As a small-business owner do you spend time doing tasks yourself in an effort to avoid paying someone else? This important choice is time away from your family, friends and recreational pursuits and may force you away from focusing on functions within the business that demand your expertise and contribute to your revenue, so it is very important to consider putting a value on you your time.
While we cannot overlook the independence and flexibility afforded to those who run their own business, there are very important decisions that need to be made on a day to day basis that just may affect how you sleep at night.
Decisions which, as an employee earning a consistent pay, are simply not their problem. Employees have a wonderful sense of security in knowing the value of their hour. This gives them the assurance and the ability to plan their personal outgoing expenses and allocate funds to niceties such as a rewarding holiday.
In this article I will share a simple equation with you. This will assist you to put a dollar value on you time, enabling you to assess if your current choices are bringing your business the profit you deserve. Consider this:
Total money earned / by your time spent = your financial value
From this, you will be able to work out if your participation in a task was financially viable for your business. Let’s look at two examples to put this into perspective.
Data entry – This important task may be tedious, however, data entry allows your business to make informed decisions and conduct comparisons. Imagine that you spend an entire day entering data necessary for your business. If we apply our equation, Money earned $0 / 8 hours = $0 an hour. Did you just work for FREE? One solution might be to hire a virtual personal assistant to work casually so that you can spend your valuable time focused on tasks that will grow your revenue.
Market stalls and expos – While it can’t be argued that showcasing your products at a market will allow you bring your brand to life in an exciting interactive environment. It is also important to consider the time spent setting up, selling and packing up. Let’s apply our equation to the scenario of traveling one hour and then setting up a Sunday Market stall where you work for five hours. Your money earned is $500 / 6.5 hours = $76.90 hour. Now, take into consideration insurance, the participation fee and the profit per item sold in order to evaluate if this was financially worthwhile for your business.
If you have not done so yet, today is the day to take a moment to consider what hourly rate you are worth. This will involve doing some much needed homework on your overheads and in some instance you may prefer to discuss this with your accountant or financial planner. Once you put a dollar value on your worth you can compare it on a task by task basis as we have done today and use your time effectively allowing you to work on your business as well as in it.