Avoid the mistakes of over extending your resources on your way to becoming the Lazy Entrepreneur

You could stumble before you start on your business improvement strategy unless you take the time to be very clear on your strategy.

Mistakes at this early stage become a huge expense later on.

As the leader of your team, they are relying upon you to be very clear on the direction. The biggest mistake that business owners make is thinking they have to do this all on their own.

So the planning of resources is essential to the success of the project.

The things that need to be looked at are the internal, external, financial, and management resources available to be used.

And when and who to use is the critical step. Again, a common mistake is to try to make too many changes all at once. Unless the business is about to go under financially, you have time on your side.

Pick an important but not urgent priority and use this as the initial milestone target.

You’ll need to list all the other priorities, but in the beginning, focus on a laser-focused short-term outcome.

Follow the thinking process in this podcast and have the confidence to know your plan will succeed.

Chapters

• 0:59 Resource Allocation - First steps
• 5:00 Internal Resource Assessment
• 6:50 External Resources
• 11:34 Financial Resource Assessment
• 15:02 Allocating the Management Team
• 19:06 $40,000 Bonus Offer

Transcript

 Series II Episode 8 Resource Allocation

Series II Episode 8 Resource Allocation

[00:00:00] Welcome to the Inspiring Business Podcast, where we hope to inspire you, the business owner, and provide you with information, knowledge, and tools that will help you create a business that is scalable and ultimately independent of your daily involvement. My name's Steve Sandor and your host today, and welcome to the eighth episode of the Lazy Entrepreneur Series where I walk you through the scale to success solution. The very process I help my clients to achieve the improvements they are struggling to implement. 

[00:00:35] In session seven last week, we looked at the first step in the implementation process and we were looking at clarifying and confirming the information that we had been able to collect over the previous six weeks.

[00:00:51] And I briefly touched on resource allocation. So today what we're going to do is do a deep dive into this particular area [00:01:00] because it's usually where the greatest frustration occurs for business owners because they're really wanting to get moving in this and feeling frustrated that they don't have the necessary expertise to be able to deliver the outcomes that they're looking for.

[00:01:19] So you've made the decision to start and you come across barriers that are usually related to capability and capacity. So it's not the willingness to make the improvement where the resistance is, it's the inability to fit in and execute or deliver the outcome that you're looking for. 

[00:01:43] So to remove that frustration, take your time to map this process out. And we're using the pathway analogy, and I know that the majority of successful business owners, the reason they're successful [00:02:00] is that they've been able to take risks in what they do and I'm generalizing here, but they're typically quick starts and they want to get things done and we're not looking at stopping that from happening. But as the leader of your business, you actually do need to make sure that you are leading people down a particular pathway and that they feel confident that you are heading in the right direction and so sometimes charging in a bull at a gate is not necessarily the right approach, particularly when you are taking people with you.

[00:02:38] Resource allocation is the assessment of what you need to get the job done so to continue with the analogy, what we are looking at doing is getting to that first milestone, so that first month or two the important and not urgent milestone that you're [00:03:00] looking at developing the reason we do that is we are wanting to have some time so that you can go down the pathway and, it may be an experiment or may be the wrong direction because you come up against a barrier, you can turn around and go back and try a different pathway and not have to be committed to the process.

[00:03:22] The committed part of your day is obviously the important and urgent. The things that need to be done today, that's not what we're talking about in this particular pathway. 

[00:03:31] So what are we looking at here in terms of the resource allocation?

[00:03:35] So we addressed capability and capacity in episode five and we'll be re revisiting some of that, as well as introducing a few other resource considerations we're gonna drill down into the internal resources that you need and how to determine whether you need external resources.

[00:03:57] So we're gonna look at what financial resources [00:04:00] you'll need to invest in the business improvement. And there'll be two parts to that. There'll be the direct expenses so these are out of pocket expenses that you invest in the business improvement and then there's the indirect expenses, which are the opportunity costs, I guess, for you and your staff investing in this. 

[00:04:22] A lot of times people don't take this into consideration and the indirect expenses can have a significant impact on the operations of the business if you drag people away from their day-to-day operations and put them into the business improvement.

[00:04:39] So there's a balance there between whether in fact that's the best use of their time and in particular if it's not a skill skillset that they need to develop or have.

