Taking at look at your professional development budget

 

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Click on the gif above to watch this video on YouTube or click play below to listen to the Podcast version

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Professional development budget!

It can be tempting to overspend on professional development! Professional development is an important part of businesses in terms of helping hone your skills, increase productivity, and enhance the business’s bottom line. To maximize the Return On Investment (ROI) of professional development, look at what you’ll learn and how the takeaways will impact your business when choosing a course.

But here’s the thing: the best option might not be to put that money into professional development. It might actually be better (and more cost-effective) to hire an employee or contractor.

Keep track of the results of any investment and avoid spending more than 5% of your salary on professional development. On the advertising front, businesses should be thinking about why they are spending money and how the purchase will be utilized. Sometimes it just makes sense to Google it on your own rather than doing someone’s paid course.

All of this and more are in today’s video – “Taking a look at your professional development budget”!

 

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The transcript is below if you would prefer to read this yourself instead of watching the video!

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Hi and welcome back or welcome to Sidekick COO. I’m Sandra B your sidekick COO and today we are going to be talking a little bit about your professional development budget.

Yes, yes, yes. That lovely little line in your P and L is telling you exactly how much money you are spending on courses and masterminds and memberships. That, in all honesty, you probably don’t need to be spending on. If you’re like so many others I see, you are probably way overspending in this category. 

What is your professional development budget? 

Your professional development budget is supposed to be for training and skill development in areas that are lacking for people in your business. So it can be your team members, it can be yourself, and it’s meant to really shore up skills for somebody in a role. It also helps people learn for potential new roles and for growing in the company and things like that.

 It is definitely something that is needed in your business. You definitely need to be spending money on professional development for your business. However, the amount of professional development most people are spending in their businesses, especially for online service providers is astronomical and needs to stop. It has ended more than one business that I know of. 

One of the reasons why I think a lot of us overspend in this category is that people in the online space, we’re surrounded by people “Experts” who are selling us courses and masterminds, memberships, and programs and they’re really good at selling them. These are experts and they have managed to help, you know, hundreds of other people get to a place where you wanna be and it’s really hard to see all that advertisement and not think, “yeah, I really wanna be there so I guess I gotta get that course”. 

The thing is, your professional development and your skill development is supposed to be very specific in regard to something that you’re going to learn. Just having a general course because it has a couple of things that you need to know about, probably isn’t the best solution. 

–This, I hate these, the reflection in my glasses, it’s driving me nuts.–

The thing is, when you are going to spend money on professional development, you really should understand

1. What are you gonna learn? Why are you taking this course? What skill or piece of knowledge is missing that you don’t actually have that you feel you need to have, that you need to pay for? Is that course gonna get you that?
2. What is the return on the investment? How are you going to utilize that information and where is it going to get you? 

For instance, if you have an employee who wants to take a course that’s actually outside of their current job description, it can still be very beneficial for you to invest in that if you have the potential of moving them into another role. If you have a really great employee that’s amazing and they want to have more responsibility. Or they want to move into a different role and you can see that with a little bit of training, they could be amazing and you could easily replace them in this role and whatnot, creating those opportunities for them to move up by allowing them to take a course or a program that’s outside of their current job description can be super beneficial to you. 

You get to keep a really great employee and they get to move forward in their career. They get to be fulfilled in their own career. You get to retain them as an amazing employee who already knows everything about your business and it probably won’t even cost you that much.

Professional development is even when you don’t have employees, for yourself as well, something where you should be thinking about specifics in regards to what you’re gonna learn. Why do you need to learn that and what’s the benefit to you and your business? 

For example, say you are a solopreneur and you want to run Facebook ads and you have no idea how to run Facebook ads, you could hire a Facebook ads manager that’s thousands of dollars a month typically. So could be a little bit prohibitive depending on how much you’re making in your business. You could hire a VA who maybe knows a little bit about Facebook ads, can learn a little bit about Facebook ads, that could be good except then you know you’re not really in control of your Facebook ads. What if they really suck at it? How will you know if they’re doing well? 

Hmm, maybe not the best use of your time and money, but possibly could if you’re willing to invest, if you’re willing to invest for them to learn and you can see the results, it could be good. Totally up to you. The other option is you could buy a course, you could join a little membership, you could be in a program where they teach you how to run Facebook ads. They teach you all about Facebook ads.  

I’m thinking about Tara Zirker’s Successful Ads Club, for example. They have a program that’s basically part course, part mastermind, well I guess not a mastermind, but like support where you get to have a course that teaches you how to run the Facebook ads and then you get access to the experts to help you create your Facebook ads. They’ll help you create copy if you want, but they’ll also help you set up Facebook ads. They’ll help you understand and test the Facebook ads to make sure you understand how to know what’s good or not, and blah blah blah blah blah. 

That one, it’s low cost but you have to do it yourself. So depending on what your time’s like, that could be problematic. So really when you’re coming up with what’s the best solution, for me, it’s all about what’s happening in your business right now. Do I have the funds? Like where’s my funds, where’s my time? All of that. And figuring out what’s gonna be the biggest bang for your buck. But at the same time, make sure that you’re looking at the results that you’re generating.

So if you decide, you know what, I’m making enough money, I can go ahead and hire that Facebook ads expert for thousands of dollars a month to run the ads for me, I’m gonna go do that so that I don’t have to worry about it. Fantastic, do it. That’s totally fine but you need to have some parameters around what you expect to get out of it.

• How many leads are you expecting to generate? 
• How much income are you expecting to generate? 
• What cost per lead do you need to have in order for this to actually be viable for you to continue? 

