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Working out Return on Investment

23 May

dictionary coins watchIn Part 1 of this article I talked about how you work out if an investment is worth making. Now I’m going to look at how you work out what the ROI (Return on Investment) is for something you’ve bought, and next time I’ll be sharing some examples from me and some other people about what’s worked for us – and what hasn’t.

What is Return on Investment?

Return on Investment (ROI) is what you get out of something as compared to what you put into it. A straightforward example is if you invest in some stocks and shares. If you put in £10,000 and get £1,000 back on top, that’s a good ROI. If you put in £10,000 and get back £8,000, not so good.

It’s not quite that simple if you’re looking at your own investments, though.

Time / money / effort

Investments and their returns can be subdivided into several categories, for example, time, money and effort.

Investment:

  • Time: You might invest your time in learning a new skill or trying out a new tool, or writing your web text yourself.
  • Money: Lots of products and services and memberships cost money to buy. Even if you’re bartering,  there is still a “cost” involved, even if you’re paying your proofreader in falafels!
  • Effort: I’m including emotional/psychological factors here. You might put a lot of yourself into going out networking if you’re shy and would rather stay at home. Chasing late invoices can be full of effort if you hate hassling people for money. Working part time and running your business part time can involve a huge emotional and psychological investment, as can building relationships with your clients.

Returns on Investment:

  • Time: Do you save your time by using a new product or by out-sourcing? Your time is also money, of course, but there is only so much time in the day, or week, or month, and you should really be concentrating on doing the core tasks that only you can do, whether that’s making your jewellery, editing novels or selling widgets.
  • Money: If you streamline your production line with a new machine so you can make and sell more items per day, or get your invoices paid on time and improve your cash flow, or you buy a tool that makes your hand-made cards look more professional, then whatever you’ve done has saved you money, or made you more money.
  • Effort: If you hate doing something and you can pay someone to do it for you, or you want to branch out into a new area of work that you find attractive and interesting but need to do a course to get into it, or, indeed, you’re tired of the day job and know that by working hard on your business you can move away from it and gain a more free and flexible lifestyle, then those all save you effort or bring you an emotional gain in the long term.

These factors can inter-relate, so you might get something like this:

  • I spend MONEY on an accountant and she saves me MONEY in terms of the tax I pay
  • I spend TIME setting up automated invoicing systems and save myself TIME every month when I run my invoices
  • I put EFFORT into networking and save EFFORT in getting new clients in other ways I don’t like to use, like cold-calling
  • I spend MONEY on an accountant and she saves me time working on my accounts
  • I spend TIME setting up automated invoicing systems and make more MONEY because I’m more efficient, and save EFFORT tracking down invoices and chasing up late payers

And of course, you can have negative or neutral returns on investment, too:

  • I spent MONEY on paying to advertise on this website, but I’ve never directly made any MONEY from it (referrals can be tricky to work out as people sometimes see your name a few times before they buy, but if you pay for membership or an ad you should be able to see some direct worth coming from it)
  • I invested lots of TIME writing my blog but no one looks at it so I can’t be making any MONEY from it and if no one reads it and I never get any comments so I don’t get any emotional (EFFORT)  output either
  • I made MONEY making these rip-off teddy bears but I feel awful that I went against my principles

You get the idea.

So, is it worth it?

An investment, whether it’s in a product, a service or something less tangible, is only worth it if you get more out of it than you put in.

This can be very subjective. If you hate doing your bank reconciliation, you might be happy spending more on an accountant to do it for you than your friend, who quite likes doing it. If you join a professional association but get no business, kudos, support or fun through it, then it’s not worth paying those fees next year – but that can be very different for your colleague at a different stage of her career, as we will see.

So, it’s a question of sitting down and looking at what you’ve bought, and working out whether the return on investment, in terms of money, time or less tangible factors is worth it. You can do this in advance, too, for example “I need a new computer, it will cost me money but save me time recovering from crashes and increase my income as I can do more work more efficiently”, but you MUST also do this in arrears, rather than spend-spend-spend and never tot up the benefits.

