a bigger way.
It’s why launching ends up being SO stressful for so many business owners, when they spend so much time trying to do all the things themselves. Why? Because they’re not entirely sure they can afford to pay for help.
One of the things I often see with clients, is that they’ve got to that stage where they know their zone of genius is the £300-£500 tasks. But they’re still stuck with the £10 tasks because they don’t have anyone to pass them over to, because their income goes up and down.
It’s so common in a launch-based business. It can be really hard to work out how much you can afford to spend on people helping you – and is often why business owners don’t take on an assistant or grow their team in the way they really need and want to, to take their business to the next level.
What if you take on staff who give you their all and have an amazing impact in your business, but then a future launch flops and you can’t afford to pay them anymore?
Especially if you love to build a close-knit team and you hate the thought of making anyone redundant!
So how DO you figure out when it’s the right time to invest back in your business? Here’s exactly how to know and what to bear in mind!
Firstly – I’m assuming here that you have your foundations straight. By that I mean you’re regularly putting money away each month for your tax bill and that you’re paying yourself a decent wage each month (whether that’s salary or dividends out of your business, whatever set up you have in place).
There will be some money left over for you to spend on your business – your operating expenses if you like. But how do you decide how much of that to reinvest?
The starting point is to look at the things you spend out on each month, to run your business. You may have insurances and liability cover, director’s pensions and death in service type benefits – as well as your internet service, tech subscriptions like Canva or Kajabi or website hosting, memberships or masterminds and all the other things you pay out for on a monthly basis.
When was the last time you sat down and added that stuff up, to work out exactly what you’re spending?
Are you someone that sits down each month, looks at your profit and loss and then uses it to inform the decisions you make? Maybe so…or maybe you’d really like to be!
If you’ve got accounting software like Xero or QuickBooks, it’s all there as reports and it’s absolutely worth getting your accountant or a Xero specialist to show you how to find the stuff you need. By prioritising the time to look at the actual profit within your business every month, you’ll be able to see if you’ve got money available to invest in staff and growing your team.
Maybe you want an in-house team of employees.
Maybe you love to nurture talent or build deep relationships with people, and your vision is to have a loyal, dedicated team around you. You’ll need to run payroll every month; spend out on any equipment and training they need; be responsible for paying their National Insurance and tax, and of course make sure that statutory requirements like annual leave and maternity leave are all sorted.
Maybe having employees feels a bit burdensome to you, and you want to keep things more flexible by hiring a team of freelancers who are amazing at what they do – either on a project-by-project basis or agreeing the number of hours they’ll work for you each month. Decent freelancers like this are generally much more expensive per hour than employees, but of course you’re paying for their expertise and specific skill sets and you don’t have to pay anything else (like NI, pensions or training costs).
Or maybe, you just want to pay a team of people when you’re launching, to do it all for you!
I know of more than one company in the online world where if you’ve got a launch coming up, you can pay them a fixed fee and they will create everything for you. They’ll build your landing pages; set up all the tech; write your emails; design your graphics; help manage your Facebook group – literally all the stuff you need to get your launch organised, scheduled and running. So all you have to do are the things that involve your voice and your face (or the elements you actually want to do).
But these types of launch services sure aren’t cheap – mainly I see them starting from around £5k and depending on the scale of your launch, ticking up towards £10k and beyond. Which means you HAVE to be confident that you’ve got (or will have) the money to pay them.
If it’s a new product that you’ve never launched before – and you have got no idea how well it will sell – it’s probably not worth speculating, unless you’ve got money sitting in reserve to pay for this type of service. Because if you spend that amount of money on an untested product and don’t get the level of sales you want, you’re going to feel dreadful if you end up spending your cash reserves and have no money left to invest in other things later in the year.
On the other hand, if you’ve got a product that you’ve launched successfully and you now want to scale those sales, investing in a team of people can make a lot of sense. Using their expertise leaves you free to spend your time doing the things that are most important for you.
But it can be REALLY hard to take the time out to look at our business numbers, can’t it?
There’s always so many other things to get done. All the client stuff; marketing and social media; planning and strategy and figuring out where you want to be in 12 months or 5 years. What’s my exit plan? When will I retire? Everything that means so often, there’s no time to stop and look at what’s actually going on in your business.
