Time is Money
By: Kevin Scott, Partner of DeWitt Ross & Stevens
Time is money.
We’ve all heard it, we’ve all said it. But how many of us are mindful of it on a consistent basis as we conduct our business every day?
Time is what we sell in legal services. I charge clients a certain amount of money per hour of my time, which I then use to help them resolve their legal issues. The value of an attorney’s time is as clearly defined as it is in any industry.
Nonetheless, attorneys still need to see that defined value translate into actual dollars every month. I cannot charge a client my full hourly rate for routine filing, opening the mail, or for performing the myriad of administrative tasks that go along with operating a law practice. Therefore, as much as possible I try to delegate these tasks to our outstanding paralegals and administrative staff.
As a small business owner, you as well are acutely aware of the need to have your time translate into dollars at the end of the month. However, do you know the value of your time? Even if you do know that value, are you actually spending your time performing tasks that will not only bring that value in return, but hopefully increase your time’s value in the future?
I suggest that, if you haven’t already done so, that you calculate your “hourly rate.” Take the amount that you would like to make this year and divide it by 2,000 hours—50 forty-hour weeks (I realize that for many of you the idea of a forty-hour week or taking a vacation is a foreign concept, but bear with me.) This will give you a rough idea of the value of each hour of your time.
Once you do so, start examining whether you are spending your time during your workday performing tasks that are at that “pay grade.” Many business owners fall into the trap of performing tasks that are well below their skill level and/or position in the company. Editing timesheets, moving product around the warehouse on the forklift, cleaning bathrooms, etc.
Let’s say you calculate your time to be worth $100 per hour. Would you pay someone $100 per hour to drive do basic administrative tasks? Drive a forklift? Perform housekeeping?
No, you wouldn’t. By the same token, it’s a poor business model to pay yourself that much to perform tasks that should be compensated at a much lower rate.
While many small business owners have no choice but to do things that are not CEO-level tasks just to keep the business going, that doesn’t mean that the situation should not change. Look to find opportunities to outsource and delegate lower-level tasks, and you’ll eventually find that your business works better when you are putting your vision and talent to work at a higher level. Doing so will bring the greatest return on the investment of your time now and in the future.