Next time I’ll be talking about the investments I (and some other people) have made, which have been worth it and which have not.

RELATED POSTS:

How do you know if it’s worth investing?

Interested in finding out how I made the transition from part-time to full-time self-employment and built my business safely and carefully? Take a look at my new book, out now!

 
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Posted by on May 23, 2013 in Business, New skills, Organisation

 

Small business chat update – Annabelle Beckwith

18 May

Yara Consulting logoHere’s a very welcome addition to my chat updates from my friend Annabelle Beckwith of Yara Consulting. Anna’s first interview was published at the end of April 2012, and she said this about her plans for the next year: “A lot can happen in a year! I plan to keep growing, and to turn some of my training programmes into online products to generate another income stream”. So, has she kept growing, has a lot happened, and does she have a new income stream? Read on to find out …

Are you where you thought you’d be when you looked forward a year ago?

Yes and no – I thought I’d be doing more online than I actually am. My short e-book, ‘A Quick Guide to Indian Culture‘ is available on Kindle, though, and selling well, and I still have plans to market products online.

What has changed and what has stayed the same?

My approach has stayed the same: the biggest difference is the extent to which I’m collaborating with others – with Susan Grandfield at SG Development Solutions on a major project , and with training colleagues, Ian Thomson and Charlotte Cameron, with whom I’ve formed a consortium ‘Never Mind the Buzzwords’. We’ve already won our first pitch to deliver a programme for Senior Managers at a Leeds-based charity.

We all have different sets of skills, so it makes sense to combine them in approaching larger clients.

What have you learned? What do you wish you’d known a year ago?

I’ve learned to leverage the skills of others more, and to focus on what I do well. My forte is in developing creative and experiential (and sometimes off the wall) approaches to learning and development, and I have a strong network of people with complementary skills whom I can draw upon.

In some respects I wish I’d started these more formal collaborations last year…on the other hand, the time seems right at the moment.

Any more hints and tips for people?

Don’t look back with regret. Look back and learn … and keep moving forward. And , as Churchill put it “never, never, never give up”.

And … where do you see yourself and your business in a(nother) year’s time.

Working collaboratively with others for larger clients … and maybe I’ll get some of those online products going!

So, not so much of the online products, but lots of exciting-sounding collaboration. This has been a bit of a theme in this series recently, and I can also bear witness to the fact that as your business grows and matures, it’s most useful to treat your colleagues as just that, colleagues, rather than rivals. Even if you don’t make formal collaborative arrangements, there will still be times when you know that someone else’s skills will work for your prospective – or current – client better than yours do, or simply be swamped with work and need reliable people to recommend prospects on to.

We look forward to hearing more exciting news next year!

The Yara Consulting website can be found at www.yaraconsulting.com  and she has a blog, too. Anna can be contacted via email or her contact page online.

If you’ve enjoyed this interview, please see more small business chat, the index to all the interviewees, and information on how you can have your business featured. If you’re considering setting up a new business or have recently done so, why not take a look at my new book, Going It Alone At 40: How I Survived my First Year of Full-Time Self-Employment.

 
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Posted by on May 18, 2013 in Business, New skills, Small Business Chat

 

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How do you know when it’s worth investing?

15 May

dictionary coins watchYou want to invest in something, but how do you know when it’s worth it? Is it worth laying out a sum up front, or is it always better to save up first? In this article I reflect on some purchases I’ve made which have been worth it (and some that haven’t), and discuss how you tell if they’re going to be in advance.

How do you tell whether an investment is worth it?

Investments for a small business can be broken down into

  • Outsourcing (paying other people to take on tasks you might do in-house)
  • Products, materials and services
  • Training

Is it worth outsourcing this task?

In a previous post, I talked about how to tell when it’s time to outsource a task to do with your business. My rules then were:

  • If you’re rubbish at doing something and I’m good at it, outsource it to me (even if you’ve got the time to do it yourself or it’s going to cost you more per hour)
  • If the time it will take you costs more in your worth per hour than it would cost to pay someone else to do it, then outsource it (e.g. transcribing your interview will take you 6 hours and you’re worth £40 an hour (£240) – better to send it to me who can do it for you for £60.