The problem with this is that if you only meet with your accountant once a year and they tell you how much tax to pay – if there’s been a problem, or if there is a trend in your profit where things are heading in a direction you don’t want – you won’t find out until it’s too late to do anything about it.
For the clients I work with, I recommend that they look at all of their financial figures once a month.
And this falls into two main sections.
Firstly, your personal finances, where we look at your assets and liabilities.
What’s your house worth? How much is in your pension or your ISA and other investments? How much have you got in savings? What do you owe on your mortgage, your car finance, your credit cards and other debts? By subtracting one from the other, you end up with your net worth.
Over time your net worth figure should be going up. It should be increasing because the value of your assets should go up, and your debts go down as you repay them. The difference between the two should grow each month and it’s SO worth keeping track – so you can chart your progress and know when your mortgage will be repaid or when you’ll have enough in your pension to step back from working full-time in your business or retire completely.
And secondly, the other thing to look at regularly is the numbers within your business.
When we look at last month – how much did you make in sales turnover, the money that came into your business from your clients or the products you sold? What did you spend on expenses, not your salary, but everything else?
The difference between the two is your profit. When accountants calculate profit, they do lots of other complicated things involving allowances but the point of this is to give you a snapshot on a month-by-month basis.
If you had £20,000 of sales come in, and you’ve spent £5,000 on costs, your profit is £15,000. It’s as simple as that. Then from a proportion of that profit, you can start to take a regular salary while also building your cash reserves, so you can still pay yourself when want to take a holiday or can’t work (more on that in another blog here!).
But part of that profit is money that you can use to reinvest back into your business. Which is why knowing your numbers is SO important.
Sticking with that example above – let’s say you have a profit of £15,000 a month. You’re going to be putting some of that away for tax and you want to take £5,000 each month as your salary. You could then choose to put £2,000 into a pot for staff costs.
Whether you physically move that £2k into another bank account or just earmark it and leave it in your main account is up to you and how you manage your money!
But the point is that if you know your profit is consistently between £12k and £15k a month – and you take a monthly salary of £5k – you can be reasonably certain that you can afford to take on that assistant or get someone on retainer to do your social media or write your copy or help with your marketing (or whatever).
If you look at your figures, you’ll know what you can afford.
Regardless of what the actual numbers are for you right now, the beauty is that you can always start small and increase your financial commitment monthly. So if you’re wary of getting the support you really want, you could look at taking on somebody who’s only £500 a month or getting a VA for just a few hours a week and try that for a few months.
Quite honestly, once you see how much time it frees up for you and therefore watch what happens to your sales, it feels amazing! And then as your profit increases, you can increase your staffing and support accordingly.
This is exactly what I did. 7 years ago, I took on my first member of staff – the lovely Sally – who worked five hours a week for me. That little investment of around £200 a month meant I was able to dedicate that time to what I love, focusing on what I’m best at and my business grew.
7 years later and Sally’s still a core part of our team. She now works an average of 20 hours a week and along with two other members of staff now in our team (as well as freelancers), it does give me a hefty salary bill as well as the responsibility of tax and NI and holidays and so on.
But I’ve built a team that enables me to run and continue to grow my 6-figure business, working just 20 to 25 hours a week. I take holiday when I want (we have lots of family holidays in the sun!) and I have a business that runs without me. So if you’re not sure whether or not you can afford to take on staff, you NEED to start looking at your numbers.
And if you know you’re going to struggle to do this without some help or support, then I’d urge you to look at the Asset Accelerator™!
It’s my monthly support community specifically designed for women in business – just like you – where we come together once a month, for an interactive implementation and wealth session.
We all log into Zoom and work on our own stuff, in complete privacy. You never have to share your own financial stuff (unless you want to!), but it means you can get expert answers to your questions and hold the space to actually DO the things and get them done.
Tracking your net worth; getting clear on your business numbers and monthly profit; setting up your money pots; getting your ISA or pension or life insurance or critical illness cover sorted (finally!); setting up pensions for the kids; starting or managing your investment portfolio; looking at better mortgage deals – literally whatever money stuff you know you need to sort out, the Asset Accelerator™ gives you the time, space, accountability, expert support and guidance to DO it.
So you finally feel like you’re in control of your money, totally clear and on top of everything and actively growing your wealth and net worth…moving closer to your goals and feeling incredible about it all!
Here’s the link again to get all the Asset Accelerator™ details now.
I can’t wait to welcome you inside!
Until next time,
Claire
