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How you can save € 3,000 yearly by making a one-time investment of € 750?
Let me ask you two fascinating questions:
- How can you save € 3,000 yearly by making a one-time € 750 investment?
- What needs to be done to ensure that this will give you extra earnings of € 1,372 in the first year and € 2,229 in the years after that?
But first, let's think about what we're looking at and why we're looking at it before we do the math. As a business owner, you should look at all the tasks you have to do. You have a lot of tasks in your business. Since "time is money," there are many ways you can free up time and generate more income. Now, I'm about to give you a short, step-by-step guide on how to generate more money from your business.
- Step one: You should make a complete list of everything you do in your business. Estimate how many hours you spend on each task.
- Step two: Based on this list you decide if those tasks need to be done.
- Are they bringing in any money or benefiting customers in any way?
- Or is it just something you do because it's something you've always done?
- You may not even enjoy some of these things or find them pointless!
- Third step: Which of these things do you enjoy doing? Which one do you like the least? Evaluate each task. Taking this step is vital since you lose energy when you do things by yourself that you don't enjoy. Your energy is the most valuable thing you have; if you keep doing something you don't like, it will permanently waste your energy.
Here, the goal is to end up with only the things you love to do. Because that will give you more energy. You want to eliminate everything else you don't like during this process.
- Which tasks are necessary?
- Which tasks are unnecessary?
Now that you've made this list, it's time to evaluate it carefully. Now, let's go back to the tasks and look at which are necessary and which are not. Every task that isn't necessary should be thrown out. But most entrepreneurs never think about that because they are stuck in their habits. This list, which you just made, will help you sort out what you don't need to do anymore. Firstly, you should drop and remove all non-productive tasks. If they are non-productive, then there is no point in wasting any time on them. Secondly, you need to spend time carefully considering all your necessary tasks. The things you need to think about are:
- Number 1: How much money does the task create?
- Number 2: How much return on your effort are you getting out of it?
Only if a task is productive, it is worthwhile to look into it. And the third thing you need to think about is:
- Number 1: How can I automate it?
- Number 2: Are there any things I can do to make it more effective and efficient?
Only optimize necessary and productive tasks!
You can't make it more efficient by optimizing non-productive tasks, which aren't needed, don't add value to your customers, don't generate earnings, or don't help your business move forward. So, only pay attention to necessary and productive tasks! You should eliminate all the others.
Automating productive tasks can make them more effective; however, it is not always possible to automate them completely. Then you have to delegate the parts of those that cannot be automated. However, delegation, in this case, means that you delegate it to someone and give them complete responsibility for the outcome:
The power of delegation
Delegate everything that cannot be automated to an employee, a service provider, or a supplier. They should be paid for the results, not by the hour. I know that employees usually get paid by the hour, and we'll even use this metric in our calculations. The objective is to compensate suppliers for the results they deliver, not the time they spend on the task.
Let's look at the math and numbers of the robot cleaner example now: I used robot cleaners instead of a cleaning service. Surprisingly, the robot cleaners became one of the things that made my rehearsal studio unique. There was even a news show about them! When the TV crew saw them running around and cleaning the studios, they were so amazed that they included them in their TV report. Robot vacuum cleaners are not used in any other rehearsal studios. This is what people smile about and remember. They remembered it and kept talking about it, which helped my business stand out from the crowd and that people kept remembering it. Here is the calculation for the three robot cleaners:
I bought the three robot vacuum cleaners for € 750. The robot cleaners would pay back the initial investment of € 750 in three months. This is because € 750 was saved on the room cleaning service over three months. It saves €3,000 a year with a one-time investment of € 750, which turned out into an additional € 1,372 in earnings the first year and € 2,229 the following years. Note that Microsoft Excel, which calculates the exact amount. It won't come out exactly that amount. But from this calculation, you can get an idea of the range of savings.
First year's investment
Let's take a look at the first year's investment. I paid € 750 for all three of those vacuum cleaners. Each one costs € 250. Three times € 250 is € 750, and that's how much we paid for the vacuum cleaners. There might be extra shipping costs, but the investment is in that range to order the cleaners. The next step is, to estimate startup costs, which I had to account for to calculate the earnings.
