Entrepreneurs

I recently finished the tax season, but I have to admit, I didn't do too many tax returns this year. Just a few for some close friends of mine.  Last year, I worked full-time at it, and I swear I worked 15-hour days right up to the deadline. I did make some decent cash, but I was exhausted. So, why wouldn't I want to continue?

It all comes down to maximizing my personal revenue.

A tax return can take at least an hour depending on how many receipts a client has. I then have to meet with them, confirm results and make any changes, if necessary. Let me tell you, there's always something to change – they sometimes forget receipts or worse, they're not happy with owing money. Don't get me started.

How much can I charge them? Not as much as I'd like. You'd be surprised how much people expect to pay. There are many people out there without training who will do a return for $40. My point is, after all that time I potentially spend, the payoff isn't always that great. I usually have to do a lot of returns to make any money.

Could I get a better return on my time somewhere else? During that same time, I could probably do a corporate tax return and easily charge 5 times as much! I'd say that's a better use of my time than doing a single personal tax return.

It's all about getting the biggest bang for you buck during the same time. I've stopped doing tax returns because clearly, there is a better investment of my time.

Now, that I'm approaching the age of 40, I'm starting to view all aspects of my life this way – is the time I spend doing something going to return the most financially to me?

I've spent the past few years doing different things to make money. I made some money here and there, but most importantly, I learned the lesson of revenue maximization. I worked part-time for at least a year and did make extra money, but I found that it started to take away from my day job – I started missing days and I wasn't operating at my peak effectiveness. Was it the best use of my time to earn revenue? Not really.

The extra money I made was offset by feeling sick and losing days of work (I'm a contractor). Also, part-time jobs tend not to get taxed properly so you can face a tax bill at the end of the year.

I also did some bookkeeping that pays fairly well, but it took me away from some of my side-projects that could earn more money in the future.

How do I now evaluate my time for maximum revenue potential?

I consider the following:

1.) Will it help my career in the long term? Or, will there be some other long-term benefits, like networking which could lead to other bigger opportunities.

2.) If I don't make any money in the short-term – and this often happens when starting businesses – will this be offset by potentially more money in the future?

3.) Will the extra time it takes affect my health negatively? If so, I tend to stay away … like staying up all hours trying to get tax returns done.  Good short term money, but health effects are brutal like stress and high blood pressure.

4.) Will I gain some extraordinary experience that will help my resume or take something off my life's 'to-do' list.  Working part-term as a bouncer just didn't offer this.

I think the secret to maximizing your revenue is being prepared to sacrifice some short term gain for a potentially larger longer-term one.

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I'm involved in a start-up company right now as a side venture. I won't say what the industry is, but it's been an interesting few months. It certainly is different from my 9 to 5 job.

Here are a few things we've encountered:

CASHFLOW

No matter how good your idea is or how good your people are, if you have no cash, you don't have a business. We faced a brief situation where there was literally nothing left in the coffers. It didn't matter that we had some great business on the books or we had fantastic and creative employees, there simply wouldn't have been anything to pay the rent or salaries. Thankfully, through the ingenuity of the President, some cash was found and things seem to be ok. You can bet we'll be watching our costs and updating our cash projections. We'll also be watching AR very closely.

BANKS

What a pain. We were approved for a loan with the Business Development Bank of Canada (BDC) but they found a 'glitch' with the original application and denied the loan … even though we had been pre-approved! We had already found office space and moved in because we expected this loan – you can imagine the shock when they reneged on the loan commitment.

A colleague of mine – who is a Chartered Accountant – has a theory about these loans. He has a friend who is a retired banker who was recently hired back as a consultant to go around and convince people that they didn't need loans they were already approved for. As it turns out, many banks approved loan applications but since the economy has tanked, they don't want to honour them anymore. Scary, if you ask me.

EMPLOYEES

People really expect to be paid well regardless of how well a company is doing. In the early stages of a start-up, there obviously isn't much cash, but that doesn't seem to phase them. I wonder if the same situation is happening with the car companies – if you're used to getting a certain (read: high) wage, it's hard to give it up, even if the writing is on the wall.  If a company goes broke there will be nothing left to pay you. People don't seem to make this connection.

I've also seen the different mindsets at play – the entrepreneurial vs. employee mindsets. Employees expect to get paid regardless of their results – if they show up for 8 hours, they expect to be paid for it. Entrepreneurs, on the other hand, know that they can work very hard and end up not getting paid at all. It's all about results at the end of the day.

I was actually not expecting to get paid for a while, but it didn't really bother me. I don't really depend on this 'side money' and I felt the experience would more than make up for it. Plus, the connections and networking possibilities are amazing. How many times do you have the opportunity to start something new?

THE FUTURE

I'm not a shareholder and certainly don't feel the stress that the principals are feeling but it's still going to be an interesting ride in the next year. I only come in a few hours a month and correspond by email, but it's certainly way more fun than my day job!

I'll keep you posted in the coming months.

Do you have any start-up experiences?

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Went on a job site today just for the hell of it. While there are lots of jobs, I have to say, I’m just not excited. For me, happiness doesn’t seem to revolve around having a high-powered job with an impressive title.