Calculating Capacity

Use Your Runway to Start Earning Sustainably

Leo Manzione

Too many business owners are holding their breath waiting for things to get better. With them in mind, let’s talk about sustainability.

Money does a great job of flying out the door when you’re building a business. Whether you’re hiring experts in certain fields, ramping up your ability to produce for your clients, or trying to offload some of your busy schedule, it all comes at a price.

We talked last week about knowing your business’ runway – essentially what your burn rate is and how long you can continue forward if you keep earning at the same rate. We’ve talked about the importance of maintaining your happiness and health through our Well-Being Checklist.

With the foundation laid, it’s now time to settle in for the long-term and make sure that you can find sustainability:

Once your business is able to sustain itself without draining you of all your time and energy, your remaining capacity can be invested in building your long-term vision.

Making ends meet in the short term

It’s tempting to immediately fill your capacity to the brim right away and spend every working hour you can doing work to get the bills paid.

The calculation can look like this…

I need $12,000 to pay the bills this month.

Essentially, that’s $3000 per week after taxes and expenses which means I should shoot for $4000 per week ignoring expenses.

I can work 40 hours per week.

Therefore, I need to earn $100 per hour.

Let’s go sell my time at $100 per hour.

What you’ve just seen is a perfect recipe for the stressed out 80 hour workweeks I regularly see all over the country in my diagnostic sessions.

Instead, let’s flip that process and focus on the long term…

 

Shifting to the long-term

Instead of falling prey to the same mistakes so many others have made before us, let’s instead change the game by reframing it. I recommend asking yourself the following: How can I be sustainable when working at about half of my capacity?

This is a great exercise to help you figure out alternative pricing methods, work that can be eliminated, and get creative with other ways to maximize the earning power of your work hours.

NOTE:
This analysis should encourage you to effectively earn more by the hour. Create more value, charge more, and push yourself to get what you deserve instead of just doing what you need to survive.

Perhaps paying all the bills isn’t possible for you working at half your capacity. You may need to build up to it over time by raising your prices, adjusting your customer portfolio, and whatever else allows you to earn enough in fewer hours.

Once your business is able to sustain itself without draining you of all your time and energy, your remaining capacity can be invested in building your long-term vision.
This is the distinction between working in the business and working on the business. It’s so important to make sure you’re able to work on your business if you really want to see long-term growth in a direction you’re excited to pursue.

If, however, you notice it really does take you almost all of your time to make ends meet despite trying to implement changes, it might be time to check in on the value you’re providing – Is there a way to add more value that people are willing to pay more for? If not, it may be time to consider if this pursuit is really worth all of your efforts. Perhaps your attention could be better (and more profitably) spent elsewhere.

Want help doing these calculations for your own business?
 Feel free to apply for one of my complimentary diagnostic sessions and we can review this concept and uncover anything else that might be holding your business back.

APPLY HERE!

Talk soon,

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