This week I had a great conversation with a friend who does freelancing consulting. She was facing the challenge of hitting her income potential. She’s a one-person operation and has a fixed number of hours that she can work. So say she has 40 hours a week available and, accounting for other non-billable activities, can bill 25 of those. Let’s say she currently bills at $50/hr. She has 2 choices: work more billable hours, or raise her rates. Working more billable hours is simple. Raising rates is more complex.
Raising rates has to do with two drivers: the quality of work performed, and the supply of talent available for the given skill set. The question is: how are the 15 hours of non-billable time being spent? If my friend is spending those hours honing her current skill set, then she can raise her rates for those services. If she’s spending her time exploring and formally training on new skills that are in scarcity, then that could create a new service for which she could charge more per hour, keeping her rates the same for her original services. Either way, investing that 15 hours into learning and improving can make her more money. In the consulting world, this is very simple to track and analyze. As an entrepreneur, it becomes a little more challenging to do this type of analysis.
Can you break down your day into “doing the work”? Do you track your time and review your calendar? What skills are you intentionally working on improving every week? Reading blog posts is informative, but not necessarily deep enough to really be skill additive. When is the last time you cracked open a text book?
If you’re working a 9-5 job, the 40 hours a week that you’re paid for are to produce based on your current skill sets. It’s the after-hours learning and skills development that drives the ability to earn more. I’ve seen this with some of the top salespeople that have worked for me in the past. Salespeople have a finite window of their day that they can be “selling,” so they don’t want to burn daylight on anything but selling. This forces them to work on their product, industry, and technical skill development after hours. A lot of other functional roles have the ability to take their work home. They put in more work after-hours in an attempt to produce more with their current skill set. By focusing on the quantitative measure of their work, these people are missing out on the opportunity to refine their current skills and create new skills in order to produce different, higher value things at work.
But developing your current skills and adding new ones is crucial for long-term success. So do that work. Develop your weak areas. Develop your strong areas.
Personally, this year I am focusing on being more intentional about developing tactical skill sets. This means doing a lot of tasks myself to get better at them. For example, I’ve been writing 1,000 words per day. My goal in doing this is to process everything that I learned throughout the day and to improve my written communication. Not just quantitatively, but also qualitatively. This also means that I must get better at typing. I never learned how to type well, so this will hopefully upgrade my skills.
It’s obvious that we should work on developing our weak areas. What’s less obvious but equally important is the work we put into developing our areas of strength. I’m good at strategy and sales. I’ve learned that while I don’t have an education or formal training in either, it is important that I start to backfill myself with formal training. Being good at something doesn’t mean that I can stop working on improving that area. It’s like having a great jump shot: unless you can hit 100% from anywhere on the court, there’s always more practice time required.
As an entrepreneur, you need to know all functional areas of your business. Luckily, you also have the time and space required to improve your knowledge and abilities in these areas. An entrepreneur should never have to defer to a team member to give a status. I’ve seen small companies parade in an entire team to provide updates to the board of directors. I’ve done that to give my team the experience of presenting to a board, but never because I couldn’t present all functional aspects myself.
So again—do the work! Map out how you spend your weeks based on functional expertise. Work is about production. As an entrepreneur, continue to improve the production efficiency of your current skill set, and learn to produce things that are of higher value along the way. Value creation is not intangible; it is highly quantitative. The entrepreneur’s bar for value creation is very high. If you need help mapping out your value stack, I’m happy to help. If you’re already a member of the Shadow Ventures Lab Program, let’s book some time.