7 Key Concepts for Business Owners That Want to Spend, Invest, & Hire Strategically
GUEST AUTHOR: Bill Hershey, founder of Life Stream Business Services 
One thing successful business owners have in common is that they've mastered the principle of "Spend more to make more."
They've figured out how to "take one dollar and turn it into two dollars" with their business.
Spending money to make money may be counterintuitive.
Yet, it's common for most people to borrow large amounts of money for higher education (i.e., the foundation of a career).
The challenge is that there's a lot more ambiguity and no guaranteed outcome in business, whereas, in education, the path forward is comparatively more straightforward:
You invest.
Put in work for 4 years.
You come out with a degree.
You use that to start a career.
If only business were that straightforward!
When we say "spend more to make more" in business, we should carefully add a significant word – strategically.
Money needs to be spent strategically to make it more effective.
Unfortunately, few small business owners approach their businesses with a clear strategy.
Many business owners are also hesitant about investing the necessary resources into growing their businesses, which is understandable. I don't recommend investing without a strategy.
In this article, I, Bill Hershey, founder of Life Stream Business Services, suggest developing a deeper understanding of how your business earns money. I’ll review six key concepts and walk you through an example of how to grow your business strategically.
By the end of this 8-minute read, you’ll have a clear growth plan (i.e., a business strategy) to apply to your small business to spend, hire, and invest more strategically.
The Time I Hired An Online Business Manager (& was so glad I did!)
My website desperately needed updating as I entered my third year of business. I was so embarrassed to share it with people that I sent them to my LinkedIn profile instead!
Fortunately, I was at a point in my business where I knew I could get client work that would pay between $100-200/hour. I knew I needed to find support to help me with tasks that I wasn't skilled at (like redesigning my website and setting up the new CRM links with the website).
I could have figured these out myself, but it would have taken four times as long (and it would likely have been half as good) compared to hiring a professional who can do the work for $50-70/hour.
Hiring this helped free up my capacity to onboard a large client. It also gave me peace of mind, knowing that my projects were moving forward seamlessly while I could focus on the work I'm skilled at. And the person I hired did much better than I would have! I got lots of compliments on my website. I could also pick up where I left off with my new CRM without missing a beat in my regular newsletter emails.
Concept #1: Opportunity Cost of Not Spending
The story above illustrates the principle of opportunity cost. I could have taken on the 40-hour web design project myself (that's the amount of time it probably would have taken me).
But this would have involved watching YouTube videos to learn the web platform, contacting support when I got stuck, and probably spending several hours procrastinating and feeling overwhelmed trying to learn a new system alone.
I could spend all of that time serving clients instead.
I'm lucky I had mentors early on in my business who helped me understand this principle.
Let's put some numbers into this scenario (these numbers are hypothetical to illustrate the point).
Instead of taking on a DIY website/CRM project, I put those 40 hours into client services.
Let's say I'm earning at the low end of my range of $100/hour (which is my scholarship rate)
That would be a revenue potential equivalent of $4,000.
I hire an Online Business Manager who has web design skills, and she does the job for $70/hr and can complete the project in 10 hours (because she is experienced and highly efficient)
With that, I've spent $700 for the project.
If I had decided to do it myself, I might have saved $700 in expenses, but the cost would have been 40 hours of my time, which could have allowed me to earn $4,000. That doesn't include the overwhelm, confusion, and stress of fiddling with unfamiliar tech (which could have affected my other client's work).
So, in that scenario, I spent $700 to earn $4,000 - a decision that profits my business $3,300 - not bad!
Concept #2: Understand Your Business Model
For some, the term "business model" may sound fancy, but it simply means understanding how money moves in and out of your business. You may have one or more revenue streams, and you will likely have a variety of expenses that allow you to generate that revenue.
In other words, if I wanted to understand your business model, I might ask, "What activities, structures, systems, and processes are required for your business to generate revenue?" That question alone can take several hours to answer, so don't mistake it as a small question!
In my consulting work, once I understand my client's business model, I can help them identify potential efficiencies. This brings us back to our core question: "How can we spend more to make more?"
Concept #3: Identify High-Yield & Low-Yield Revenue-Generating Activities
Once we understand what activities are required for your business to make money, we can categorize them according to their impact on generating revenue for your business.
In other words, certain basic activities like clearing out promotional emails from your inbox, attending a webinar, or dusting off your keyboard won't directly impact your income. These can be called low-yield (or no-yield) revenue-generating activities. You can often hand off these activities to others because they require less specialized skills.
Low-yield revenue-generating activities could include:
Social media management
Checking emails
Answering & returning routine phone calls
Routine administrative work (like bookkeeping, record keeping, filing, etc.)
Troubleshooting tech issues
High-yield revenue-generating activities could include:
Completing a client project that requires skill
Showing up to calls with clients and prospective clients with your highest self
Sending out effective marketing emails and offers that are authentically yours
Forming strategic partnerships
Giving public talks and workshops with a clear call to action
Forming and executing a business strategy
Building an effective marketing funnel
Bear in mind that there's a lot of room for nuance here, so depending on the details of the activities involved, you could easily mark some of the activities I've listed as low-yield or high-yield.
Concept #4: Hire & Delegate Low-Yield Tasks to Scale
Do you find yourself doing a lot of tasks that fall into the category of "low-yield revenue-generating activities"? Delegating these can be profitable if it frees you up to focus on "high-yield revenue-generating activities."
