Are You Worth It?

This article explores what is at the very core of time management – namely knowing the value of time. This knowledge is vital for any business, and none more so than for the small business owner.

Have you ever asked yourself this simply question - How much is my time worth, what is the value of my time? And if you do know - do your act upon it?

Without some means to measure, compare and decide between two (or more) ways to spend our time, we would never make any rational decision about time management. In business the universally used means of comparison is of course money. We ask this - is one activity likely to produce a higher monetary yield than another?

If you are employed by someone other than yourself, the judgement is very straightforward. After adding in time taken in travelling to work and perhaps also “tied” hours, such as lunch breaks which cannot be used freely, the value you place upon that time must be less than the amount you are paid. If you did not value the remuneration more highly than the time spent, then why are you doing it?

But it is not as simple as that. Most of us would feel that it would be unhealthy to place a value on all of our activities in this way. It would hardly benefit your relationships with your spouse/partner and children to devote time to them according to some idea of a how it looks in a profit and loss account. Yet in some ways that is not a bad analogy - the size of the “profit” (good family life) will surely depend upon the extent of the investment (time spent with our families) and in reality we do make this judgement explicitly. Earned income is gained by sacrificing time with our families, even if the decision seems to be largely outside of our control. This teaches an important lesson – the value we place on our time is not a fixed figure – it shifts so that we may be comfortable working say 40 hours each week, but not 50 – even if the extra 10 hours would be paid at a higher rate.

So the value of time is not constant, and that is an important consideration for effective time management.

The situation is further complicated if you run a small business. You may undertake a range of activities which reward at different rates and some which produce no income of themselves, but which are required in order to support other income generating activities. Now complicate the matter further and add to the mix the considerations I have explained about the value of work versus family time and it can be seen that placing a value on one’s time is not easy for someone who runs a small business, perhaps at home.

Many small business owners do not attempt this calculation, in fact many do not even know, with any degree of reasonable accuracy, the number of hours they work in their business. Without this data they cannot make any calculation about the value of time in their situation, yet it is very important for any business that this calculation is made.

It is therefore vital for any small business owners to keep an accurate record of the number of hours that are worked in their business, not just in terms of the total number, but also the pattern of the house worked, and on each major activity. By comparing this to net income figures (after deduction of expenses) it is a simple matter to arrive at average weekly, daily and hourly rates of earned income, and also the hourly income derived from each major activity. Time management can be viewed in an entirely different light when this information is at hand.

Any small business owner should look to keep overheads to a minimum and stop doing what is of no real importance, and the immediate reaction to any suggestion to keep needless records should be resisted. However capturing data can be done in a way that requires only a few minutes each day.

This information should be at the heart of considerations about which activities to expand or drop and which to invest further effort in etc. But without information the temptation is simply to look at the profit and loss account. However relying solely on net profitability figures will not give sufficient hard information to expose the comparisons between activities in terms of costs and profit per hour. Gut feeling may tell the small business owner this, but hard facts are a greater spur to action.

For a larger business, the situation is not always as critical, a profitable activity can be retained whilst finding resources to develop others that are less profitable before shifting focus to improve profitability. For a small business owner, there may be no option other than to choose between two activities – and this may be the only way a business can be sustained or expanded.

In conclusion, in a small business, time management - knowing how time is spent and the value of time in terms of all and each activity - is of fundamental importance to its survival and growth. Records to gather and compile this data can be can be maintained at minimal cost – and their value will far outweigh the time and effort to do so.

Brian Hazell.