Spend More to Make More: 7 Key Concepts & A Story to Grow Your Business Strategically

One thing successful business owners have in common is that they’ve mastered this principle:? "spend more to make more."? They’ve essentially figured out how to “take one dollar and turn it into two dollars” with their business.?

Spending money to make money may seem counterintuitive to some, yet it’s quite common to borrow large amounts of money for higher education (i.e. the foundation of a career for most people).? The challenge is that in business, there’s a lot more ambiguity and no guaranteed outcome, whereas in education the path forward is comparatively more clear:

1. You invest.??
2. Put in work for 4 years.??
3. You come out with a degree.??
4. 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 be careful to add a very important word – strategically.

Money needs to be spent strategically in order to effectively make more.

Unfortunately, I see very few small business owners approaching their business with a clear strategy.? I also see a lot of business owners very hesitant when it comes to investing the necessary resources into growing their business.? This is understandable.? I don’t recommend investing without a strategy.

The remedy I would suggest is to develop a deeper understanding of how your business earns money, and then lay out a clear plan for growth (i.e. business strategy).

The Time I Hired An Online Business Manager (...and was so glad I did!)

As I entered into my third year of business, my website was in desperate need of updating.? I was so embarrassed to share it with people that I was sending folks 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 things out myself, but it probably would have taken four times as long (and it probably would have ended up being half as good) as compared to hiring a professional who can do the work at $50-70/hour.

Hiring this help freed 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 that I’m actually skilled at.? And the person I hired did a much better job than I would have done!? I got lots of compliments on my website.? I was also able to pick up where I left off with my new CRM without missing a beat in sending out my regular newsletter emails.

Concept #1: Opportunity cost

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 all by myself.

All of that is time that could be spent serving clients.? And I’m lucky that 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, just to illustrate the point).??

• Instead of taking on a DIY website/CRM project, I decided to put those 40 hours into client services instead?
• 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 is able to 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 may have saved $700 of expense, but the cost would have been 40 hours of my time which could have allowed me to earn $4,000.? That doesn’t include all the overwhelm, confusion and stress of fiddling with unfamiliar tech (which could have bearing on my other client work).?

So in that scenario, we can say that I spent $700 to earn $4,000 - that’s a decision that profits my business $3,300 - not bad!

Concept #2: Understand your business model

For some, the term “business model” may sound like a fancy term, but it simply means understanding how money moves in and out of your business.? You may have one or more streams of revenue, 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 talk though, so don’t mistake that as a small question! But in my consulting work, once I understand my client’s business model, I’m able to then help them identify where there may be potential for building efficiencies.? And this brings us back to our core question “how can we spend more to make more?”

Concept #3: Identify high-yield and low-yield revenue generating activities

Once we understand what activities are required for your business to make money, we can then begin to categorize these activities according to the impact they have on generating revenue for your business.? In other words, certain basic activities like clearing out your promotional emails from your inbox, attending a webinar or dusting off our keyboard probably won’t have a direct impact on your income.? These can be called low-yield (or no-yield) revenue generating activities.? And often, these are activities that can be handed off to other people because they generally 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 there’s a lot of room for nuance here, so some of the activities I’ve listed here could easily be marked as low-yield or high-yield depending on the details of what’s involved.

Concept #4: Delegate to scale

If you find yourself doing a lot of tasks that fall into the category of “low-yield revenue generating activities”, it can be profitable to delegate these if it frees you up to focus on “high-yield revenue generating activities”.

Be patient though - it may take time for you to define your systems and processes sufficiently that will allow another person to step in and do the work in the way you want it done.? It will also take the time it will take to train the person.

If you find a highly skilled Virtual Assistant (VA) or Online Business Manager (OBM) who is experienced with businesses like yours, they can help you build out the necessary systems and processes that will allow you to effectively delegate.? Helpers of this caliber will generally know how to gather this information from you during their onboarding process.

Concept #5: Understand stepped costs

It may seem like more work in the beginning when you’re bringing someone onboard, so it’s a good idea to consider hiring help before you really feel the pains 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 it doesn’t set up the right culture for success.? You may find yourself spending more money in the first month or two before you see a noticeable increase in revenue.? 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 as a result.? On a graph this looks like a stagger, because your investment will take some time to allow for that increase in work volume (i.e. revenue).

It’s important for you 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, and if you don’t have a way to create a clean profit and loss report, you may want to hire a bookkeeper or accountant to help you with this.? If you can find someone who can 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?

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 strategy, and you are executing, you’ll need to give the strategy enough time to work.? If you bail on your strategy before it has time to take root, all of the thought and effort that went into creating the strategy will have gone in vain - it needs to be given a fair shot.

Here are some key elements of an effective business strategy:

1. You’ll need to have financial goals, and these goals need to be time-bound (i.e. 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 that you develop a financial forecast that shows how you will build up to hit those goals.?
2. You will need a strategy for marketing, sales and operations development to help you hit those financial goals.? These are the core elements of the business planning process.
3. You’ll need to have a way to track against 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.
4. You will also likely need to adjust your strategy as you begin to see what’s working and not working.
5. It’s helpful to have a business advisor, coach or consultant who can help you see from an outside perspective to either 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 expert help will give you the best chances for success.

Concept #7: Be mindful of scarcity mindset?

Scarcity mindset is unfortunately common in the small business community.? In the same breath, I would emphasize that this is a subject that needs to be approached delicately and handled with care.??

A person afflicted with a scarcity mindset tends to focus more on what they lack or might lose instead of what they could gain.? It impairs creative thinking and openness to possibilities, and it generally inhibits one’s ability to effectively grow a business.? Entrepreneurship is a highly creative pursuit that requires both an open mind and an ability to think critically.??

Working through a scarcity mindset may require doing some deeper money work, to gain familiarity with one's subconscious patterns around money.? Money related traumas are unfortunately common in today’s money-driven society, and many folks inherit unhelpful patterns around money from their parents, relatives and even ancestors.

But the reality is that money allows for a lot of important things in life.? Bringing mindfulness to your relationship with money as a business owner is key to allowing 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 necessary 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 definitely not for that.? It can easily do more harm than good to call someone out directly if it appears they’re afflicted with a scarcity mindset.? Ultimately, this tip is to help you as a business owner reflect 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, M.A. , a pioneering financial therapist and author of The Art of Money.

Conclusion

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 need to be designed with some forethought, intention and strategy in order 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 are key for bringing in the help that will support your success.

May your spending be strategic.??

May your spending make you more.

Your unique approach

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 fill out my Integral Business Type Assessment (note: this is designed specifically for holistic health business owners, but the results can be translated with relevance to most service-based businesses).