Small business entrepreneurs are busy. But many of them don’t know the true value of their own time.
So, what is the value of a small business entrepreneur’s time?
What is your time worth (in dollars)?
Let’s look at the economics of a small business entrepreneur’s time.
Let’s say Joe owns a fitness studio. His primary revenue is monthly memberships. His average membership is $100/month, and his typical member remains a member for 3 years (36 months). Joe spends 15 hours/week marketing and selling to new members. In a typical month, Joe adds 12 new members.
If you run the math, Joe creates $576* of value with each hour he spends on marketing.
That means that every hour of Joe’s time is worth $576, on average. Every hour that Joe spends on menial tasks that bring the business marginal value, Joe could be paying someone $10-50/hour doing that task. That saves Joe at least $526 dollars of new value per hour. That’s a lot of money!
The lesson here?
Don’t try to save thousands of dollars by doing everything yourself and miss out of tens of thousands of dollars worth of savings and new revenue that outsourcing and delegating could bring you.
Paying someone else to take smaller tasks off of your plate is not the economically risky decision – not paying someone to do those tasks is the risky decision.
*100/month x .80 gross margin x 36 months = 2880 customer lifetime value
60 hours per month/12 new customers = 5 hours spent to acquire a new customer
2880 customer lifetime value/5 hours = $576
Disclaimer: these numbers are an example. Plug in numbers that make sense to your business. But no matter what, the cost of doing it yourself is higher than the cost of paying someone.
We also understand that many attorneys charge more than this.
What is your time worth to you?
Stepping away from money for a moment, let’s talk about what your time is worth in a broader sense. Your focus, your energy, your ability to think clearly about the big picture – those are vital to your business.
Think about the small business owner who is always buried in a to-do list. They wake up and answer emails, thinking it will only take an hour to take care of their inbox. Three hours later, they realize that they have to get going. With their day already off to a late start, they find themselves managing people, paying bills, and dealing with little things that come up until it’s already late evening. So many things just need to get done that by the time the day is over, they’ve worked 14 hours and haven’t had time to think.
Since you’re the entrepreneur, at the end of the day, you have more buy-in to the business than anyone else ever will. You’re the one who will make sure that payroll is on time, the books are getting done, the customers are happy, and the business is running like it should be. You have to hire people, deal with contractors, and manage the cash flow. Having the most at stake means doing everything from the big, important tasks to the small ones that fall through the cracks.
But that doesn’t mean you can’t make it easier on yourself.
Every hour you spend on those tasks is a little bit less focus and mental energy you have to devote to your overall business strategy. Your time and energy are what drive your business. More time and focus means growing your business faster, and not growing to resent your work because you work 16 hour days and don’t feel like you’ve accomplished what you wanted to at the end of those days.
Change your mindset.
Your time is valuable, not just in a monetary sense, but because your mental focus is limited, and your ability to make decision after decision will wear down after awhile. The more you view your time and energy as limited resources, the more you will find ways to carve out time for your business strategy.
How to get out from under the pile of to-do’s
Ask yourself this question: what am I uniquely good at when it comes to running my business?
Answer this question honestly. If you’re not an expert at marketing your business locally and you don’t have time to learn how to do search engine optimization well, be honest with yourself. You can do a fine job at something without being uniquely good at it. Know what parts of running a business you enjoy and are uniquely good at. The things that get you up in the morning.
Everything you aren’t uniquely good at can be outsourced or delegated.
It takes a little bit of mental preparation to give up control over things that you can do yourself, knowing that while you might not specialize in that, you can do a good job. Forget about doing a good job, focus on finding someone to do a great job. Find someone who focuses on marketing small businesses and pay them to do it for you. You’ll have control over what you want them to work on, but they’ll use their broader knowledge to spend their time and energy doing what they are uniquely good at doing. Then, do that for everything you don’t want to do.
Having time to think, to strategize, to make a plan and delegate tasks is critical for a small business entrepreneur. Value your time. Delegate tasks and roles. Relinquish some control to someone you trust, invest a little bit more in your business.