Here’s an exercise straight from “Smart Business Stupid Business.” You’ll have to get the book to get all the worksheets, but for now, let’s talk through it step by step.
Think about the biggest check you ever made in your business. It could be from one business deal, one business relationship or could be everything you made from a client during the year. However you define ‘biggest check’ is what is important.
Now think about how many of your hours went into creating that biggest check.
Now divide the amount of your biggest check by the hours you spent on that project. That should be your highest hourly rate you’ve ever made. Now some people find that their biggest check really isn’t much per hour because they worked more hours then they even realized. In fact, some people find that their biggest check means they had to work even lower than the minimum wage. That’s an ‘ah-ha’ moment. Take time to make a note of it. Do you always equate more money with more hours worked?
For purposes of this exercise, think of another big check that will represent more per hour for you. Go through the same calculation.
You’ve just calculated your PROI – your personal return on investment. If this is truly your biggest check, this is also the highest amount you make per hour.
In the book “Smart Business Stupid Business”, you’ll see a graph of a bell curve with lines coming down. At the top of the bell curve is 100%. There are then lines down at 50% and 25% on the left side of the curve and on the right side of the bell curve, there are 150% and 200%. So reading across you see 25%, 50%, 100%, 150%, 200%.
In your recent business past, your just calculated PROI represented the far 200%. In other words, this was the highest amount you expected to make.
The final part of this exercise is to move that highest amount to the middle. If you calculated that the best you’d done in your business was $500 per hour, then that is your new norm. Put that in the middle. Now, calculate 25%, 50%, 150% and 200% of that number.
If $500/hour was your highest PROI amount, you’d have $125/hour (25%), $250/hour (50%), $500/hour (100%), $750/hour (150%) and $1000/hour (200%).
Stop there a moment. How would it feel if your highest per hour was now your average result? What if your new stretch goal was twice what your high had been before?
Over the next few days, we’re going to look at some techniques to kick up your business value and your value as a Smart Business Owner that as featured in my new co-authored book “Smart Business Stupid Business.”
Thursday: Quit Sitting On Your Assets. Turn Them Into Cash!
Friday: Turn What You Know Into Dough