Do you know what your time is worth? Read on to find out!
Photo by Dylan Ferreira on Unsplash
Time is precious. We can’t get back. We know that in our personal lives, but when it comes to business, we don’t always treat our time with the consideration it deserves.
But as a business owner, you have to know the value of your time. Knowing that value helps you decide where to spend your time, what tasks are better left outsourced to others, and what really matters. It’s how we find that elusive work/life balance that everyone talks about but too few know how to obtain.
For many business owners, it’s difficult to pinpoint the value of your time especially when you’re starting out. All tasks seem important, and you want to know all aspects of your business. So how do you manage it all?
Have you ever sat down and really thought about where you spend your time? I did this recently in my business, and I have to admit, I was pretty upset.
How much time are you spending in your initial meeting with potential clients? How much time are you spending creating proposals and contracts, invoicing and corresponding with them, and setting up your work with them? All of this is part of your onboarding process, so how much time does it take?
How much time are you spending on your project or work with your clients? How much time are you spending handing off projects (offboarding) or in recurring meetings?
For me, I was spending 3-4 hours per client before they even signed a contract.
We make choices where to spend time, and those choices are what keep us stuck or what help us grow. So how can we figure out what is worth spending our time on?
The easiest way to track your time is by using a software program. There are tons of programs that allow you to track time like Toggl or Clockify that have free options to make tracking your time and what you are spending your time on easy.
When I was getting my business going, I used a mixture of tasks, programs, and processes instead of solutions. I would write tasks down and then use an online timer, roll up my task hours, send an email, etc. Ugh. It was a time suck. When I found my project management tool, it became a solution. At Martha Warner, LLC we use ClickUp. ClickUp is more than just a time tracking system. It is a fully integrated project management tool that helps us stay organized and keep track of all the tasks we need to complete. It easily allows us to keep track of our time and what we are spending our time on, but it also has integrations and automations that save me time. Use it to track how much time you’re spending on every step in your process.
The next step in figuring out what your time is worth is to calculate how much money you earned during the time that you tracked.
You probably did something similar initially to set your prices. It’s easy if you’re an employee since your paycheck determines how much you made for the time you spent at work. However, if you are a business owner, this calculation can be a little more difficult. You have to factor in all of the time you spent preparing, material costs, travel, systems, etc.
When I got started, my earnings were low. Like really, really low. It didn’t matter that I have a bachelor’s degree and master’s degree or that I have years of experience. I was intimidated, doubtful, and full of the poor, blue-collar, Midwestern spirit that told me that my value was low. There were times when I started that I’m pretty sure I was losing money by working.
But when I got serious about my money (and got out of my head), I started seeing the difference.
You can use QuickBooks or another accounting software to see where your money is going.
Next, divide your total money earned by the total time you spent on work related tasks. This amount should be close to your rate. If it’s not, you need to consider raising your rates.
Once you have a clearer idea of the cost of your work, you can make those hard decisions about value.
You’re left with a number. But that number isn’t exactly the value of your time.
Look at the bigger picture. How much time do you want to spend on your business versus in your life? What are your goals?
What areas of your business do you enjoy? Are there any areas of your business that you don’t enjoy? Where do you need to make more money? What tasks took up a lot of your time but are not showing a return on your investment of time?
This is the point where I break out a formula.
I list tasks, time, and cost. I label who: P = personal (can only be done by me), O+ = can be outsourced but I like to do, O- = can be outsourced but I don’t like to do. Personal gets 3 points; O+ gets 2 points; and O- gets 1 point. Then, I label value: each area as low, medium, or high value. Low gets 1 point; medium gets 2 points; and high gets 3 points.
From there, it’s a calculation: (cost/time) *(who points * value points).
For example, if a task takes me 2 hours, and I make $100, but I enjoy the task that could be outsourced but leads to a lot of referrals, so it has a high value, I would calculate: 50 (100/2) * 6 (2*3) = 300. Another task might take me 2 hours, but I make $200, but I don’t like it, and it doesn’t result in much value. I would calculate 100 (200/2) * 1 (1*1) = 100. The value of the first activity is three times as high as the value of the second activity even though the second activity is worth more money. In the end, we’re talking about the value of our time–not how much money we’re making.
Check out this free resource to help you calculate the value of your time.
Oftentimes, we find that something costs more up front, but in the end, we increase the value of our time.
For me, this meant investing in HoneyBook. HoneyBook is a client relationship management system that tracks leads; generates proposals, contracts, invoices; and allows my clients to make payments. I can also see my income quickly with HoneyBook’s monthly and yearly reports.
Using HoneyBook’s new Smartfiles and automations helped me cut that 3-4 hours per client down to an hour or less. Think about that. 3 hours per client x 10 clients means that I saved 30 hours with this one tool. Does the tool cost? Yes. Did it take time and resources to set up? Absolutely. Was it worth it? 100%.
As a business owner, where do you want to spend your time? If there are certain tasks that you found are not valuing your time, consider outsourcing those tasks. Reach out and I would love to see if my team and I could help you get your valuable time back!
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