What is your time worth per hour? Unless you’re in a business charging per hour, this might seem hard to know or even irrelevant. But even if you do charge an hourly rate, chances are that not all your hours are billable. If you focus on using more of your time to earning a higher rate per hour, your business will be more profitable – or you’ll be able to work less hours – whichever is more important to you.
Calculating hourly rate
Income = hourly rate x billed hours.
Most business owners are busy running the business and don’t bill per hour, and don’t consider how much their time is worth per hour. You should! If you like being the person who opens the mail, just be aware that you’re doing a job that should probably pay minimum wage and you’re reducing your profits by doing that. So what kind of things could you do that are most valuable? If you went looking for and found a new top-ten customer, how much will they be worth over the next few years? How many hours of work would that take and how much per hour does that work out to be? You could also look at the value of time recruiting a new member of staff, training staff to be as good (and valuable) as you, working on better marketing, and so on. Most business owners I encounter agree that these are all incredibly high-value activities… but then tell me they don’t have time to do them!
Focusing on high-value activities
It takes a while to really get the connection – the higher the value of the work that the business owner does, the more profitable the company. I know it can appear difficult to find time for high-value activities that don’t have someone pressuring you to do them. So here’s a good approach I’ve found very successful. Look at what you regularly spend time on each week or month and make a list, for example:
- Answering the phone
- Doing quotes
- Making sales calls
- Staff issues
- Customer support…etc
Next to each activity, write what you think would be the hourly rate of pay for someone who could do that work. Now here’s the interesting part: If the hourly rate is less than you can be worth when doing your most valuable work… employ someone to do the lower-paid work. “But I can’t afford to employ someone” I hear you saying. This is the point, and this is what keeps most business owners struggling. If you choose to do work that’s worth minimum wage, that’s the wage you’re choosing for yourself. You have to pay someone else to do the lower value work so that you can do the more valuable work and earn more money for the business. Please, don’t look at all the reasons why this is “not possible”. Instead, focus on just one question: What would we need to do to make this work? It’s surprising how many hours you can gain even without taking on an employee. Modern technology has made it easier to outsource. You can outsource your bookkeeping easily. If you don’t want to lose control, use one of the cloud-based accounting software packages so that you and your bookkeeper continually can see and work with your accounts. There are lots of brilliant Virtual PAs around who can often do things more efficiently than you’re doing them!
Take action. Make a list today, identify one thing that you can outsource and ask your coach or other trusted advisor to recommend someone to give the work to. Don’t do work with a lower hourly rate than you could be doing.
Want more information about becoming the master of your time and focusing on the work that’s going to get your the most reward? Get in touch or give us a call on 01491 877 522.