You’ve set out and started your very own online business.
No more boss or timeclock or annoying co-workers. You are the master of your own destiny. You’re the Big Cheese, Head Honcho, Chief Executive Officer.
Which begs the question, why are you not acting like it?
If you’re like the vast majority of online entrepreneurs, you have already or inevitably will fall into a pattern of repetitively performing low-level tasks that should be outsourced. This can stem from any number of reasons such as comfortability with status quo, the crippling fear of giving up control or assurance that no one can do the tasks as well as you (spoiler alert: you’re probably wrong).
We are guilty of it too. In fact, we should have outsourced our labor at least 6 months earlier!
The glaring problem with these fallacies is they significantly reduce the ability of your operation to scale from a well-paying job to a true business. Dan and I were relegated to this reality for nearly 3 years, making good money but in direct ratio to the amount of work we put in. Soon, we ran out of time available in the day, reaching a scalability threshold and came to realize that if we want to ever to build a perpetuating business, which we could remove ourselves from, we would have to outsource some of the low-level tasks we were performing.
Now, for us the answer was employees to handle prepping, packing and shipping our products to Amazon, allowing us to spend the majority of our time researching and buying more profitable products. As you might imagine, our business experienced explosive growth. During our three years of just Dan and I, we had revenue of $890K, $920K and 1.3 million. Now that’s not shabby, by any metric, but compare that to $3.9 million in 2015 (our first full year with employees) and $6.6 million in 2016.
I realize the primary reaction to this is “That’s great but you have a warehouse and employees. I have no interest in either of those, so guess it’s not for me”. Think again. While it’s true we utilized a warehouse and employees to outsource and scale, that’s primarily because we had never heard of or knew of any other options, so if you believe a warehouse is imperative to growth, I’d invite you to read one of our previous blogs on exactly this topic:
With the monumental growth of Amazon in the last few years, third-party solutions have been created and developed to make outsourcing more convenient than ever. From prep services that will handle your FBA shipments to Amazon, to software that will automate pricing and restocking and even virtual assistants that you can assign to product research.
Obviously, you don’t have to outsource anything in your business and continue wearing every hat in your day-to-day operations but I would advise you to figure out what your value to your company would be if you were able to do only the highest value-adding task, eliminating everything else.
Is it $20 per hour? $50? $100? More?
Once you grasp this value, the opportunity cost of every task you perform is the difference between what you could outsource it for and that amount. For instance, if your value is $50 per hour then every time you spend an hour labeling, prepping or packing a box you are leaving between $35 and $40 on the table since these tasks can be handed off for easily $10-15 an hour.
The converse way of looking at this is, you are effectively paying $50 per hour for that task to be performed. This means that, you make a profit of $35 to $40 per hour by paying someone else the suitable wage to do that specific task.
I know this is largely theory based and you can’t be expected to spend every minute of your day doing only the highest value tasks but it’s a thought invoking concept, challenging you to take a holistic look at and begin to realize the big picture potential of your business’s capability.
If you have never sold on Amazon or are just getting started and feel a bit intimidated or confused, don’t worry because this post is intended for an intermediate to advanced Amazon seller, as I would never suggest outsourcing anything in your business until you fully understand it and can properly train and entrust it to someone else. But even for beginners, it’s a concept to be mindful of for taking your business to the next level.
Now that you have an idea of what your true value to your business is and how outsourcing lower-level tasks is the only way to achieve exponential growth, the first and most important step in transitioning your business is changing your CEO title from Conducting Everything Officer to Chief Executive Officer.