People say you have to spend money to make money. What do you think about this sentiment? Let’s take a look at an example so you can decide for yourself.
Let’s use HoneyBook as an example.
Honeybook is a client management system (that I really like to think more of as a project management tool) cost is $480 per year, and many smart minded entrepreneurs are reluctant to invest. In the beginning, I was reluctant too. So why WOULD someone invest $480 per year?
Let’s say you’re currently spending 2-4 hours each week following up on unpaid invoices, switching back and forth between Google Drive, PayPal, and email anytime you’re sending invoices and contracts, and writing emails to inquiries/clients.
With Honeybook automatically sending payment reminders, accepting credit card payments, sending/signing contracts, and your pre-written email templates saved and ready to respond to emails within minutes, you save yourself 2 hours each week.
Let’s say your hourly rate is $50 per hour.
If you’re now working 2 hours less per week, that’s an expense cost savings of $100 per week (I consider your labor cost per hour as an expense to your business, it really helps you see the impact of your time more clearly and frankly, because your labor cost is an expense to your business! 😉).
Over the course of a year, that’s 52 weeks x $100/week = $5200/year gross cost savings.
Let’s include the cost of Honeybook in that calculation. $5200 – $480 = $4720 net cost savings.
If you were actually charging your time to your business, you’d see a $4800 increase in business cash flow for the year.
And what about all those hours you saved? Now you have an additional 104 hours PER YEAR.
If you’re currently at the stage of burnout, well now you can actually BREATHE. (Go take a nap, or bring a book to the beach and listen to the waves – you deserve it! And if you’re anywhere near saint augustine, shoot me an email and we’ll go together!)
If you’re NOT at the stage if burnout and want to take on 10 more clients at $250 each, that’s 10 clients x $250 = $2500 additional revenue.
That’s now $4800 + $2500 = $7300 in additional cash flow.
Coming back to the original question: do you have to spend money to make money? Well, considering the example, would you spend $400 to make an additional $7300 and gain back your sanity/freedom? I would!
It depends on the scenario, and doing a bit of a time-cost analysis (like we did here) helps you answer that question, as well as assessing your current workload and your stress levels (i.e., burning out because there just aren’t enough hours in the day).
Two additional things to take into consideration are your priorities and what you’ve defined as success.
For instance, using the honeybook example, let’s say you were currently reaching your revenue goals, but you were exhausted and burning out. Perhaps investing in honeybook and taking on only an additional 1-2 clients to cover the cost of honeybook is the solution for you (if each client takes 10 project hours, that still leaves you with 84 free hours in the year – and more time to spend with family, something that’s a priority to you).
Alternatively, let’s say you weren’t quite reaching revenue goals and want to take on 10 additional clients but need to find more time (assuming each client takes about 10 project hours). Now with adding on honeybook, you’re able to take on 10 more clients for the year to reach your goals (whereas, without honeybook, you’d be adding 100 working project hours ON TOP of your current workload).
One final note. It’s not choosing to make an additional $7300 or $4800 that makes you a Savvy CEO, it’s knowing what data to use to help you make the decision and WHY you’re making it that makes you a Savvy CEO. Because you know everything in life isn’t about just about money if it means your freedom and sanity are the cost. Perhaps just valuing your time and gaining back 104 hours this year is enough. Perhaps that is what would bring you joy and satisfaction. Those are decisions you can make from a place of empowerment now.
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