[00:04:50] So we're gonna look at specifically now the internal resource capability and capacity that you need and looking at the skills that you need [00:05:00] for the milestone that you are targeting in this first period, 

[00:05:05] What skills will you need to be able to achieve that particular outcome?

[00:05:10] Who has those skills and are able to contribute ? And who should included and or excluded? And the opportunity here is potentially to add additional expertise to your team for the long term value and sustainability of the business. So look at it as an investment in your business, not just an expense.

[00:05:35] One word of caution here is that there is a potential risk that you redirect your resources, and as I said earlier, it has an impact on the viability or the efficient operations of the business as it stands today. 

[00:05:51] So you just wanna be careful about directing people into a particular pathway, if don't have the time or the [00:06:00] skills to be able to do that. So you may need to think about the external resources there and we'll, talk about that shortly. 

[00:06:10] So just reinforcing that rigid flexibility that we spoke about last week in that there's a pathway that you're looking at walking down and it may not yet be defined so you need to have this constant feedback loop to make sure that everyone is moving in the same direction. 

[00:06:29] Now, external resources this is where you are looking at bringing in expertise in a particular area that potentially you either don't need that long-term skillset within your organization.

[00:06:47] And I use the example of a website you, unless you're a web developer or your business is very focused on having a fully functional website something like potentially an [00:07:00] e-commerce area where it would make sense for you to have those skills internal within your organization. But if you are just looking at refreshing your website, there's no point in having a full stack web developer department inside your organization. 

[00:07:15] So we're going to look at the external resource assessment and because we are focused on important and not urgent tasks, it will give us the opportunity to have time to work out whether in fact it makes sense for you to, you bring in a, an external resource. 

[00:07:40] The risk of making wholesale changes to an operation is that there is potential disruption so I mentioned this in week seven, is to hasten slowly here. The alternative is, obviously the case as well, is that if you are delaying improvements, [00:08:00] there could be an opportunity cost. So it might be that you're losing market share and so this is a defensive strategy or an attacking strategy. So not having the internal capability or expertise may be something that you need to change immediately to, be able to overcome that. So it may be a question in the planning that you've made is that when you get to a point, you're not sure whether you need to use the internal or external resource to be able to overcome that. So this is where there's that rigid flexibility so initially, May have decided that you can handle that internally, but you get to that point and it, and you decide, Hmm, maybe we're better off if we bring in a subject matter expert to get us over the hurdle.

[00:08:48] So these are short-term objectives that you're looking at achieving and it's, the reason I get engaged with clients is because they get stuck or [00:09:00] come up to a hurdle and they're not entirely sure how to overcome it and so they engage me. I come in, we do some work for three, six months, get 'em over that particular hurdle, and then they move on from there.

[00:09:14] It's the same with, I keep talking about web developers, but there's a whole bunch of service providers who come in on a consultancy basis. They're not coaches. There's a difference between a coach and a consultant. Consultants come in, they're subject matter experts. They, come in, they do the work, and they leave.

[00:09:34] And potentially what they can do is, at least this is what I do. If there is a need for the capability of the people to be developed, for example, leadership and management training, and then I would come in and provide some additional support in that particular area, and that might require some coaching, which is different to consulting.

[00:09:57] As you build out your business [00:10:00] improvement plan, one of the things that I would suggest that you do is you start looking at what the potential external resources are that you will need, and you start looking around at people who might be able to provide you with that, you know, tap into your existing network. People who are in businesses similar to yours. Maybe they've used people in the past. There's obviously always people who are, um, providing information available to you as a cl as a potential client and I would start having conversations with those people to see whether in fact there's a match, whether you can get on with them.

[00:10:40] It's not about engaging them, but it's about asking for their thoughts around a particular strategy that you have and what might be involved in them coming on board and you can also get an idea of what that cost might be. 

[00:10:55] And that's a nice segue into the next part that we're looking at [00:11:00] in this area of resource allocation is what's your budget?

[00:11:05] Obviously there needs to be a, a clear return on investment if you're going to make any improvement the reason you're doing that is to get a return on an investment and. Recent project that we are almost finished with is the introduction of a crm to a business to enable the business owner to extract themselves from the day-to-day operations of the business and for them to be able to monitor the performance of the business without having to be in on a daily basis.

[00:11:38] One of the high level figures that we were looking at was if we had a 5% increase in the sales. that the return on investment for the entire project would be around about 12 months. So it made sense for, that investment in the business and obviously what we're looking at is making sure [00:12:00] that we achieve that 5% increase in the sales revenue now the, the CRM will give us the feedback that we need to determine whether in fact we're on track.

