The Kwickr Blog

The True Cost of Admin

Admin tasks tend to seep into day-to-day life for business owners.

Too often, business owners think “why would I pay £35 an hour to hire an admin personnel when I could do those tasks myself “for free””?

But there are some key costs associated with managing your business like this. One is the focus and productivity that is lost as a result of attention-switching. The other is even worse: opportunity cost. Let’s take a look at these:

The cost of attention-switching

A payment reminder from your mobile provider just came in by email. You are working on a proposal for a key client. You have a couple hours of work left on it. But you don’t want to forget that payment again, because the last thing you need is for your provider to cut off your calling ability. So you think okay, I’m quickly going to make that payment, and then it’s done and I won’t have to worry about it.

Well, you’ve just made a couple mistakes.

First of all, if you were focusing on that proposal, you shouldn’t have even seen that payment reminder email come in. You should have had your email closed, along with everything else other than the proposal. Those reminders that pop up from the lower right-hand corner of your screen? Shut. Them. Down.

Your second mistake was to vastly underestimate the time it would cost you to “quickly” make that payment.

Research carried out at London’s Institute of Psychiatry found that flipping from one task to another at work had a profound effect on performance. So much so, that those who were constantly distracted by emails and phone calls saw a 10-point drop in their IQ.

And lower IQ levels aren’t the end of it.

In one study by the University of California Irvine, researchers followed workers on the job to determine their levels of productivity. They found that it takes people a while to get into a new task and a while to get out of it and back on track with what they were doing before.

The study found that 82% of all interrupted work is resumed on the same day, but – and it’s a big but – it takes an average of 23 minutes and 15 seconds to get back on track.

That means that even taking a minute to reply to an email can set you back by almost half an hour. Imagine that happening three or four times a day.

On top of this, another study showed that people take much longer to switch back to complex tasks from easy, repetitive ones, which means that every time you stop whatever you’re doing to reply to an email or answer the phone, you’re losing even more time to work on the high-level aspects of your business.

In thinking that they’re saving money by carrying out admin tasks themselves is where a lot of business owners get it very, very wrong.

But there’s a second, even bigger, problem with business owners doing their own admin. Opportunity cost.

The Dynamics of Opportunity Cost

This is the biggie. This is the one that holds many small-business owners from ever getting into serious growth.

Often, the biggest obstacle that stops business owners from hiring an admin person is the way they perceive the cost of it. Most of the time, people know they could do with a hand when it comes to delegating less-important but time-consuming tasks, yet they still won’t spend the cash.  

However, if they compared immediate cash outlay to the true cost, they might see things differently.

Cash outlay is literally the amount of money that leaves your bank account in exchange for the admin service. The cash outlay of doing those services yourself is zero, which makes assigning admin tasks to yourself so appealing.

Let’s translate this into actual figures.

According to a survey by Sage, business owners spend around 120 days a year on admin tasks. These tasks are predominantly accounting, recruiting, and HR activities.

When you think about it this way, spending £35 an hour for 120 days a year seems like an awful lot if you were to hire someone to do the job.

If we conclude that the average day is eight hours long, that works out at over £33,000 per year – a cost that a lot of business owners (particularly newer ones) simply can’t justify.

But the true cost of admin goes deeper than the amount of cash that leaves your bank account.

The predicted opportunity cost of time spent by UK employees each year on admin tasks is around £60 billion. Let that sink in for a moment.

This is because when you’re spending a large amount of time working on tasks that you could pay someone £35 an hour to do, you’re not working on developing your business to bring in many multiples of that.

An hour spent dealing with admin means an hour less meeting a new client. An hour spent doing your books means an hour less working on a new campaign that builds awareness for your business.

Saving £33,000 a year might seem like a huge relief for business owners, but when you look at the opportunity cost of admin tasks it’s actually unacceptable.

Yes, you might save £33,000 by doing your admin tasks yourself, but you might also lose thousands or even millions of pounds in business development activities that you couldn’t get round to because you were too busy doing admin tasks.

Admin Just Isn’t a Part of Your Mission

Whether your mission is made up of business goals or other goals, it’s highly unlikely that admin comes into it.

So stop doing admin and start serving your mission!

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