Online Business & Operations Management
Crystal Coleman

Crystal Coleman

Certified Business Manager

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An important piece of team management and planning for online business owners is figuring out and balancing the expense of the team versus total revenue.

Whether you’re looking to build a team, or you already have one in place, this is one of the biggest questions you need to answer BEFORE you start.

Some business owners will simply decide “it costs what it costs”, and then figure out a way to make it happen. This can work for awhile.  But when times get tough, or unexpected world-wide events affect your ability to do business (hmm, ring a bell?) then this method can become a problem real fast.

Others will continue to do everything themselves because they are not in place yet to justify the expense.  But there’s only so far you can scale your business without bringing on a team without facing burnout.  There’s a real cost to your time and energy that could possibly be better spent elsewhere on your business.

I know a better way!

If you’re not already familiar with Mike Michalowicz and Profit First, I recommend you buy his book right now.  Seriously.  And when you’re done reading it, then buy Fix This Next. I promise you, it’s worth every second of your time.

If you have read Mike’s books, then you’ll be familiar with the chart below that many of us in the Certified OBM Community and our clients look to as a model for budgets:

TAPS
Image: Profit First by Mike Michalowicz

To calculate the target team expenses (not including what you pay yourself), look at the Operating Expenses column from the chart above that most closely matches your current business revenue, and then half it for team costs.

This means a business at $500,000 annual revenue would be targeting $20,833 per month in operating expenses, $10,416 of which would be assigned to your team.

For a typical online coaching business that might look like: 

  • Online Business Manager — $3500/mo + incentive (% of revenue)
  • Tech VA  — $500-1000/mo
  • Administrative/Customer Service VA  — $1000/mo
  • other: social media strategist, graphics designer, audio/video editor, proofreading/transcriptions, ads consultant, sales/closer, associate coaches, copywriter — approx $5000

Of course, these are not hard set rules.  Every business is going to vary!  But if you’re looking for a benchmark on which to base your team and operating budget, this is a fantastic place to start.

Your turn: what advice do you have for setting a budget for a team of virtual/online contractors?

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