“Time is money” isn’t just a platitude. As a business owner, your time costs a very real, down to the specific dollar amount.
We’ll get to determining what your time is worth later, but here’s something to consider: Let’s say your hourly rate is $240. You’ve been keeping your company’s books for the last three years because that’s just the way you’ve always done it—after all, if you can do it yourself and avoid paying another person to do it, you’re making more money for yourself and your business, right?
In this case, however, a penny saved is a penny wasted.
You actually hate working with numbers, and while you’re competent enough at keeping the books, you’re not exactly an expert. All you’re doing is paying someone $240 an hour to do a job someone else can do better, more quickly, and for less money. And you’re costing yourself time that could be better spent doing something thatonly you can do.
The inverse of this scenario can also be true, but the point is this: If you don’t know when to hire someone (or not hire someone) to improve your business, you’re wasting money and your own valuable time.
All it takes is two steps to determine how much your time is worth and, in turn, get back your time to grow your business, seek out new opportunities, and achieve your goals.
Step 1. Find Your Rate
Determining your hourly rate is a crucial first step in creating a path to a more profitable, efficient, and productive business. There are only so many hours in a day to get things done, and if you’re spending too many of them on tasks you’re not proficient at or don’t enjoy, you’re paying yourself to not do other things that could grow your business.
Start with your average annual income. Let’s use $500,000 as an example. Now, add up all the weekend days, holidays, vacation days, and other various days you don’t work in a year. Let’s say that comes to 134. Then subtract that number from 365. You get 231. Divide $500,000 by that number (working days in a year) to find your daily rate. In this case, the daily rate is $2,164. Finally, divide that by your average hours worked in a day for your hourly rate. For you right now that might be nine. That gives you an hourly rate of $240.
Why is that number so important?
If your background is in sales, selling your products or services is probably something you’re both good at and you enjoy. You likely also have leads that come directly to you and are sometimes larger than the average sale. If you have the time and can close that sale more quickly than your salesperson, that time it costs you to spend two hours closing the sale could be well spent.
But you might also schedule all your own meetings. And send out all your own emails. And book your own flights.
If those kinds of tasks cost you, on average, about 20 hours a week, that’s $4,800 of your time you could be dedicating to other areas of your business and your life. Is an executive assistant (EA) going to cost you the same amount? Probably not, and you can take those 20 hours you’ve freed up every week by hiring an EA to perform those tasks.
Step 2. Find Your North
You know now what your time is worth. The next step is to take stock of everything you do for your business and everything you could be doing for your business. For this, you need a Task Filter.
Start by writing down all the tasks you do and all the tasks that could realistically be yours to do. Next to each, determine if you have a passion and/or a proficiency for that task. Be honest with yourself.
If you’re familiar with the Freedom Compass, you know you’re looking for those Yes-Yes tasks first—the ones that occupy your Desire Zone, or true north on the Freedom Compass. Likely, those are the tasks you’re going to keep doing yourself because you can get them done quickly and proficiently and they make you feel fulfilled.
For everything else, you need to make a determination: eliminate, automate or delegate. And for everything you need to delegate, determine if you already have someone in your company who’s better suited for the task. If the answer is no, it’s time to hire someone.
It’s at this point that many business owners see the need to hire, see the dollar amount it’ll cost, and lose all conviction to follow through. The “I can do it myself for less” fallacy creeps in.
Realistically, hiring the right person to do the job frees up your time. You may pay someone $100 an hour to keep your books, but you’ve now afforded yourself 10 extra hours per week to cultivate new business relationships (one of your Desire Zone tasks).
The cost of hiring can be steep, but so can the cost of not hiring. It’s up to you to make the determination. Remember: Time is money. Don’t devalue your time by not spending it wisely.
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