Today’s reader question: Can I measure the return on investment (ROI) of my team so I know whether I’m getting my money’s worth?

As a business owner, it can often feel like you’re hemorrhaging cash and not having anything to show for it.  This can include the expense of your team so it definitely makes sense to measure the ROI for your team.  There’s no sense in spending money if your business is not profiting from it.

The first thing to look at is the type of team member you’ve hired.  Sometimes you’ll have team members that you only hire when it’s a billable expense for a specific client.  For instance, you might bill the client for a graphic design project at a certain amount and then pay the designer a different amount.

Even though you aren’t doing the work, you’re still managing the client and the designer during the scope of the project so you deserve to be paid for your time.  Here, you want to look at the amount you’re clearing and the time you have to spend to determine if you’re getting a good ROI.

These types of team members are not necessarily an ongoing expense and may not directly help you generate more business the way a marketing or administrative expense does.  But having a robust team that does great work will improve your reputation and client satisfaction.

When it comes to team members who create content or manage your business, you want to consider how these expenses can help you get conversions.

A virtual assistant (VA) is a good example to look at since that role can often help generate income by freeing you up to focus more on sales and assist you with the follow-up that helps close sales.  A great virtual assistant can take care of your day-to-day tasks that are most likely eating up your time and – more importantly – your creative energy.

Investing in a great VA allows you to focus your time on activities that ultimately will move the needle in your business, like generating killer content.  When you are free to act as the CEO in your business, your time becomes leveraged and your business benefits ten-fold compared to spending all of your energy keeping the hamster wheel turning.

But isn’t a good VA going to be expensive?

Yes, but that’s not the whole picture.  Paying for uber cheap help can seem very attractive for new entrepreneurs – and in some cases it makes sense (such as tasks that are repetitive and don’t require much brain power).

However, paying for cheaper help has it’s downsides as well – it often requires significantly more micro-management which also drains YOUR energy.

You may have heard the common business tip for entrepreneurs that even if you are bootstrapping your company, you need to evaluate your time as CEO costing a certain hourly rate per task.  If you aren’t looking at your business in this light, you need to start now – it will create a paradigm shift in how you operate your small business.

For example, as CEO you might calculate your time as being worth $100, $300, or maybe even $1000+ per hour.  At such a high rate, is it really worth it to spend your time on repetitive tasks that could be handed off to buy more creative time for yourself?

This same logic can be applied to your employees.  A VA with significant experience and skill (perhaps even an Online Business Manager) may charge considerably more per hour than a low priced VA.  However the amount of high value work output during that time may be worth much more than the efforts of a lower priced and less skilled assistant.

Let’s look at an example.  Virtual assistant “Angie” charges $10/hr and handles very basic tasks in your business like creating transcripts from your videos.  Virtual assistant “Beth” charges you $50/hr but is able to handle your Pay Per Click ad campaigns, email newsletter, Google Analytics reporting, and client communications.

“Angie’s” tasks are important but you’re probably not going to convert many new clients based solely on video transcripts. “Beth’s” tasks are driving traffic to those videos, managing your newsletter marketing, helping you assess what topics are hot with your audience and converting those leads to paying clients.

With this higher level of responsibility, Beth’s activities have a greater ROI, even when paid 5x as much as Angie, whose activities don’t add much value above $10/hr.

To answer the question, measuring the ROI of your team has to be done at the individual level – even if you have a larger team of 5 sales people, 12 handling customer service, etc. Start today by outlining your current team and the tasks that you’re paying them to accomplish.

If you need help with this, head over to our Contact Page and get in touch with us! 🙂

In our next Reader Question, we’ll look at where to invest your money first to make the biggest impact in your small business.