There is a sickness spreading in the FIRE (financial independence, retire early) community. This sickness threatens to topple the best laid plans of intelligent young men and women everywhere. The mentality is that you must do everything yourself to save a dollar and reach your FI goal as soon as possible. Except this DIY mantra is the surest way to delay FI and early retirement by a substantial amount of time.
The worst disasters at my office and lowest times of profitability are when I, as the boss, either refuse to delegate or do not have qualified employees to delegate to. The same applies in personal life. When you do every possible job yourself you lose the economies of scale a professional can bring to the table at a lower cost, faster completion, and a better finished product. Your FIRE goal can be delayed because you refused to delegate.
What are Friends For
The past tax season was a challenge to say the least. Two factors played a role: lack of qualified employees for me to delegate to and the refusal to delegate projects I should only be overseeing once qualified employees were in place. It took a while, but I have a good team in place handling the additional workload. The weak link was yours truly. I reluctantly delegated work as it piled up behind my desk. Finally, when I had nowhere to run, I delegated the bulk of my workload. Stuff sitting behind my desk for months was getting done and out to the clients. It also increased profit margins.
Delegating is difficult for many, especially over achievers. Business owners feel they are the best qualified to handle the job. If that is true you suck as a boss and business owner. Smart business owners train their employees to handle all the jobs the business performs. When I do my job best I spend my day studying, researching, and talking with clients and perspective clients. Doing the actual work means profits are down and so is quality. As smart as I think I am there is no way I can run at full speed day in and day out. Eventually I will make mistakes due to fatigue.
Once I hired and trained additional staff I started letting things drift from my desk to my team. I still review, but I now have my life back. The number of days per week at the office is down almost to the level of a year or so ago. And good thing. I was beginning to think a real retirement looked better than my dream job. The last bit of delegation for me is to hand over the processing of new clients. I get a lot of email from potential new clients and contact very few; I just don’t have the time. The new system currently going into operation will allow me to follow-up on a larger number of requests. My admin will qualify clients and set phone appointments. This will allow me to make better use of my time and spend more quality time with clients and have more free time for me.
Look Who is Talking
My delegating abilities are short of stellar. The last seven months proved that. However, years of experience brought me back into line before a real disaster developed. My desk is cleared and now there is one more job I need to perform as boss: teach my office manager to delegate.
Karen is an awesome office manager and team player; I trust her with my life. Karen has a desk problem similar to mine; she has too many projects for one person. She needs to delegate as badly as I did. Karen, like me, trusts herself more than anyone else. She wants the client to come first no matter what; a great quality, but impossible to uphold if you don’t engage your team.
As the boss I sat Karen down and had to make a sale. I had to sell her on taking the work off her desk and allowing her capable team to handle the workflow. Karen’s main job with all the new employees is to manage the employees, train them, and help employees reach their potential while keeping the client first. The sale was made. Now Karen is in the process of moving the bulk of her current workload to the rest of the office team. Once again, profits will rise and stress will decline.
Personal life is worse than the office and I bet you are as bad as I am. Jobs around the house are part of my daily schedule. Clipping lawn, shoveling snow, and feeding/cleaning the farm animals make sense for me to do. I like the work so I keep it all for my very own. Mrs. Accountant helps with feeding the animals and getting the eggs twice a day.
Big projects are a different story. A few years back my farm needed to update the septic system. When I bought the place it had a holding tank (an expensive pain in the ass to constantly pump). We could not upgrade at the time because we could not get a perk test to pass. However, once I decided to stop raising steers more land opened for a possible mound system. I dragged my feet updating the septic system because I wanted to do it myself. I know how to do it and am perfectly capable of handling the job with a bit of help from a family member.
During my knuckle dragging, ah, I mean foot dragging I wasted over $2,000 nursing the old holding tank setup. Finally I had it. The time required for me to install a mound system was more than I was willing to commit to. I delegated (hired a contractor I trusted) the project. The work was done in less than two months from the time I got the quote. Here is the funny thing. I costed out the whole project doing it myself. For some reason I would have saved around $2,000 when I was done renting equipment and buying supplies, the same amount I wasted convincing myself I could do it myself.
That does not mean I can’t do a job (how do you like the double negative?). Delegation does not require delegation of every job, even ones I enjoy, until I have nothing to do all day except hold myself. I still change the oil in my car and handle light repairs. Working on farm equipment or a tractor is a nice way to spend a Sunday afternoon or a snowy January day. Projects around the house fill a day with satisfaction so I keep the jobs in-house (pun intended).
Here is where it gets interesting. Some projects you have to delegate. I hate shopping so I delegate the job to Mrs. Accountant (she hates shopping slightly less than I do). Shopping fortunately is no longer the chore it once was. Rather than run around town looking for the right part and the best price, I can shop online and have the parts delivered to my door in a day or two for less than it would cost me to run around town.
Karen’s husband, Chris, is a military guy (in the Reserve). He has plenty of time at home when he isn’t deployed. He loves working remodeling jobs and is better at it than me. He also gets to work faster than I do and completes projects in an acceptable time frame, something I am developmentally challenged at.
Several projects needed attention around the office, but I dragged my feet, expecting time to become available to do them myself. (Are you noticing a pattern to my behavior? As I write this it is becoming clear I need mental therapy.) One project involved the sump pump. Tubing leaked and caused some water damage where the hose exited the building. The damage got worse as I procrastinated. It also made a mess. I finally broke down and called Chris to fix the leak. The cost was under $100, including new hose and patching damaged wood. He also ran and got all the parts. There is no way I could do that job for under a hundred dollars. The value of my time is worth more.
If I enjoyed the work it would be a different matter. I dragged my feet because it isn’t my favorite way to spend a day. And all over $100! I have learned my lesson. The ladies have been begging me to update the kitchen at the office. I finally broke down and told Chris to have at it. He uses my credit card to buy supplies and charges $150 per day for his time. Highway robbery! (That was a joke. At $150 a day it is I who am committing highway robbery.) He figures he will be dome in 3-4 days. The time away from Mrs. Accountant and my girls over $450-$600 is insane. Worse, I will easily earn more money doing what I do best in the time it takes Chris to give the kitchen the once-over.
Delegating is one of the most powerful tools you have available to build FI. It is not a sign of weakness or laziness. Hiring people who specialize at a job makes sense since they can do it faster, cheaper, and better. If you enjoy the work feel free to pitch in. Another set of hands is always welcome.
Thursday 18th of August 2016
Enjoyed reading this article. This is a topic of great interest to me within the past few years from both a personal and business perspective. With 4 kids, a full time job and a part time job, I really have to think through time management. One of the things that helps me is to think if a particular activity is worth my time at $100/hr. JD Roth posted an article a few days ago that takes this analysis a little further, but I still like this as a rule of thumb. (see http://moneyboss.com/money-boss-academy/)
I would be interested in some of the behind the scenes (nitty-gritty) detail of the things you are now delegating. Like you, I am running a tax preparation firm. For the past 15 years it has been a side business, but now I am putting my full effort into marketing and expanding it. I spent a year building a financial planning practice at XYPN but decided I could do more good in the world by helping other financial advisors as a tax consultant and a safe place for them to send their financial planning clients to for tax preparation. I am really enjoying working with financial advisors to provide proactive service to their clients.
If you were advising a new business owner of a tax practice, what would be your top three pieces of advice? Would love to hear your perspective!