One of the most consistent things I see with younger and growing business owners is that even when they identify what to give up, they often have a hard time letting things go. Just as a business owner may have a hard time letting go of a task because they know they can do it, so do many homeowners. When it comes to mowing the yard or cleaning the house, old habits can be hard to break. In the same respect, so can new addictions like Facebook or even watching TV. These small addictions become much clearer when you start to put a dollar figure to these activities.
As an hourly employee, it’s fairly easy to figure out what your hourly time is worth. For salaried employees or owners, a very simple rule of thumb is to take your pre-tax pay rate/compensation and then divide that by 2000-2200 hours in a year. 2000 hours is a 40 hour work week with two weeks off a year. For this example, let’s say your fully loaded compensation plan is $100,000. This means your hourly rate works out to $50/hour. Now, we can look at the highest and best use of your time with dollars in mind; this is the fastest way to get the owner of the business to stop “helping” load the trucks, take care of invoicing or meddling in HR. In the previous exercise, we outlined and prioritized where you are spending your time throughout the day and on what tasks. This exercise helps to break down the things you should be delegating.
With this new exercise, use the same boxes as the previous and put your hourly rate in the top right box. In the top left box, put a number that is equal to 1.5 times your rate. Anything that falls in this area is something you want to focus on. In the bottom left box, place your rate divided by 2. Finally, for the bottom right, divide your rate by 3. Anything in these lower boxes that you can contract out at or near that dollar value, you should. Free yourself up for extra time in the top quadrants. If you spend 5 hours a week setting appointments and managing your schedule, ask yourself: is this 20 hours of scheduling worth $1000/month? If you are the owner and someone came to you saying, “I want to pay someone $50/hour to schedule my calendar” you would say, “HELL no! we can get that done for $15-20 an hour!” That means you could buy 20 hours a month at $400 and have 20 additional hours to focus on things that will really help the company. You could potentially make hundreds of dollars an hour or more! Yes, that is correct, you can literally buy time. It could start with a virtual assistant 10 hours a week and grow into private jet because your time is worth that much.
How often have you heard someone say, “What would I need to give to have more time with my kids?” Unfortunately, I think many people ask this, but very few actually think about it. Just as in business, people sometimes have a hard time breaking away from old habits. Our free time should have a dollar value to it as well. (I would argue it should be worth more than work time, but that is whole different segue down the rabbit hole.) For this discussion, let’s just start with 50% of the value of work time. With that in mind, we can take the example from above and make it $25/hour for your non-work time. When you start to look at things with this light, it makes free time no longer free. This mindset requires you to invest in your “free time”. Perhaps mowing the lawn at $25/hour is worth it to you, especially if you are teaching a child the value of work and/or getting some exercise. Is it worth the time to paint the house, wash the car, or clean? Likely, you can hire it out to people who love what they do, will do it better, and it will save you some time. The other area in the personal time segment that really gets me wound up is how people waste time. When you start to apply $25/hour metric to things, it is difficult to see why anyone would watch TV for hours on end or spend 9/10th of the time they do on social media! Ok, I am throwing stones in my glass house. How you choose to spend your time comes down to your own, individual priorities. That being said, when you start to look at time with an assessed value on it, you will start to be much more protective of your “free time”.
- For your work life, figure out what your time is worth and then compare that to tasks in the elevate and delegate tool to determine if this the best use and value of your time.
- Build a free time Elevate and Delegate tool and identify what you can delegate away
- Look at your free time as no longer free and apply the dollar value to the things you are doing. Determine: is this the highest and best use of my personal time?
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