A good business mentor can make a real difference in improving your business. Especially if you are on your own as an entrepreneur in a start-up or small business. So let’s analyse how you go about measuring your business mentor return on investment.
Let’s get real, too: a good mentor is not a cheap investment, in either time or money. It’s nice to feel good, have company, be challenged. But you need to make every second count.
A fundamental premise of good business practice is having a framework to assess a project, and mentoring is no different. It’s worth determining whether and how much value you get from your business mentor.
Your business mentor needs to demonstrate that, financially (the scorecard of business) they represent a great return on investment.
Mathematically, working our your Return On Investment (ROI) is not that difficult. Methodologically though, there are a few twists you want to take into account.
What does a business mentor cost?
There are several elements to account for when totalling up the amount you will invest in engaging with a mentor.
The first and most obvious one is their fee. It’s important that, before you start, you are clear on both what and how they charge. Are you paying by the hour or a fixed cost for the engagement?
No matter how you structure it, any mentor worth their salt will be able to give you a clear price, in advance, for your financial investment.
Second, you will be investing your time. Every hour you spend with your mentor is time you can’t invest with a customer or in your business. So, make sure that you include your invest your time, which has an economic cost.
Finally, there is an opportunity cost. This is similar to the cost of your own time, but it’s more subtle. It’s the fact when you are working with Mentor X, you aren’t working with Mentor Y. Time spent with this mentor, could be spent another mentor who may be better equipped. Now – you may think this is a little esoteric. And it certainly is difficult to put a price tag on this.
I include this factor though, to impress upon you the importance of clarity of purpose when choosing your mentor.
Measuring your Business Mentor Return on Investment
Measuring the cost of engaging a mentor is the input. What about the output? How do you track and assess the results of a business mentoring relationship?
Well, if you are a big company, you set up surveys, measure tangible and intangible attitudes, start recording multi-year responses and perhaps after 5 years you can derive a figure. There is nothing wrong with this and makes a lot of sense if you are doing mentoring on a grand scale.
If you are an entrepreneur or small business owner – you probably don’t have that luxury. Yes, you can get some great ideas from large scale studies like this one. In the meantime though, you need something straightforward, lean and mean… and useful.
It doesn’t have to be complex to be effective.
You need something straightforward, lean and mean....and useful. It doesn't have to be complex.
First, look at tangible measures that are useful and easy to track. This could be volume measures like sales, recruitment costs, number of leads. Or it could be ratio measures like profitability, lead conversions or return on equity.
The important aspect with these is to ensure that they are items that will be affected directly by the work you are doing with your business mentor. It’s not relevant to assess your Return on Investment using a reduction in expenses if your business mentor is helping you specifically with marketing!
What about soft skills?
Second, consider how you are going to assess the intangible aspects of your work together. These are very real but they require some discipline to measure. Much of the value of a mentor comes from the intangible aspects.
It’s lonely being an entrepreneur! A business mentor provides a trusted and wise ear to listen and advise you in your decision making. This value needs to be taken into account in measuring your business mentor return on investment.
To measure this intangible benefit, define it. Give it a name and description, to ensure consistency. Then regularly grade it on a scale from 1 to 10.
For example, it might be your Confidence level. Before mentoring, you may be at a, say, 6 out of 10 on your Confidence scale. Reassess this at regular intervals during your Mentoring journey. Come to a final number – hopefully, higher! – at the end of the time spent with your business mentor.
Whatever metrics you decide, make them measurable. Naturally, it makes sense to get an agreement with your business mentor – or at the very least share – these metrics. That helps your business mentor stay focussed on those things that you value.
But be fair. After all, it isn’t your mentor who will be making the sale calls or closing the deals.
Doing the Maths
At the end of the business mentoring engagement, you can do some straightforward maths to work out what your Return on Investment is.
With the tangible measures, simply look at the change in the financial measure less the cost of the business mentor, and express this as a percentage.
With intangible measures, look at the change in scale as a percentage of your starting point.
It’s not uncommon for this to be a quite high number. Why? Well, business mentoring does make a material difference!
But, just like the business mentor can’t get all the responsibility, they can’t get all the credit either. The whole point of the mentoring process is the incremental and radiating improvements that flow from your work. These get reflected in other areas of your business that may not be directly related to your mentor program, but which have material benefits nonetheless.
What are the Next Steps?
Forget the external environment and the bad news that exists every time you open a browser or a newspaper. The current business environment is one of the most promising I have ever seen, as years of societal changes are being compressed into a few months due to our global pandemic. Follow the examples of millions of others that are branching out on their own. Be clinical and ruthless though, in determining where you spend your capital.
Getting a business mentor is a fantastic idea that almost every successful person has embraced. A fantastic idea though doesn’t always mean you achieve your business goals.
Make sure you keep measuring your business mentor return on investment as a part of this.
Want to share your story with me, and see if I am the right mentor for you? You can contact me here and tell me your story. Let’s see if we are the right fit!