Last week, I had an aspiring entrepreneur contact me and ask me if she could ‘pick my brain’. She was stuck in the corporate world and described herself as ‘obsessed with entrepreneurship’. She felt like her job was sucking her dry, and said she had a driving desire to start a business support/virtual assistant business for other entrepreneurs and business owners.
I felt like the deal of a lifetime had just landed in my lap. Here I am, in desperate need of administrative support, and I have more than 15 years of business experience I can share with her – on top of the fact that I am a certified coach. So I offered her a trade – she helps me with my business, I offer her exposure to her target audience, advice, and structured mentoring every week to help her grow her business enough to leave her job.
Her response, though pleasant, was:
“I would be happy to help you, but at this point I need to make sure I’m getting compensated for the work I put forth.”
I can understand where she is coming from, and I certainly hold no hard feelings. But her short-sightedness tells me she is not ready to be in business for herself – yet.
So let me take a step back for a minute here. Even if you are in a full time job, you are still in business for yourself. You have a product you are selling – you are selling your hours for dollars.
If you make $80K a year, you have sold your product (2,080 hours per year) to your employer in bulk at $38.36 per unit.
- You are accountable for delivering your product as promised (doing your job as described when you were hired)
- You must manage and track your account receivables (by doing your taxes, budgeting, etc.)
- You are responsible for customer satisfaction (keeping your boss happy)
- Else you risk losing your customer (getting fired)
Let’s look at this briefly from a business perspective -
- You have only one product
- You cannot increase your inventory (even working overtime has its limits)
- You have only one customer (maybe two if you have to)
- You have only one chance a year to raise your prices
- And you are limited by what your customer is willing to pay for those units, because they know they have complete control over your account receivables
It doesn’t take an MBA to realize that this is not the business in which you want to be. In short, you have a business that is not very scalable, has all of its eggs in one basket, has limited long-term growth potential, and you will go out of business immediately or run your business in the red if you:
- Lose your inventory (retire, get sick, have a family)
- Lose your customer (get laid off or fired)
- Have account payables that outweigh your account receivables (like when you have to pay $600 a month for gas, which eliminates your food budget for the month)
What makes a good business?
A good business is structured in the exact opposite manner than that of a J.O.B.:
- Diverse customer base (A good rule of thumb is that no one customer rules more than 40% of your revenue)
- Diverse income sources (For example, the M&M’s brand sells candy packages and ice cream flavors, as well as stuffed toys, toy dispensers, and has a museum and store in Las Vegas)
- A scalable business model (so that profits can increase without adding employees or overhead)
- An innovative marketing team (to generate new profit centers as well as sell existing product lines)
- And most importantly, a good business invests profits and resources back into their company knowing that more work now will translate to bigger profits 1-5 years down the road.
Back to my VA.
As long as she still thinks that she must have dollars for every hour of her work, her business will be forever constrained by the amount of hours she can work in any given year. Even if she has employees down the road, she will still have a finite number of units she can sell – 2,080 per person (technically less than that, but you get my point). Yet if she had taken me up on my offer (or if she found any mentor for that matter), she would have been making an investment in the long-term growth of her business. She would have found clients by being involved with Sparkplugging. I would have given her the opportunity to write for the network. She would have gotten free advertising. I would have helped her market her business and build her visibility among her potential customers.
Most of all I would have taught her the most important lesson she needs to learn as a business owner – until you can get out of the “Dollars for Hours” mindset, your business is not scalable, is completely vulnerable to the economy and outside forces, and cannot grow beyond the 2,080 units you have to sell. If you are in a service-based business, of course you have to bill for your hours – don’t get me wrong on this. That being said, you must invest time and resources back into your business in order for it to be healthy, sustainable, and scalable.
And if you are stuck in that corporate job, I hope you see that you are a lot less secure than you might have thought you were. Everyone is a business owner. It’s my hope that everyone starts thinking like an entrepreneur – which is the best way to recession-proof your career.
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Sparkplugging Founder Wendy Piersall is dang passionate about helping people start & grow a business while maintaining life balance (somehow). 