[00:12:12] And, the financial gain is the obvious one that everybody tries to make sense of but there's also the non-obvious financial gain. So maybe you are looking for more time to focus on what you love to do, and that gives you the ability to generate more revenue.

[00:12:34] It may mean that this process of extracting yourself from the day-to-day operations has a negative effect on profit. So that means that you are not necessarily doing the business development, for example, and you hire somebody to do the business development, and that obviously has a an increase in costs.

[00:12:58] But it also has a [00:13:00] positive effect in the value of the business. So if you are no longer the key person involved in the day-to-day operations of the business and you have a potential buyer of that business, it then becomes somewhat of a turnkey operation where it doesn't require your individual contribution to the business for it to be valuable. 

[00:13:25] So there are nuances to this and project is big enough. I would always include someone who has got management, accounting, expertise, and management accounting is not financial accounting, and you need to understand that there's a difference between the two. 

[00:13:41] Management accounting is looking at the future. It's looking at forecasting scenarios, cashflow projections, et cetera, as opposed financial accounting, which is looking at what has happened and reporting on, on performance.

[00:13:55] So just making sure that it may not be that your accountant who's [00:14:00] able to support you in this area may be someone who is a specialist in this particular area of taking some what if scenarios and and modeling those out. 

[00:14:12] The final piece is the allocation of you and your management team. And once you're able to establish the competencies of your team and whether you are using internal or external resources, you'll now need to factor in the time allocation of your team. And I spoke about that briefly before. important thing here is about the communication that you have with your whole team.

[00:14:38] So having the plan mapped out, you can then rally the troops, then you can have conversations with your team and explain why you potentially are not going to use them in the strategy, but they will be a place for them at some time in the future, and it's based on their either capability so they can't add any [00:15:00] value because they just don't have the necessary skills now, or they don't have the capacity to be able to do that, and you taking them out of the day-to-day operations and bringing them into this project may have some detrimental effects both on them in terms of their mindset and the business operations. 

[00:15:21] So what you can do is, because we are working with important but not urgent projects, if there is a skillset that this person needs to develop to be able to contribute to the project, you've got some time then to potentially train them, send them off on a course, mentor them, coach them, on the job training there's a number of ways that you can help to build up their skill level if that skill is required to maintain the sustainability of the business. [00:16:00]

[00:16:00] So bringing that communication to your team has this fantastic impact upon the culture of the organization. So they then feel as though they're going to be a part of that solution and that they're being valued and they, and their contribution is being valued.

[00:16:22] So it has this knock on effect because you are communicating with your team and they can see the direction that you are taking them down as the leader, that they start to feel as though they're a part of the employer of choice that we've been talking about.

[00:16:43] So that brings us to the conclusion of the resource allocation part of implementation I hope you got some value from that thought process. Looking at focusing on the important but not urgent areas. Taking some [00:17:00] time to look at the internal and external and financial resources, and then how you go about managing your team to enable them to feel as though they're a part of the organization or a part of the solution so that they can contribute and feel valued and obviously what we're trying to gain is that employer of choice, mentality, and culture.

[00:17:26] In the final part of the implementation planning pathway next week we'll be looking at the integration before, during, and after the improvements are implemented.

[00:17:36] As a leader of your team, there is a lot of responsibility on you and it rests on your shoulder so I hope what I'm sharing with you gives you a framework to make better decisions as you go about improving your business. 

[00:17:52] And just a reminder that the individual and business bonus offers worth in excess of $40,000 will [00:18:00] be on offer after the final episode and I know I'm bucking the trend here with this, but I truly believe that if I want to give away value I, want to be very targeted and so for you to be eligible, what you need to do is you need to be subscribing to one of my email lists. 

[00:18:24] The scale to success solution is a simple application of systems and processes to improve the efficiency and effectiveness of your business. It also delivers a program of people development and leadership training, so they have the skills and knowledge to do the things they were employed to do. My goal is for you to become the lazy entrepreneur so that you can continue to do the things that you love and be with the ones who you love.

[00:18:54] As always, I appreciate you for listening and I hope the information I shared with you [00:19:00] here today is useful and adds value to your business, and that you're inspired and energized to make a difference in your and others' lives.