This links into a couple that are about time:

  • If it’s going to take you 6 hours to do but me 3 hours to do, then outsource it to me
  • If it’s going to take you 6 hours to do and me 6 hours to do, but you don’t have those 6 hours free, then outsource it to me

But you can add in some other factors, too, such as the boredom factor:

  • If you’re perfectly able to do the task and it would cost more to have someone else do it, but it bores you to tears and you never get round to doing it until it turns into an unholy mess, outsource it to me.

This last one is how I decided to hire an accountant to do my accounts and my bank reconciliation.

Is it worth buying this product or service or these materials?

That’s all about outsourcing. What about investing in products and services? These are my rules:

  1. If it will make my work more quick or more efficient – consider buying it
  2. If it will make my records more secure – consider buying it
  3. If it will advertise my services to my core market – consider buying it (for a year on a trial)
  4. If it costs under £100 – go for it

Points two and four combined to make me buy my external back-up drive and my professional version of my transcription management software.

Points three and four combined to make me sign up for membership to Proz (a jobs board service), which I’ve stayed with, and other sites and associations, which I have trialled and haven’t stayed with (see section on Return on Investment in the next article).

Of course the £100 level is an arbitrary level I selected. In fact, I didn’t select it consciously: I’ve just noticed that that’s the level I’m comfortable with.

Regarding materials, I don’t use materials in my editing business. But the golden rule here has to be:

  • Will the price of the item you’re making be higher than the cost of the materials? If not: find cheaper materials or adjust your prices within sensible limits

Is it worth buying this training course?

And a special consideration on training, as this is something I have been pondering and decided not to invest in:

  1. Is the training run by an accredited provider that is respected in my industry?
  2. Does it train me on something I will use in my everyday work life?
  3. Will it add a skill to my portfolio that I
    • know there is a market for
    • will enjoy doing
    • have got time to commit to fully once I’m trained up?

Point two helped me decide not to take the training provided by a well-known and respected association in order to gain qualifications with them, because they are all about editing on paper and I have done one job on paper in four years.

And the last bullet in point three is how I decided NOT to pursue training in the art of indexing. Yes, there’s a market for it; yes, I would enjoy doing it; but no, I have a full roster of valued clients at the moment. If I was to take on indexing work, something would have to give: either my evenings and weekends, which I have pretty well reclaimed from Libro, or one or more of my current customers. I wasn’t ready for either of those scenarios, so let it go.

Do I invest in advance or arrears?

This is a tricky one. I’m facing it at the moment with my book.

I really want to publish a print version of my e-book. I’ve got some quotes for producing the back and spine cover art and wording, and for producing it as print-on-demand and fulfilling it via the online bookshops. I would be able to buy copies for myself and sell them at events. I’d also have a physical book with my name on.

I was always adamant that the book needed to pay its way, i.e. I wouldn’t do new or paid-for initiatives until the book had actually brought in the money into my bank account to pay for it. Ignoring the hours I put into writing and promoting the book so far, I would need to sell approximately five times as many e-copies as I have already to pay for the setup, design and print-on-demand service (the fulfilment cost comes out of the profit on each copy).

I should make at least twice the profit on each print copy that I sell as I do on the e-books, if they sell.

Do I wait until I’ve made that money to go ahead? Do I wait until I’ve made half of it and then risk the other half, assuming it will take me half as many books sold in print to get the investment back? Do I do it now and hope I sell 2.5 times the books in print that I’ve sold in electronic form to pay myself back?

Before, I’ve always waited until I have the money put aside before I buy something – I didn’t invest in my new PC and laptop until my Libro business had been going for a couple of years and I had the money in the bank (were they worth it? Read next week’s article to find out!). But I’m eager to get those print copies out there … and I really don’t know what to do at the moment.

How do you choose how to invest / whether to invest?