To get started, I estimated it would take an additional € 160. As a result, the initial investment's total cost is € 910. The € 160 comes from the following sources. Let's assume it takes one day in total to select a vendor, purchase the robots, order them, and then set them up and test them. Let's say we need 2 hours to find a vendor, order them, 4 hours to put them in place and make them work, and 2 hours to test them. In this case, if I had done it myself, I would have paid myself € 30 per hour. That would have been € 240. But by delegating this task to my employee and paying him only € 20 per hour, the eight hours will cost only € 160. That's the assumption I'm making here.
So let's get back to the savings from my cleaning service. I canceled this cleaning service, for which I paid € 250 a month. From my savings, I have to subtract my initial cost, € 910, as calculated before. Now we have to calculate ongoing maintenance costs. Of course, we have to do some maintenance on the vacuum cleaners. The dustbin needs to be emptied. Sometimes they don't find their way back to the charging station, so we've got to collect them and take them back manually. We need to ensure that there are no bottle tops or guitar strings inside and have a general look at them.
Depreciation cost
Finally, we have a depreciation cost for the vacuum cleaners, which means we have to replace them now and then. I assume they will run for 3 years before we replace them. So every year, I record the depreciation of one-third of my initial investment, which is € 250. That's the cost of renewing one vacuum cleaner per year. By the time they need to be replaced, I will have the funds in my pocket, ready to replace them.
For maintenance costs, I assume that there are three robots and that maintenance takes three minutes per day. However, we only do it three times a week, on Monday, Wednesday, and Friday. My employee's task list now includes vacuum cleaner maintenance, which he completes 52 weeks a year.
This results in the following: We have three robots that need to be checked, which requires three minutes for each one. We only did maintenance on the robots three times a week and spent 27 minutes doing it. When you multiply 27 minutes by 52 weeks, you get 1,404 minutes. Which is how much time we spend on robot maintenance every year. Since this number is in minutes per year, we need to calculate how many hours that is. That comes out to 23 hours of maintenance work per year; paying my employee € 20 per hour adds up to € 468 per year for maintenance.
So, if I take this amount away from my savings of € 3,000 minus € 910 total investment cost, € 468 maintenance, and € 250 depreciation, I have an extra € 1,372 in earnings in the first year. This is additional money I made after I made the one-time € 750 investment for the robot cleaners.
We didn't have to make any more investments in the following years. Because the vacuum cleaners had already been paid for. But we calculate a depreciation to replace them every three years. And, we only need to calculate one-third of the time because we only needed one replacement per year on average. In subsequent years, the initial cost is only € 53, or one-third of the € 160.
From the saved € 3,000 by canceling the room cleaning service, we subtract the initial cost. In addition, maintenance costs were deducted, which were the same as the previous year. In addition, we deducted the depreciation because we had to buy one new vacuum cleaner per year on average. So our savings in subsequent years amounted to € 2,229 in savings. Isn't that even more endearing?
And it's still the same in the third year, the fourth year, and so on. On my website, you can download a spreadsheet. With that, you can calculate how much you can save and earn additionally, by making your business's processes more effective, and efficient, by automatization and delegation. See, it does not have to be your business, that you optimize. It can also be something else you do privately. Have fun with your extra time and money!
Summary
It is a critical target for you, that end up only with tasks that you enjoy doing. Because to learn and grow, you need energy. Either you grow with your business, or your business grows over you. If this happens, you become a slave to your own business. So, let's summarize the six steps once again you need to take to implement this plan.
- Number 1: You have to trash all of the tasks that are not productive.
- Number 2: Automate those that are necessary as much as possible. And if you can't automate them completely, delegate the rest. But delegate including the responsibility to the service provider or employee. So the person, supplier, or service provider is responsible for the results.
- Number 3: Boost the effectiveness of tasks, for example: In the sales process, you may want to add an upselling product to the delivery chain. Or introduce a down-selling product into the sales process that creates additional revenue money. And then you put these things into action.
- Number 4: In addition, you should make the process more ergonomic, so that it will be easier to complete, and takes less time. But remember, making processes more efficient is pointless if they are not productive, not needed, do not generate revenue, or do not provide additional benefits to customers. Because doing so means running faster in the wrong direction.
- Number 5: Concentrate on doing only the energizing tasks by yourself.
- Number 6: Use this energy to learn and grow alongside your business.
Your task for today
- Make a list of the tasks you do each month and estimate how much time you spend on each task.
- Remove all of the tasks that are not necessary and get rid of them.
- Do the calculation for the remaining ones, as I showed you before. You will find a template to download on my website.
- Start with the tasks you don’t like, those with the biggest savings and fastest results.
You can now optimize your business and earn more money by working less.