As a small business owner, you wear many hats. In addition
to being an entrepreneur, you may be your company
bookkeeper, web designer, administrator, sales person and
more. Having so many rolls is challenging, but at least it
saves you the money you would have spent hiring staff or
outsourcing these tasks. This is the mindset of many
entrepreneurs who are struggling to take their business to
the next level. They believe that if they do it all, they
save money. The truth is that this is usually not the
case. The error being made by the entrepreneurs, who
believe this, is that they are ignoring the opportunity
cost of their time (i.e. what they forego when they work on
these secondary, but necessary tasks).
Comparative advantage is a term used by economists to
explain the gains from international trade. It suggests
that even if a country has an absolute advantage in the
fabrication of all goods, it will maximize its wealth by
specializing in those products in which it has the greatest
advantage and trading for the others. How does this
concept apply to business? Well, a business owner may be a
better worker than anyone he hires to work for him, but he
may still stand to increase his revenue by performing the
tasks that bring him the greatest profits and delegating
the remaining tasks.
Consider how much your time would be worth if you could
spend more of it doing the tasks that make you the most
money. For example, if you make $60 per hour when making
sales, but you have to spend 2-3 hours of your day on
administrative functions, that is a potential loss of
$120-$180 that could have been generated during that time.
This is the opportunity cost of these administrative
duties. If you consider that outsourcing them would likely
cost you no more than $30 per hour, you can see that you
could stand to increase your profitability substantially by
outsourcing.
Spending more time doing what you do best could be the key
to taking your business to the next level of success.
Don't hinder your business' growth by attempting to avoid
the monetary costs of hiring an administrative assistant or
by outsourcing the work. Do the calculations and you may
discover that comparative advantage suggests that you
should delegate certain tasks to others, so that you can
concentrate on performing the tasks at which you have the
greatest advantage.
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Kelly Sims is a Virtual Assistant and President of
Virtually There VA Services. To find out more about how
working with a Virtual Assistant can simplify your life,
visit her website at => http://www.virtuallythereva.com .
While you're there, don't forget to sign up for her free
monthly newsletter providing useful information that
enhances and simplifies the lives of busy entrepreneurs.
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