How do you make your decisions? Have I missed something here? I’d love to know your thoughts – do post a comment! And … should I make a leap of faith and invest in print copies of my book? Help me to decide!

In the second part of this article, I talk about how to calculate your return on investment, and I’ll be going on to share what’s been worth it for me (and some other people) – and what hasn’t.

RELATED ARTICLES

Working out Return On Investment

Interested in finding out how I made the transition from part-time to full-time self-employment and built my business safely and carefully? Take a look at my new book, out now!

 
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Posted by on May 15, 2013 in Business, New skills

 

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Small business chat: Diane Grogan

11 May

Welcome to a brand new Saturday Small Business Chat with Diane Grogan from Kanine Kampus & Pet Au Purrs. We’ve already encountered Diane in this series, as she was mentioned in Gill Linnell’s update interview a few weeks ago. I do think it’s great when similar businesses work as colleagues rather than rivals – it’s the way I operate with a number of editing colleagues, as there are always peaks and troughs in any type of business, and it’s good to have trusted people you can recommend enquirers on to, or who can fill in types of work that you don’t provide yourself. When Diane contacted me with her answers, I thought it would be an interesting comparison, too.

In a common theme that runs through these interviews, this successful business (it’s been running for nine years) was started because the business owner had experience in the area she wanted to go into. I’m becoming more and more sure that this is key, but maybe one of you will prove me wrong …

Let’s meet Diane and find out more about her business and the lessons she’s learned.

What’s your business called? When did you set it up?

Kanine Kampus & Pet Au Purrs, I set up Pet au Purrs in April 2004 and it was mainly pet sitting, dog walking and small pet home boarding (rabbits and guinea pigs, etc.).

What made you decide to set up your own business?

I had the chance of being made redundant from the vets where I worked, and I had experience in dog grooming, running a kennels and also running the feline holiday apartments connected to the vets.

What made you decide to go into this particular business area?

I have always worked with animals in various areas, and decided I wanted to stay working with animals.

Had you run your own business before?

Never.

How did you do it? Did you launch full-time, start off with a part-time or full-time job to keep you going … ?

I just set up full time in what I was doing, I was lucky to have the backup of my husband having a good job at the time.

What do you wish someone had told you before you started?

Don’t panic, don’t stress!

What would you go back and tell your newly entrepreneurial self?

Follow your dream.

What do you wish you’d done differently?

Set up the daycare part of the business sooner.

What are you glad you did?

I’m definitely glad that I went down this route.

What’s your top business tip?

Be sensible, but if it’s your dream, follow it through.

How has it gone since you started? Have you grown, diversified or stayed the same?

It’s grown: now we have the daycare it’s opened up a whole new side of the business, and more opportunities, such as Dog Grooming. We have teamed up with Gillian Linnell, helping her to expand what she offers, and also with Rachel Bean, RVN Canine Behaviourist, to provide first aid and puppy workshops. We also offer dog training and have a small shop area.

Where do you see yourself and your business in a year’s time?

I hope that the business keeps growing and we could maybe have another branch of Kanine Kampus in another area.

That’s very good advice, isn’t it: don’t panic, don’t stress, be sensible and follow your dream. As I said earlier, partnering with colleagues in the same business area is often a sensible path to follow that can help you both to expand what you offer and provide a wide-ranging service, and is something that I think everyone should look into. At very least, it can provide that all-important holiday and sickness cover, as I’ve found out over the years. Best of luck to Diane with her plans for expansion and possibly more collaboration, and we’ll look forward to finding out how things are going in a year’s time!

You can visit the Kanine Kampus and Pet Au Purrs, based in Oldham, at www.pet-au-purrs.com, phone Diane or Paddy on 07942 892 728 or visit their Facebook page.

If you’ve enjoyed this interview, please see more small business chat, the index to all the interviewees, and information on how you can have your business featured. If you’re considering setting up a new business or have recently done so, why not take a look at my new book, Going It Alone At 40: How I Survived my First Year of Full-Time Self-Employment.

