How can you demonstrate your value or return on investment (ROI) as an operator?
As an entrepreneur or service provider, you know that when you invest in something… you want to know what your return on investment (ROI) is. As someone who does a lot of hiring for entrepreneurs and small businesses, it is important to me as a hiring manager that they see a ROI. One thing that is very challenging is finding the ROI from an operations professional.
There are two sides to every business: the front and the back. The front side is focused on marketing and sales activities such as finding leads, finding your audience, communicating to your audience and bringing them to you through marketing and visibility efforts.
The back of the business is about operations. Operations looks at the infrastructure or foundation of a business, such as processes, systems, management, team management, and building teams. It is what is needed to fulfill the product that was marketed and sold.
When I hire, it’s always my goal to guide the client to create 30-60-90 day goals (also called key results areas). This is so both parties are clear on expectations, for performance management reasons, as well as helping me to find tasks, responsibilities, and projects that bring a return. My goal is to have this resource bring a return to the business and “pay for themselves” within 90 days.
Most people ONLY think of this in terms of ROI meaning hard dollars. That’s a great start, but after being in this space for many years and building teams, I’ve seen a return in many other ways.
I also want you to know that marketing typically sees an ROI easily, whereas the operations side has a softer return and oftentimes is not financially solvent in 90 days. Because of this, I’ve gone to work to show the operators in my Director of Operations Certification Program (and now you) how you can show value in a variety of ways.
I’ve shared this soapbox moment with you before but as service providers, regardless of front or back of house, we MUST quantify our value. It’s not enough to trust that your leader sees your value or even knows what you’re doing. Reporting is massively overlooked and underperformed in the freelance, online, and service space.
“If you SHOW your value on a regular basis, you become easy to pay, easy to retain, easy to promote and refer. You do this by reporting.”
You may have to do a little data gathering but it’s 100% worth it. Today’s podcast is here to help you with two things: quantifying your value + identifying metrics you can use.
I’ve got a method I am excited to introduce. It’s called the Return on TIES method. TIES stands for Time, Investment, Effort & Stress.
T: Return on Time
This is the amount of time you remove off of your leader’s calendar/desk. By bringing on an operator, the leader is going to shift some hours that they were recently spending in admin, meetings, research, to you. This leaves them more space and time.
Every leader wants more time back, but what they plan to do with the extra time varies. They may want to work less hours, take more vacations or amplify what they’re doing with those hours that you now oversee. I believe CEOs are truly in their CEO role when they are focusing on content creation, product creation, strategy, sales, and networking. When their plate is full, they can’t do that. By bringing in an operator, they now can use their time on more strategic items.
How to measure: This involves noting the number of hours the leader is working and what they’re spending time on. I recommend you do this at the beginning of the relationship and then 1 week a month. Ask them to track their hours and get a report or an understanding of how they spent those hours, or what they were working on. The hard part is getting a CEO to actually do this. Get creative! Ask the question “how many hours did you work last week and what did you accomplish” as part of your weekly or monthly meetings. It certainly won’t be as thorough but you’ll be able to see trends.
You’ll know you’ve paid for yourself when: The leader is doing less admin and more strategy or visioning work. By doing this, the revenue of the business will increase because their time is available to focus on revenue generating activities rather than the minutia.
I: Return on Investment
This is when you make more than you spend. For example, when you buy a course on how to do Facebook ads. You invest $1K on the course but the product of the knowledge you’ll gain will bring you 4x that in a 4-week period. That’s a positive ROI.
Some people will challenge themselves to get the fastest ROI and in this case you will track time. The same goes for expanding your team. Marketing and sales personnel are the easiest to see an ROI. For example, adding a funnel designer to design a funnel for $3K. You’ll know you get your ROI when the funnel exceeds $3K. It’s a little more difficult for the Operations focused labor. It can absolutely be done but it’s oftentimes a soft return vs. a hard return, meaning it’s not hard dollars. It’s often through savings of time and becoming more efficient. The return on those are soft, meaning that time in itself isn’t going to bring you cold hard cash but how you use the discretionary time can produce a return.
