Do you know what your time is worth? A lot of people would answer this question by saying, “Yep, I make $x’s per hour”.
That’s one answer. However, for a lot of people, the answer is “no”, “I don’t know”, or I have not thought about it.
If you don’t know how much your time is worth you should because chances are that you are not managing it effectively. I mean, if you don’t know its value, then how can you use it effectively?
I”ll bet that when you go to Target to buy a pillow that you will look at the price, before you get it to the cash register and check your wallet to make sure you can cover the cost. But when it comes to time, a lot of us never consider it, we just spend it as though it is endless.
This is a problem in businesses of all sizes but particularly toxic if you run a small business or start-up. In a small business or start-up, time is one of your most valuable assets. Its the one element that you can utilize more efficiently that your larger competitors, always.
While consulting with small business owners, I often observe inefficient operation practices that are frankly costing the business owner money. Its not always clear to them because they are so close to the day-to-day operations but as an observer, its very clear to me.
Having written operational procedure for a large business for many years, I often cannot resist the opportunity to approach them with my observation in an attempt to provide some constructive feedback to improve the situation.
The most common responses that I have heard from business owners after recommending alternatives are:
- It will only take me a few minutes to do it
- I don’t have the time to learn another way to do it
- It cost to much to pay for a product, service or person to do it
Those responses all seem reasonable but in most cases they don’t make sense and here is why:
Lets just say that you value your time at $100 per hour. That is equal to $1.67 per minute (We get that by dividing 100 / 60 (100 is the hourly rate and there are 60 minutes in an hour) which equals 1.666, rounded up to 1.67). So 5 minutes amounts to $8.35. (That’s more than the hourly minimum wage. You could have paid someone for an entire hour to perform multiple tasks with the value of that time)
NOTE:Keep in mind that you can use any number for yourself but 100 is a nice round number so we will use it for this example.
Use this formula: pay / minutes worked = Value of your time
The first thing you need to do is find the value of your time by identifying how much you are paid for what you do and then break it down to the minute. If you don’t get paid by the hour and don’t have an idea of where to begin, you should start with what you do know.
There are lots of variables here as everyone’s work patterns are different. Some of us work off and on through out the day. Some of us only work 10 months a year. Regardless of the schedule, there is a number of minutes that was worked and an amount of money that you were paid (or living expenses spent). If you have those things, then you can complete this task and solve this problem.
Consider these examples:
- How much do you make per week?
- (Example – $400 per week. For working 8 hours per day Monday through Friday 40 hours(2400 min). Divide $400 by 2400 min = $0.16 cents per minute)
- How much do you make per month?
- (Example – $5,000 per month. For working 10 hour days 5 days per week equals 200 hours (12000 min) total. Divide $5000 by 12000 min = $0.41 cents per minute)
- How much do you make per year?
- (Example – $100,000 per year. For working 12 hour days 6 days per week equals 3456 hours (207360 min) total. Divide $100000 by 207,360 minutes = $0.48 cents per minute)
- If you are a business owner or start-up without traditional payroll or are not taking a salary – Figure out what your living expenses are per year or month?
- (Example – Spending $4,000 per month for food, shelter, utilities. For working 4 hour days 7 days per week equals 112 hours (6,720 min) total. Divide $4000 by 6720 minutes = $0.59 cents per minute)
NOTE: All examples use gross earnings.
NOTE: There are 60 minutes in an hour. 60min X 8hrs(standard work day) = 480 minutes per day. 60min X 12(entrepreneurs workday) = 720 minutes per day.
This may seem complicated but it really isn’t. Its simple math to help you understand that when you take a few minutes to do something that could be handle by delegated to someone else, or handled by a software program strongly consider it. Minutes grow into, hours, which grow into days, months, years, etc.
Some things to note:
- The average employee spends 1-2 hours on email and receives 200 emails daily.
- The average employee is interrupted every three minutes; it takes 25 minutes to regain concentration after each interruption.
- The average employee wastes 55 minutes per day looking for misplaced items.
Know the value of your time and be more productive. If you have any tips or suggestions, leave them in the comments section below.