Virtuoso Team Consulting, Inc.

One of the biggest inconveniences we are faced with is the innate inability to be in multiple places at the same time. How wonderful it would be to be earning money at the office while being out on the boat with our family, or spending time with good friends, while finishing off that presentation due next week. Every time we make a decision to do one thing instead of another, there exists a cost. Whether it is sacrificing time with your family so you can pay the mortgage, or spending money on dinner so you don’t have to cook, one thing is being exchanged for another.

Recently, I had a friend ask me whether or not I would be able to show a benefit to the bottom line earnings of a company if they hired me. I responded that it would all depend on the business owner.

Why would it depend?

Simple! I gave him an example using his own company. He works long hours, which prevents him from spending a lot of time with his wife and child. He would love to spend more time with them, but cannot because he needs to make money. He bills clients at $50 per hour, and spends 5 hours per week doing his own bookkeeping. A company approaches him and offers to do this bookkeeping for $200 per week. As a business owner he declines the offer, because why would he want to pay $200 a week to someone for something he can do? He agreed with this so far.

I then explained that if he spent those five hours working for his clients instead of balancing his books, he would net $50 more than the cost, or he could work for four hours, break even, and buy another hour of his life back to spend with his family. This news came as a surprise, because he had never taken that approach. I then asked him, how can I show that as a bottom line increase if he were to opt for the hour of family time?

Anytime you are able to make more money doing what it is that you do, than the cost of paying someone else to do another task, it is generally a good idea. There are instances that this is not the case, but that is for each individual to decide for themselves.

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.

How much will customers be willing to pay for your product or service?

How many customers will buy at that price?

How large is the actual market for your business?

From the beginning, regardless of your education or experience, these questions and others are best estimated by a SHAG, or a scientific half-assed guess. This method is not quite as willy-nilly as it may sound, but is a carefully constructed best guess based on known facts, and supposition.

What facts do we have at hand?

Of what do we feel reasonably sure?

What do we believe to be true, and why?

These represent a psuedo-solid foundation for creating estimates. Whether the company is a start-up or a century old, the importance of these guesses remains the same. The only thing that changes is the historical data sets that show where the company has been, not necessarily where it is going.

There are traps people fall into using SHAGs that I would like to warn against. First, it only gives you a starting point, so be flexible enough to change your course as experience dictates. Thinking that you are right can destroy a business far faster than admitting your wrong. Second, do not over use SHAGs, or put too much faith in them. Anecdotal evidence can only carry you so far, the proof, as they say, is in the pudding. Sometimes it is the questions you don’t think to ask that kills you. This is a process that is best accomplished with the help of a group of people you trust. Generally speaking, the group is smarter than the individual.

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.