How to measure: By sales and profit margins. It’s very important to chart your revenue, expenses, and profit against your presence in the business. How do those factors improve as a result of having you here? Look at the sales and profit margins, and compare before and after you showed up in the business.
You’ll know you’ve paid for yourself when: Profit margins expand beyond your investment. If they are paying you $5K a month, make a point to celebrate with them when you see an additional $5K in sales or profit. It’s a collaborative effort but one you need to watch for.
E: Return on Effort (Efficiency, Ease)
This is how heavy or strenuous your business activities feel for you.
When I hear people say “it’s too hard”, “want to quit”, or “burn it down”, it means they are at max effort. This is far from the optimal place of ease. It’s in this state that we focus on the small things rather than the vision, which is where passion and ease meet. To overcome the overwhelming feeling of effort, you can delegate tasks to others who enjoy performing that task, identify what you’re doing that’s out of your wheelhouse, look for opportunities of automation and leverage technology, or become aware of perfectionism and hire. Operators, this is your greatest gift to an organization! If we can make hard things easy, there’s a return on effort. We do this by showing up as strategic partners rather than limiting yourself to implementing… when you are creating processes, building and managing teams, leading meetings, managing projects. I know a business is ready for a DOO when they crave ease and efficiency.
How to measure: Objectively, we measure by documenting profit margins. When they get wider, it is usually a reflection of business becoming easier. Subjectively, we can ask the leader to rate their satisfaction with their job as the CEO/leader. How are they enjoying it?
You’ll know you’ve paid for yourself when: Profit increases as a byproduct of the efficiencies you have put in place and when the leader’s satisfaction improves. Another subliminal way is when the leader returns to their creative/passionate zone. You may see this with innovation, new product lines, or new business ideas.
S: Return on Stress
This is defined as improving your physical and mental health and quality of life as a result of sharing work or business responsibilities.
It’s no secret that entrepreneurs and business leaders struggle with depression, anxiety and stress. This prevents them from optimal wellness and if they aren’t well, this bleeds into the business, the brand, the team, the vision, and the reputation. When a leader brings on an operator, they are no doubt looking to reduce stress. That stress can be physical, mental, or quality of life.
How to measure: At this point I don’t know a way to measure this objectively but I know this matters SO MUCH. I recommend doing this by reaching out to the leader and the team and gathering their stress levels as it relates to physical, mental, and quality of life. This is probably best done with a survey tool so it can be anonymous and without judgement. Plot this each month and make notes of what key projects you all are working on in the business. Wouldn’t it be cool to show the impact of stress that launches or certain campaigns at specific times of year do to people?
You’ll know you’ve paid for yourself when: The stress rating decreases by 20%+.
All of these (TIES) result in greater stability, profit, and satisfaction but are not necessarily directly monetary. It’s important to look beyond the hard ROI.
Leaders desire a return on time, investment, effort, and stress…and they can’t do this alone. They need operators to help them obtain this! Another reason why DOOs are so foundational for scaling businesses.
As an operations leader, I want you to show your value to the business you’re working in but I also want you to know how your gifts are blessing others. We don’t take the time to quantify it and I hope this podcast encourages you to begin charting this today.
Weekly Ops Activity
Make a move! Start something new with your existing clients. Introduce this concept to one client. Focus on stress and effort because they may not have thought about that. Ask them to rate their stress and effort levels, then track every single month. Show your value and earn your return!
If you aren’t in a place where you have access to business financials but you know you have the leadership to guide businesses, I encourage you to consider the DOO certification. There are businesses that are scaling that know they can’t do this alone. They NEED DOOs to move forward with less stress, effort, and time. I would love for you to join us in our next round beginning in late November. Join us at Directorofops.com… applications are always open.
“RETURN ON DOO INVESTMENT= time + effort + stress + efficiency.”
This is how business owners are going to know that you are the most solid investment they have ever made!
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