 
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Posted by on May 11, 2013 in Business, New skills, Small Business Chat

 

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What to do if your comment boxes are too big in Word

08 May

I have already published a range of posts on issues with comment boxes or comment balloons, including ones on comment boxes suddenly going tiny, or comment box text running in the wrong direction, changing the language in your comment balloons. Thanks to my colleague, Laura, I realised that I needed to post an article on what to do if your comment box size, or the general comment box area, is bigger than you want it to be.

Help! My comment box margin is too large!

This is the problem that my friend, Laura, had. Her comment box margin was somehow spreading across almost the whole page. Although it doesn’t encroach on the text area on the page, it makes your total page really wide. It looked something like this:

1 too wide

Even on my wide monitor, if the comment box margin is too wide, you get the choice of being able to see all of the text, as above, or all of the comment, as below – not very helpful!

2 too wide

How do you resolve this issue? You need to pop into Track Changes (in the Review tab) and click on the little arrow at the bottom to give you the Track Changes Options. Right at the bottom, you’ll find options for making the comment review pane / margin smaller (and moving it to the left or top if you so desire).

The default is 6.5 cm but if you like to have your page of text bigger but still see your comments, change this to a smaller size.

Note, that like everything in Track Changes, this only changes the view on your computer – whoever you are sending the document to will see it however they’ve set it up.

Help! My comment box text is too large!

Are you experiencing this problem:

3 too big

To change this to a normal size, we need to access the Styles dialogue box, by either

  • Pressing Control + Alt + Shift + s simultaneously
  • Going to the Home tab and clicking the little arrow at the bottom right of the Styles menu

This brings up the Styles dialogue box.

Click the right hand button at the bottom: Manage Styles. When you first open this next window, the sort order is As Recommended – click on the down arrow to change it to Alphabetical:

Find Balloon Text (note: not Comment text) and it confirms how you have your text set up (blue circle).

Click the Modify button … to change your font and font size. You’ll notice lots of other options (blue circle) to change the spacing, etc.

The standard size for balloon text is 8 or 10 so choose that and you’ll have a nice tidy balloon again!

Press the OK button, and carry on pressing OK buttons until you get back to your document. Now, your comment will appear in the style you have chosen.

Again, these changes will only affect your computer.

These related topics should help you further:

What to do if your comment boxes go tiny in Word

What to do if your comment boxes start running from right to left

Changing the language in your comment balloons

Customising your comment boxes – everything you need to know

Customising Track Changes

This is part of my series on how to avoid time-consuming “short cuts” and use Word in the right way to maximise your time and improve the look of your documents. Find all the short cuts here …

Do let me know if this has helped you, saved your bacon, etc. – and do share with the buttons at the bottom of this article.

 
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Posted by on May 8, 2013 in Copyediting, New skills, Students, Word, Writing

 

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Small Business Chat Update – Harry Bingham

04 May

Welcome to another interesting Small Business Chat update, this time with Harry Bingham from The Writers’ Workshop. Harry’s original interview was published in April last, year, and when  asked where he wanted to be in a year’s time, Harry replied, “Overall, it feels like we have a good, coherent package of services. I think we’ll focus now on expanding our reach and less on adding new services. The real trick will be to go on developing our web presence: something that just takes huge amounts of patience and work.” So – did this happen? Let’s find out …

Are you where you thought you’d be when you looked forward a year ago?

Hmm, well you me reminded that I’d said, “I think we’ll focus now on expanding our reach and less on adding new services”. Shows how much I know, huh? It’s true we have put some time and effort into boosting our web presence … but we also decided it would be fun to revolutionise the way that writers searched for literary agents in the UK. So we built Agent Hunter, a site that holds details on every literary agent in Britain, and provides data that is richer and more searchable than anything which has gone before. We’ve only just launched it and still have a LOT of work to do, but early indications are wonderfully promising.

What has changed and what has stayed the same?

The biggest change is the launch of Agent Hunter. What stays the same is the need to keep on looking at how we attract clients. Viewing ourselves through their eyes – and doing all we can to deliver amazing editing services to make sure that every manuscript leaves our hands better than it arrived. And our clients, of course, always want to be hooked up with literary agents, so we’ve done more and more to deepen our connections with that community.