Easton Ellsworth is owner of 
Wow, Wendy, that’s one powerful article. What you said is very true. I just want to point one thing out:
“I would be happy to help you, but at this point I need to make sure I’m getting compensated for the work I put forth.”
If you focus on “at this point”, it can have a different read. I mean, even if I knew that I can invest one million dollars to buy some land that I knew would give me ten million dollars of profit down the road, I still don’t have one million dollars to put in right now. Sometimes sadly you have to pass up opportunities like that.
Kelvin Kaos last blog post..What inspired me to write each episode (11-15)
While I understand Kelvin’s point and agree to some extent, we’re not talking a million dollars here. We’re talking investing a few hours of time into starting your own business by taking on a client who, in turn, can offer you something other than direct financial gain. The exposure and networking she could have gained by accepting this position would have been worth much more than a set hourly rate. It sounds like she was expecting to be able to just quit her job as soon as she got her first client and it doesn’t work that way.
Many VAs have spent a lot of time and money starting their own business, some of them while working a “regular” job full time, some of them while taking care of their kids and some of them (like me) while doing both.
Those nights that I stayed up until 2 a.m. reading ebooks about marketing and SEO, I wasn’t receiving any “compensation”, no one was paying me for that. The payoff for those hours comes later. If this person was in the right frame of mind to start her own VA business, she would have recognized that and appreciated the opportunity.
Hi April. Haha, yeah, of course I’m exaggerating to some extent (ok, maybe not just “to some extent”). I actually agree with both you and Wendy that it would be a good investment based on the info provided here, but I don’t know the full story of everything so I don’t think I can really judge. I’m just bringing up the other side of the argument for the sake of discussion.
Kelvin Kaos last blog post..What inspired me to write each episode (11-15)
I’m sorry, I didn’t mean for it to sound like I was judging anything. I just wanted to make the point that some things have a value that can’t be measured in dollars.
Going back to your analogy about the million dollar land, if it was something you really wanted and there was a possibility that it was something you could actually pull off, like if you had real estate experience and could come up with $500k, wouldn’t you look into finding someone to invest with you or some other kind of opportunity to help get you started in that venture? Or if someone said “I can’t come up with the $500k but if you help me sell this other property I have thats worth that much, I’m in”?
Look at the guy that made the news last year (or was it two years ago) that had the giant red paper clip and ended up with a house by trading up.
Never underestimate the power of bartering!
Wendy,
Having followed your posts for a while now…your advice has always been simple but helpful and straight-forward.
I have been in business for nearly two years, and I can say that I wasted more than 80% of the time, effort and money because lack of direction and the guidance of an experienced mentors.
Learning how to run a business takes preparation, it involves more than the technical skills in doing the tasks.
I had been studying Digital Media (web development) at uni, and decide to start a web design business. However I had no experience in marketing and project management, I accepted projects without a proper estimate of the time and difficulty, without going through a qualifying process before taking on a client, and start a project without a deposite or a proper contract… I ended up working for $2 an hour and some clients even refused to pay due to delay in delivery…
At the time, I felt been taken advantage of by the clients… but now I understand that I did not learn to swim before jumping into the pool, and the mistakes were the best teachers.
Over the past 14 months I have taken up private courses in copywriting, magazine writing, PR and Information Marketing. These have been tremendously helpful in laying a solid foundation, and for quite some time I have been looking for a successful entrepneur to help guide me to the next level.
I understand you are looking for an experienced administrator to help reduce your workload.
Between 2006 and 2007, I have been working part-time as an administrator for Pigment Dispersions, and I have been responsible for a variety of tasks including reception, document filing and translation, research and database management, data entry, co-ordinate advertising, managing correspondence and company website etc.
At the moment, I am a part-time account manager at Media Monitors while running my home-based business in the spare time.
I appreciate the wisdom and experience you have shared with me as a reader, and I admire your confidence and passion as an entreprenuer.
Would you be able to give me more details on the jobs you need help with, like what kind of tasks it involves; approximatly how many hours it will require; and what attributes you are looking for in the person…
I will be more than happy to help you in anyway I can.
