How to Think Like a Business Owner and Not a Technician

In this episode of the Technibble Computer Business Podcast (with transcript below), I’ll show you how to break the mindset of an employee and think more like a business owner. I also talk about identifying any bottlenecks that stops you from earning more money and taking your business to the next level.

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Discussion:

00:16 – Mindset of an employee and not of a business owner.
01:24 – Effective Hourly Rate
02:46 – Computing for the Effective Hourly Rate
04:15 – Lower priced employees or Outsource
05:12 – Put it into action

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Transcription:

This is a problem that I often see with both new businesses and established businesses. They tend to have the mindset of an employee, instead of the mindset of a business owner. People tend to get what is called superhero syndrome where they think they can do everything in their business. And while they might be able to, doesn’t mean they should because it starts bottlenecking your business and prevents its growth. In this episode I’ll show you how to break the employee mindset and identify these bottlenecks .

I find that computer technicians can be their own worst enemy in slowing themselves down and getting caught up with the details. We are tinkerers by nature, we love to pull things apart and figure out how they work, we can figure out just about anything and do it ourselves but the problem with that is it slows us down.

And as business owners, our time is much more important now. I see technicians get caught up doing things like spending 15 hours perfecting their website and their effectively hourly rate drops down to that of a fast food employee. If you don’t manage your time properly, you would be better off working at McDonald’s because you would actually be earning more.

What you need to do is figure out your effective hourly rate. The reason why is that this creates a benchmark on how much your time is worth, and whether a task is worthy of your time or you should pay someone else to do it. You don’t always save money by doing everything yourself, depending on how busy you are its quite possible that you are actually losing money by doing everything yourself. So the formula to figure out your effective hourly rate is your monthly revenue, minus all costs with the exception of your wage. That gives you the profit before wage and then you can divide that number by the amount of hours you worked that month.

Back to the website tinkering example I mentioned before. Lets say you could have gotten someone to set the website up for you for $300, but instead to save money you did it yourself and it took you 15 hours.

That $300 divided by 15 hours is $20. Now as a computer technician, many of us charge in the realm of $50 per hour or more. By taking on that task yourself you lowered your effective hourly rate from $50 to $20, possibly even more of a reduction depending on what you charge. This is severely un-leveraged and a bad use of your time.

For all tasks, calculate what the effective hourly rate will be. Ask yourself, how much money can this bring in? and how much time will it take? That will become the effective hourly rate.

If you are just doing hands on computer repair work and charging $50 per hour and only spend time doing billable work, then your effective hourly rate is $50. Although, in reality your effective hourly rate is a little less because there will be some unbillable work, like administration tasks such as filling out receipts and whatnot. In this case you are still better off fixing clients computers for $50 an hour than spending 15 hours on your website at $20 an hour.

Lawyers are really good at this. When I have had to talk to my lawyer the secretary arranged times for the call, handled billing and invoicing, and every hour I actually get to talk to the lawyer is the part that only they can do. The lawyers time is almost 100% billable and the unbillables are handled by the lower cost secretary.

Like the lawyer example, business owners should be doing things only they can do. This might be strategizing for the business, setting up new advertising and marketing channels, or going out and talking to potential clients, making deals and getting out there and networking. These tasks can have an even higher return per hour than just spending an hour working on a clients computer for $50. And that is where lower priced employees come in.

Of course, I know many Computer Technicians aren’t at the point where they can bring in an employee, but if you are keeping fairly busy then you can start to outsource at least some of the tasks to a third party.

One of the tasks that can be time consuming and not easily to automate is administration work. Invoicing, chasing up unpaid invoices and other book work. This can take quite a few hours out of your week and you will be surprised how cheap it is to get an accounts person to come in for a few hours a month. There is a good chance they are cheaper than your effective hourly rate and you can your use your time working on money-making clients computers instead.

Don’t get caught up with “super hero syndrome”, just because you can do it or can easily learn how to do it, doesn’t mean you should do it. If you do, you become a bottleneck in your business and there are only so many hours in the day that you can personally work. So work on the tasks that makes you the most money.

So to put this into action, I want you examine your day. In a spreadsheet or notes on your phone, every 15 minutes write down what you did. Was it billable client work? or was it administration work? You can also use software like RescueTime or Harvest to track this. What do you know you should be working on? and are you working on things that are below your effective hourly rate?

This is definitely worth doing, it can be incredibly revealing looking at where the time in your day goes and can show why you aren’t earning more money.

Once you find areas that are below your effective hourly rate, outsource them. Break the negative mindset of “spending money” on things below your pay grade and think of it as gaining hours in the day where you can make more money.

I hope this help you, if you have any questions just leave a comment below.

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How to Think Like a Business Owner and Not a Technician

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How to Think Like a Business Owner and Not a Technician

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How to Think Like a Business Owner and Not a Technician