What have you learned? What do you wish you’d known a year ago?

The big thing would be that when it comes to these big database projects (like Agent Hunter) you can’t do too much thinking and specification in advance. I can easily see why major government IT projects go over budget. We did OK, but we were learning fast on the job.

Any more hints and tips for people?

Yes! Have fun. Be open to the new. This time a year ago, we were fully open to working hard on our editorial services and writing courses … and leaving it at that. But (when walking back from the pub one day) it occurred to us that we could create something like Agent Hunter and we just thought, why not? A few phone calls later and we were committed.

And … where do you see yourself and your business in a(nother) year’s time?

The centre of our business will always be our manuscript editing services. That’s not just the biggest revenue earner for us, it’s also the company’s spiritual core. But if we see great things we can add on to what we already do, I think we’ll go for it. At the moment, I don’t see anything like that on the horizon, but we’ll never say no to a good idea.

So, a bit of a surprise new addition to the business there, that certainly wasn’t in the air a year ago – but it all sounds very exciting and we wish the new Agent Hunter initiative lots of success in the coming year. I wonder what Harry will have come up with by this time next year … be sure to watch this space!

The Writers’ Workshop can be found online at www.writersworkshop.co.uk

If you’ve enjoyed this interview, please see more small business chat, the index to all the interviewees, and information on how you can have your business featured.

 
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Posted by on May 4, 2013 in Business, New skills, Small Business Chat

 

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Small Business Chat Update – Gillian Linnell

27 Apr

Welcome to another Small Business update, this time with Gillian Linnell of the recently slightly renamed GGL Pet Services. Gillian’s original interview was published in February last year and what did she want to be doing by now?  She said, “I would like to be selling the supplies to local people and pet sitting clients and to have a brand and reputation which is very well known and recognised in the local community. Eventually I would like to employ staff and have a  warehouse full of pickers and packers. This is just one ambition – I have a handful of different directions which the company can take“.

Which direction did Gillian take? Read on to find out …

Are you where you thought you’d be when you looked forward a year ago?

I am in a different place than I was when first interviewed, I still offer pet supplies but a more niche market now: my suppier is Puchi Petwear, and they specialise in designer pet wear for dogs and cats, as seen on TV and used by celebrities. I dont tend to push this side of the business so much these days, as the Pet Service side has become the main title, hence the company name change from GGL Pet Supplies to GGL Pet Services.

What has changed and what has stayed the same?

Not a great deal has stayed the same, it’s all changed! I’m now Licensed by OMBC for home boarding dogs, I have a vast client database and dog walking takes up a lot of my day.  I have teamed up with another company, Kanine Kampus Doggie Daycare (read their Small Business Chat here), and we work together every day: it has given me a fantastic USP and a premium package to offer my customers.

I also employ help on a casual basis to help me out with the dog walking,

What have you learned? What do you wish you’d known a year ago?

Keep calm,:-)

Any more hints and tips for people?

You have to have a passion, a love and a will to succeed: if you have no self belief you will find it difficult to succeed.  My advice would be: Positive thinking every day. Enjoy your work – if it’s not like playing a fun game every day where you wake up all excited and raring to go, then you could possibly be in the wrong job. Get the right job, it’s never too late to change.

And … where do you see yourself and your business in a(nother) year’s time?

Wherever it takes me, I enjoy my work and my life, and wherever I go, I know I will be happy and that I will always make the right choices. I have another project which I am currently working on to do with advertising/marketing Pet Businesses, so we will have to wait and see what happens in the future.

Well, there’s a positive note to end on, and some good cheerleading for anyone considering changing their job to have a happier lifestyle! I look forward to hearing what happens over the next year!

Visit GGL Pet Services online at www.gglpetsupplies.com.

If you’ve enjoyed this interview, please see more small business chat, the index to all the interviewees, and information on how you can have your business featured.

 
1 Comment

Posted by on April 27, 2013 in Business, New skills, Small Business Chat

 

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