Settling for inadequate income

Being self-employed either as a practitioner or business owner can be a trap. Believing that your professional skills are sufficient to earn an adequate income is a dangerous position because it takes more than technical skills to ensure a good income going forward. A realistic question to ask is “As I continue to build, am I constraining the growth by holding on to the belief that I have skills that will ensure an adequate income and return on my investment?”

A common dilemma

It’s more than a common dilemma; it’s almost universal among sole practitioners and owners of firms that constraints to growth and therefore income are in the ‘DNA’ of the professional.
Typically. a practitioner gets busy enough to employ, or hire under contract, someone. But they will inevitably set tasks that deliver basic bookkeeping for a client. With a good network or active marketing this process may well repeat itself for a couple of years and grow the firm until, the penny drops and the question is asked “Am I settling for an inadequate income by simply reproducing my own professional practices and therefore, failing to capitalise on the potential and leverage of all this effort?”

On boarding is a business skill

Sole practitioners employing others never fully delegate. They never really on-board new employees.
They create a hierarchy where they remain “boss” and have employees or contractors.
What we know about employees and contractors is that they deliver technically good results but are not enabled to be owners.

The Macca formula

The founders of McDonalds understood that to build a scalable and profitable enterprise they had to do two things:
• They had to standardise every part of the process, from order to delivery
• They had to automate as many of the moving parts as possible
Then there’s the ‘secret sauce’ and that is they had to establish a method of tracking in real time performance and alignment with goals.
Time is elastic when automation delivers its manifold benefits but discovering the redundancy in your typical day is no mean feat. Without elevating your income horizons these potential time gaps will hurt your profitability.

Management reports

Management reports are a key component of every business be it a client business or your own firm. So what should be tracked? Billable hours is conventional wisdom but what is needed is a billing model that drives the highest margins for client or employee/contractor.
That is what is needed to meaningfully address the question “Are you settling for an inadequate income?” Set in place goals and benchmarks that aligns everyone in the firm and make sure ‘ownership’ skills are developed.