The phone is ringing off the hook, you have 72 emails in
your inbox and your desk looks as though it's being
consumed by paperwork. You have three options; you could
take on these tasks yourself, hire an Administrative
Assistant, or seek the services of a qualified Virtual
Assistant. If you decide to put in some overtime and
tackle the job yourself, at least you'll be saving some
money…or will you? Let's examine this option further.
Assume that you are more qualified than any Administrative
Assistant you could hire. That is to say you have an
absolute advantage in running the company and carrying out
the required administrative tasks. For example, suppose
that you type 15 pages per hour and that your prospective
Assistant only types 10 pages per hour. You need to have a
60 page report typed. It would take you 4 hours to
complete the job yourself, and your Assistant would take 6
hours. Believe it or not, the cost savings still lies in
having your Assistant perform the task. This follows from
two simple economic concepts: opportunity cost and
comparative advantage. I asked Dr. William Sims a
Professor and Chair of the Economics Department at
Concordia University in Montréal to explain these two
concepts further:
"Comparative advantage is a concept used by economists to
explain international trade. It suggests that even if a
country has an absolute advantage in the production of all
goods, it will maximize its wealth by specializing in those
commodities in which it has the greatest advantage and
trading for the others. For example, Martha Stewart may
have an absolute advantage relative to just about everyone
she could hire in cooking and cleaning. Should we then
conclude that she should do the cooking and cleaning at
home or should she outsource these activities? The answer
clearly rests on the opportunity cost of her carrying out
these tasks versus the cost of hiring someone else to do
them. Her comparative advantage is likely in growing her
business. Outsourcing is almost certainly the wealth
maximizing strategy for Ms. Stewart."
In the context of our example, the opportunity cost of you
carrying out the Administrative tasks yourself is the value
of the time you will lose that you could have spent on
other things, such as growing your business or spending
time with your family and friends. There are only so many
hours in a day. Let's assume that you can make $150
dollars per hour for every hour you spend growing your
business. The opportunity cost of you doing your own
typing would be $600.00, whereas the cost of the Assistant
doing the work (assuming an effective wage of $43.28
(calculations shown later)) is $259.68. Using the
Assistant would result in a savings of over $340.00.
Although your prospective Assistant would take 50% longer
to complete the task, you would still be wise to maximize
your wealth by spending your time growing your business.
Despite the fact that you have an absolute advantage at
typing, the Assistant has a comparative advantage (i.e. a
lower cost) in carrying out administrative tasks. You
should therefore, specialize in the task in which you have
the greatest advantage.
Perhaps you've decided that you would profit by hiring an
Administrative Assistant. But what about the other option,
the Virtual Assistant? Hiring a VA couldn't possibly be
less expensive than hiring an Administrative Assistant,
right? Wrong! According to Monster.ca, the median salary
of an Administrative Assistant in Toronto is $42,837 per
year. Assuming a 40 hour work week and a 52 week year,
this employee would be paid for 2080 hours throughout the
year at a rate of $20.60 per hour. This would seem quite
reasonable but, according to a new survey by America Online
and Salary.com, the average worker admits to wasting 2.09
hours per 8 hour workday on non-work related activities.
So, assuming that an Administrative Assistant takes a 0.5
hour lunch and has 0.5 hours in break time, the work year
turns into 1276.6 hours. This yields an effective hourly
rate of $33.56.
Next we incorporate benefits. According to the Greater
Toronto Marketing Alliance, the approximate total benefits
paid by the average Ontario employer are 28.97%. This
means the average Ontario employer pays $42,837 x 28.97% =
$55,247 per year. This is an effective hourly rate of
$43.28. This result would be even higher if we included
the cost of office space and equipment.
As for the Virtual Assistant option, rates for VAs are
usually between $20-45 per hour and can even be as much as
$75 per hour for VAs that specializes in a particular
field. The downside here is that although a VA is a
qualified professional Administrative Assistant, he/she is
also an entrepreneur and is therefore not available at your
beck and call. Nevertheless, in working with a Virtual
Assistant, you would pay only for the time spent on task
and you have the added benefits that you don't need to buy
any office furniture and equipment, pay any benefits or
allocate any extra space. It would seem likely at an early
stage of a business' lifecycle, if the administrative tasks
are not sufficient to warrant hiring a full time employee,
the best solution would be a Virtual Assistant. Indeed
even if the workload justifies a full time employee the
calculations above might suggest the VA route should be
considered.
The choice is ultimately yours. If you can't bring
yourself to let go of even the smallest of tasks, you might
be more comfortable continuing to do everything yourself.
But, if you have decided you need help, your next decision
should be whether to hire an Employee or use the services
of a qualified Virtual Assistant. Carefully measure the
benefits and cost involved with both options. Hopefully
this article will allow you to make an informed decision.
----------------------------------------------------
Kelly Sims is a Virtual Assistant and President of
Virtually There VA Services. She is dedicated to making
the lives of small business entrepreneurs easier. For more
information, visit her website at =>
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