Be patient, though. It may take time to define your systems and processes sufficiently, allowing another person to step in and do the work the way you want it done. It will also take time to train the person.
Find a highly skilled Virtual Assistant (VA) or Online Business Manager (OBM) experienced with businesses like yours. They can help you build out the necessary systems and processes that will allow you to delegate effectively. Helpers of this caliber will generally know how to gather this information from you during their onboarding process.
Concept #5: Understand Stepped Costs to Know How Much to Spend
Bringing someone on board may initially seem like more work, so it's a good idea to consider hiring help before you feel the pain of not having it.
You don't want to be drowning during the hiring, onboarding, and training process—it sends the wrong message to your team (i.e., that your business is out of control) and doesn't set up the right culture for success.
You may spend more money in the first month or two before seeing a noticeable revenue increase. Sometimes, it can take longer, depending on the situation.
But once that position has settled in and it truly frees you up to focus on higher-yield revenue-generating activities, you should see an increase in revenue. This looks like a stagger on a graph because your investment will take some time to allow for that increase in work volume (i.e., revenue).
It would be best to track your finances when you hire help so that you can look for a return on your investment.
Otherwise, how will you know if it was a good financial decision?
You'll want to look at your profit and loss statement monthly. If you don't have a way to create a clean profit and loss report, you may hire a bookkeeper or accountant to help you with this. If you can find someone to help you understand what the numbers mean, that's a big plus (and that's a pun for my number nerds out there).
Concept #6: Entrepreneurial Mindset to Investing Strategically
It can be challenging to see your expenses increasing without an immediate increase in revenue.
This is where having a clearly defined, well-thought-out strategy is required.
Once you have a plan and execute it, you'll need to give the strategy enough time to work. If you bail on your strategy before it takes root, all of the thought and effort you put into creating it will have gone in vain—it needs to be given a fair shot.
Here are some critical elements of an effective business strategy:
You'll need to have financial goals, which need to be time-bound (e.g., stating a goal as earning $100,000 isn't as useful as saying, "I want to earn $100,000 in annual revenue by year 3."). Ideally, I recommend developing a financial forecast showing how you will achieve those goals.
You will need a marketing, sales, and operations development strategy to achieve your financial goals. These are the core elements of the business planning process.
You'll need a way to track your financial goals, which goes back to the importance of bookkeeping and accounting. You'll need a clean profit and loss statement, and you'll need to learn how to understand it.
You will also likely need to adjust your strategy as you observe what's working and what's not.
It's helpful to have a business advisor, coach, or consultant who can help you see things from an outside perspective and validate or test the assumptions of your business strategy.
Along with all this strategy work comes the need for a healthy dose of boldness. Entrepreneurship is not for the faint of heart. With any investment comes risks, but having a solid strategy guided by qualified experts will give you the best chances for success.
Concept #7: Be Wary of a Scarcity Mindset As a Business Owner
Unfortunately, the scarcity mindset is common in the small business community. However, this subject must be handled delicately and carefully.
A person with a scarcity mindset tends to focus more on what they lack or might lose instead of what they could gain. This mindset impairs creative thinking and openness to possibilities and generally inhibits one's ability to grow a business effectively. Entrepreneurship is a highly creative pursuit that requires an open mind and the ability to think critically.
Working through a scarcity mindset may require deeper money work to familiarize one with one's subconscious patterns around money. Unfortunately, money-related traumas are common in today's money-driven society, and many people inherit unhelpful patterns around money from their parents, relatives, and even ancestors.
But the reality is that money allows for many essential things in life. Mindfulness in your relationship with money as a business owner is crucial in enabling you to grow into your full potential in your business (and your full potential as a human being).
Doing this inner work is often a precursor to adopting the necessary strategic mindset and strategic work involved in growing a business.
I see a lot of folks out there pointing out scarcity mindsets in ways that lack compassion - that's something to watch out for, and I'm not for that. Calling someone out directly to their face can do more harm than good if they appear to have a scarcity mindset.
My recommendation is to be mindful as a business owner and begin to notice within yourself if a scarcity mindset tends to influence your thought processes around growing your business. If you are looking for help in this area, I highly recommend the work of Bari Tessler, a pioneering financial therapist and author of The Art of Money.
Where to Go From Here
Hiring the right people is the key to growing your business and designing it to support you in doing your best work.
No business owner wants to struggle, burn out, or fail!
Small businesses must be designed with some forethought, intention, and strategy to support the lifestyle you want to lead.
Your business needs to be sustainable. And it needs to sustain you!
Getting strategic and understanding your finances is vital for bringing in the help that will support your success.
May your spending be strategic. May your spending make you more.
Deciding Your Unique Approach to Spending, Investing, & Hiring Strategically
Each business owner approaches their business in different ways.
You'll ultimately want to leverage your strengths and build a team around you to compensate for areas where you have gaps.
If you'd like to better understand your unique business type and how that influences your approach to business, I invite you to take my Integral Business Type Assessment.
Note: This is explicitly designed for holistic health business owners, but the results can be translated with relevance to most service-based businesses.
ABOUT THE AUTHOR
Bill Hershey, founder of Life Stream Business Services, brings a wide breadth of experience in business strategy, coaching, accounting, and bookkeeping to help integrative and holistic health practitioners confidently navigate the business landscape. His work offers business insights and a path to professional fulfillment through financial guidance, somatic work, and Integral Coaching (a holistic approach to business and human skills development).