You need to know those numbers, which means you need to take some time to figure them out. Okay, hopefully, that really expensive Facebook ads person is gonna help you. But the point is, this isn’t all about Facebook ads, it’s all about just professional development in general. 

So for instance, you wanna start a business, maybe you don’t have a business yet and you just have this little side hustle that you’re trying to get off the ground and you decide, you know what? I am gonna invest some money and buy a course. Now before you buy that course that teaches you how to build your business, ask yourself,  what is in that course that I don’t already know or can’t already find out really easily? 

Some people don’t have the time or the energy to actually do a bunch of research to figure it all out on their own. So getting into that business course is probably gonna be a good fit for them. Other people, maybe they already know a lot about business and they just don’t have the confidence. Getting into that business course probably not gonna be the best thing. It could be but probably not.

If you’re only gonna get into a course for your confidence level, there are other ways, less expensive ways to do that. The reason I am bringing this up at all right now is because I have seen so many businesses overspend in the professional development department and so many businesses not even look at what returns they’re getting on that professional development.

If you are spending, look at your P and L right now (your profit and loss statement) in your bookkeeping. If you don’t know what that is, ask your bookkeeper.

If you don’t have a bookkeeper, get one, please.

But look at that, that line and if you are spending 30% of your revenue on professional development, that is way too dang high. You need to scale that back. You need to be asking yourself the hard questions and figuring out:

• What is it that I am paying for?
• What am I actually getting from it?
• How is this affecting my bottom line and do I need to continue with it?

For every single mastermind, group coaching program, course, or membership that you are in, you need to look at what you’re paying for and whether you are getting that return on your investment. Typically a really good metric, and this is gonna probably blow the minds of most of the online business owners that I know, cuz I know most people are spending way more than this on their professional development. But honestly, a really good number to be spending on your professional development for anybody in your organization, whether it be you or somebody else, is typically no more than 5% of that person’s salary. 

So that means, if you’re paying yourself a salary of a hundred thousand dollars then the most that you should be spending on your own professional development, personally, your own professional development should be $5,000 for the year total. Not $30,000, not a hundred thousand dollars, $5,000.

Challenge Time!

I want you to go in and look at your profit and loss statement right now, and I want you to find that line for professional development. I want you to see exactly how much you are spending on your professional development right now in relation to your personal salary, the amount that you actually pay yourself.

If you don’t take a salary and like you’re not incorporated, so you’re not on payroll and just everything is yours, then you’re gonna be looking at your total revenue, okay? Then calculate the percentage that you’re spending and if you are spending more than 5%, I challenge you to look at what you’re spending that on and start scaling it back. 

Really look at what is it that you’re actually learning from this course or from this membership. 

• What are you getting out of it? 
• Are you putting that information to use? 
• Is it helping you in any way beyond just every once in a while? 
• What is the return on your investment? 

If you’ve signed up for a membership, I don’t care if it only costs $15 a month, if you’re in a membership where you’re spending $15 a month, but you never use any of the content, cancel that membership. You don’t need it. And don’t worry about it. A lot of people feel like, well, I’m already paying for it, so before I cancel it, I’m gonna get in and I’m gonna try and get all this information from it and blah, blah, blah blah.

Don’t bother! That information is gonna sit on your computer and you’re never ever, ever gonna look at it. If you haven’t used it now, you’re not gonna use it later, just cancel the membership. I don’t care that it’s only $15 a month. If you’re not using it, you’re just throwing money in the trash. Okay?

Look at your profit and loss check to see how much you are spending in relation to your salary for your professional development budget and then start scaling it back until you get to know more than 5% of your salary. And then going forward, you’re gonna make sure before investing in any further professional development, that 1. if you actually need it. 2. Do you understand what it is you’re buying and what are you gonna get out of it? Specifically, what lack of skill or lack of knowledge are you actually fixing with that course? And then 3. how are you gonna actually (I say actually a lot) How are you gonna implement what you learned so that you can make sure you are getting that money back in your business or getting at least the value back in your business?

It doesn’t have to necessarily equate to revenue down the road. A lot of the time it will, but it needs to equate to something. You need to be able to see the difference in your business. 

I do wanna just say one last thing on the subject, and that is so many people that I know are spending money on professional development for a couple of reasons. One reason is it’s actually not a professional development budget, it’s an advertising budget. They see a course that has a really good group of people in it and they’re like, I can make connections there. In that case, if you’re not buying the course or the program or whatever for the actual content to learn something, you’re just using it for, you know, potential clientele and connections and scaling purposes, then that’s really more of a business development/advertising expense. You still wanna understand why you’re making that purchase and how you’re gonna use that purchase. 

If you get into a mastermind for the connections, but then you never show up or you never work on those connections, you never utilize those connections, you never reach out to those people to for them to help you with anything, then you’re paying for nothing. That’s one thing I do see people spending on. It’s not really professional development, it’s more like advertising or business development. 

The other thing I see people spending money on professional development for is specifically because they don’t have the confidence that they can do it themselves. You know, “I’ve never run a Facebook ad, so I’m gonna get this course”. Even though they could haven’t even tried to figure it out on their own, they are worried that they’re gonna do it wrong. So they just go and pay for a course and sometimes they utilize it and sometimes they don’t.

If confidence is the main issue, try it on your own first and just see how you know, how you do. Getting the confidence comes from doing it, not necessarily from buying a course to learn how to do it. Try doing it yourself first because a lot of the time you can figure it out and a lot of the time the answer is really, really super simple.

 If you found this video helpful or if you know somebody that needs to hear the message, please, please share it. 

Don’t forget to like it and subscribe. Make sure to keep an eye out for future episodes and don’t forget…

Together we thrive. 

See you later.