Do it Yourself Manufacturing

Let me ask you these key questions about your business or business idea.

• Do you operate your online business solely by yourself?
• How well can you innovate new designs?
• Are you good at sales?
• Are you good at SEO?
• Are you active on social sites?
• Are you a good photographer?
• Do you know how to make good videos?
• How well do you understand logistics?
• Who answers your phones?

I asked you these questions for a reason, they are all necessary parts of running a successful online business in todays competitive marketplace.  Most businesses start off with a single person behind the wheel doing all the chores of getting it going.  In order to expand and grow you really need to surround yourself with great talent in order to make headway that turns into cash.  I myself understood that there is just not enough hours in the day in order to wear all the hats that need to be wore.  There are certain things i know how to do and there are certain things I am terrible at.  Could I be a better photographer?  Sure, if I wanted to take the time and purchase the equipment that would make me great.  But then something else would suffer.  Instead it is much better for me to hire that person out and focus my efforts on other things that use my time best.

About the only thing you cannot hire out is the ability to innovate.  Business owners have a unique view of their companies and develop the ability to guide them to growth with innovative new products.  No one wants to just offer the same old thing, bringing a new product to market is where all the excitement is.  So how do you spend time on the all important task of innovation and still get all the other tasks done?  This task of determing how to hire out people may help you.

Lets start with a few basic facts to get this conversation started.

•  Anyone you hire should bring some monetary value to you.  This may take a few months to realize, but it will happen.  Start off with the basic formula that shows a 3 to 1 return.  That is for every dollar you spend on a wage or fee, you should get three dollars in additional revenue back.  This means the extra money you spend on an employee or contractor should get you a threefold increase in return.  For example if you spend $1000 a month for a graphic artist, they should generate an extra $3000 in sales.  It’s important to realize that this does not happen overnight and that you have to plan it in your budget.

• It is very difficult to hire anyone to innovate.  The “idea” people are few and far between and the chances of you hiring someone to innovate new designs that put your business on the map are small.  Hire people that take away the day to day tasks from your schedule.
• Most people do not hire because they fail to budget it in.  If you budget a person into you plan they will begin to return income to your business plan in as little as three months.  Assigning capital to this is one of the smartest things you can do.
• When budgeting expenses, remove the emotions from your planning.  This will help you add the right people into the fray
• You can find good people that do not have to work full time.  You should think of your team as independent contractors for the following tasks.  Photographers, graphic artists, content providers and sourcing agents are all people that you do not have to lay eyes on everyday.
• Sales staff can give you the biggest bang for your buck in the early stages.  Starting them out part time and giving a hourly wage plus sales commision can give you motivated people.  If you want mega serious results you will need to hire a serious professional and pay them what they are worth.  I generally start with someone part time and then take the plunge to full time later down the road.
• Learn how to use the basic capability of an excel spreadsheet so that you can plan out a good six month plan.

Application

So facts are nice but without application they do not do much.  Open up a new spreadsheet and list your expenses down the left side.  Start with a “starting balance”. This is the amount uou have in the bank plus an amount of capital that you can borrow.  At this point do not worry about where to get the money, that is a detail.  Also do not worry about the exact figure either, you will use the spreadshet to “play” with the numbers.

Your sample sheet should look something like this.

1. Starting balance
2. Income from source “A”
3. Income from source “B”
4. Monthly expenses (not labor related)

Set up the spreadsheet so that what comes in as income gets added to the starting balance and then the monthly expenses get subtracted for a difference.

Next skip down a couple of lines and enter in these items

• SEO
• Photos
• Graphics
• Sales
• Logistics (labor)
• Social manager
• Video work
• Accountanting

Next to these entries place a number (guess for now) and have a total at the bottom of the list.  (use the autosum feature of excel)

Lastly take the difference from the income block above and subtract these labor costs in.  Carry the difference as a new balance for the following month.

So now that you have the basics on paper you can start playing with the numbers.  At first you should prepare your mind that the people you hire will not give you any significant return in the form of labor in the first three months.  You will just have to expect this and suck it up a little.  Hiring a sales person will give you the best bang for your buck.  Sales people generate revenue in a faster timeframe than an SEO person.  SEO can take much longer to gain traffic and convert them into sales.

So what is the value?

If you have taken the time to program your spread sheet you should start to realize a bump in revenue.  I would start to track that revenue and see how it relates to the three to one rule.  Chances are it will be much better.  If it is not, you are either still on the learning curve or you may need to replace your salesperson.  The key is to make adjustments and play with the numbers finding the right mix.

Money

This is the one word that everyone seems to get jammed up about.  It is not as a big deal if you are doing your due diligence and building cash flow.  So where do you get the money?  There are a number pf places besides the obvious.

1. Home equity.  This is one of my favorite techniques.  You are really borrowing money from yourself to make yourself some more money.  Remember that every bit of borrowed capital is tax deductable.  Resist the urge to get more than you really need.
2. Kabbage.com. This is a fairly mew program that lets you borrow money to expand or buy product.  They have a slick user interface and the system runs on Paypal.  It is super convienent and very easy to use.  Interest rates are about 6% at the time of this printing.
3. Amazon lending.  Believe it or not Amazon got into the lending business and rhey actually have money to lend if you are a merchant selling on their platform.  This also is a easy system to use since it works right inside your account.  I find the interest rate a bit high, 16%, but if you have margins and turn over product quickly, it can work for you.

Credit card.  This use to be a taboo idea which I think was tarnished by irresponsible indivduals, not business owners.  There are a lot of finance mentors that recommend using your credit card to finance projects.  If you are careful to pay on time and pay more than the minimum payment this can also work to your advantage.

Creativity is what counts.  I never let money stand in the way of a new product or a new direction.  It is merely a detail.  The sooner you disconnect from the effects that managing money has, the better off you will be.  The key is to surround yourself with people that make you successful.  You cannot do it all yourself, you have to have help.  Help is everywhere, you just have to plan for it and then go find it.

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