Kind regards,
Lei
24th.novembergmailcom
Going back to the million dollar house thing… if I am really sure that the one million will really turn ten million (or have a really good chance to), and I am able to come up with 500K on my own, then yes, I’d look for a partner to go into it with.
And if you ever find a deal like this, don’t forget to let me know. Not that I have 500K at the moment.
I don’t want to hijack this whole comment section so I am done replying to this post. If you want to continue, feel free to email me.
Kelvin Kaos last blog post..What inspired me to write each episode (11-15)
Just a note – the thing that strikes me most about this person is not only that they didn’t jump at the opportunity (or at least open a dialogue about it) but that they didn’t value your time Wendy. She needs money right now but you should give up your time so she can pick your brain? Crazy!
I personally am in the start-up phase of my VA business and one of the first things I’ve done is taken on a volunteer opportunity that I believe will help me in the learning process (I have plenty of admin experience but working off-site is new and of course so is running a business)
If you still need some help feel free to get in touch – I can see the value of a reciprocal agreement!
Lauries last blog post..VA Certification – Yes or No?
Great post. So many people already know this concept but don’t really do anything about it. Not to bag on them, just to recognize the fact that humans procrastinate and usually will not act unless they are forced to do it. But when they are forced to act, it is usually too late. Thanks
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Thought you might find this article on trashing the timesheet interesting
http://tinyurl.com/5p2ycf
I think this woman missed a life changing opportunity. I love how you say “everyone is a business owner.” I never thought of it like that before.
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I recently heard an interview of an author of a book on how to get your dream job – the take off that stuck with me was that in some cases your best chance is to volunteer – IE work for free to get your foot in the door.
For a while my lovely wife (day job as an office manager) has been kicking around the idea of starting a business doing wedding photography. The thing is, she only has a little bit of experience, so I suggested that she advertise on the local net “Free Wedding Photography” – Now she is well on her way to getting the experience that she needs to justify charging for her services.
If you can’t think past your next paycheck, then you will never be an entrepreneur.
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Touche!
Ouch!
The truth hurts and as someone who elected to leave cubicle-land (the office), cubicle-nation (the company) , and cubicle-continent (the industry) after 28 years, I too suffered from such thinking.
Alas, the bright, white light struck me and the “ah-ha’s” transformed to “Oh Sxxx – let’s get started!”
Thanks for holding up the light to help erradicate the dark!
Of course, I agree with all of you.
What I didn’t talk about in the post was how she said she didn’t feel like my mentoring would constitute ‘compensation’ for her work. Perhaps she doesn’t know how much a coach costs, but I could be billing out the time I consult with her at around $150-$200 an hour.
Great post, I think in this instance it’s pretty clear that this was a great offer for the VA, and she could have gained a lot of value.
However I can say I understand having her first reaction be no because I think as women we are often too quick to barter. Maybe it’s just me but I meet other female entrepreneurs who want to barter all the time and I have never received a barter offer from a man. I am engaged in one barter right now that is working out fabulously for both of us so I am not anti-barter in general. But I think sometimes women agree to barters that don’t make sense because they are afraid to be assertive that they need to be paid for their work. What do you think about this Wendy, is this a trend you’ve seen as well?
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@ Laura Roeder (Shortcuts Online Marketing Blog):
I’ve definitively bartered with both men and women Laura – though now that you mention it, I do recognize the truth in what you are saying.
And I have definitely seen women not be assertive to get paid for their work (erm, myself included in the past as well
)
Great post Wendy.
The 2 most negative ideas in the world are “Time is money” and it is “easier to do it myself.”
Fantastic Wendy! This is another one of your must read articles without a doubt.
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Really great post Wendy! Totally agree with Char, this is a Must Read!
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Great motivation. I wish I can be an successfull entrepreneur. Thanks for this post
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Hi Wendy – this post brings up some great points. Folks who don’t want to give up the security of their paycheck will never be able to start a business until they change their mindset.
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I think that you are spot-on with your comments.
In my experience many people, particularly in service related industries are not really in business at all. They think that they have set up a business, but very often, they are simply selling time and, and, at best, have a job working for themselves.
The key to being an entrepreneur is to be able to break out of that mindset.
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