The Money Value Of Time

“Time value of money' is a common financial term. Basically, it represents how much a dollar will be worth in x number of years. A simple way to calculate this would be to use a guaranteed yearly interest rate and subtract expected inflation.

The 'money value of time' is different. This concept calculates what your time is worth.

The first step in analyzing what your time is worth is dividing your income by your hours worked over a set period. This is simple if you have a salaried job and work a set amount of hours per week. To be as accurate as possible, use the bottom line figure after taxes. Then add the value of any paid insurance, stock options, benefits, etc.

If you are self-employed, the money value of time can be much more complicated. Small-business owners calculate their hourly time the same as salaried workers. But there’s a twist you have to consider: the amount of extra money your company makes when you are working compared to an employee doing the same task. Leads on new business opportunities, wholesale accounts, and additional sales often come from your interaction with customers. New business owners need to develop a system to receive customer leads, even when they are not working.

In the beginning:
It is vital that that as a new business owner to spend as much time as possible talking to customers and learning every aspect of your business. During this period it is extremely important to establish training checklists, guidelines, and manuals, which will all help make things run more efficiently and make it easier to train employees.

Delegate if possible:
Do a task yourself if it is extremely important.
Delegate a moderately important task and verify that the task was finished.
Delegate a minor task to a trusted employee.

Incorporate the money value of time:
For salaried workers, if you’re contemplating getting another job or starting your own business, it’s important to know how much your bottom line hourly rate is.

Small business owners should delegate moderate and simple tasks to employees.
One of the biggest mistakes entrepreneurs make is working in their business instead of working on their business. Is it really good use of your time if you’re doing non-essential tasks that your employees can do? You need to grow your business by marketing, developing new business opportunities, and doing the essential tasks that only you can do.

Let’s summarize by looking at the big picture:
* Calculate your bottom line per-hour wages.
* Make a list of all the non-essential tasks you do. Remove the non-essential tasks you enjoy doing from that list. Cook if you like to cook. Clean if you enjoy cleaning.
* Hire experts to do non-essential tasks. If you make $100 an hour, why would you spend four hours a week cleaning and doing laundry when you can hire someone to do it for $15 an hour?
* Think about the money value of time when doing any time-consuming task. Take a taxi or shuttle instead of driving a four hour round trip to the airport.
* Consider hiring a personal or virtual assistant.
* Hire a bookkeeper for payroll, accounts payable, and accounts receivable.
* Hire a cook or order more take out if you have a high hourly wage.
* Use college interns or hire contract workers to handle short-term projects like web development, editing, marketing, etc.
* Use commission only based salespeople. Hourly wages no longer become an issue.
* Purchase more products from the Internet. Shopping is time consuming. Buy items online if possible.
* Hire couriers and pick up and delivery services.
* Delegate more work tasks to employees.

The faster your business grows, the more important it is to delegate appropriate tasks. Whoever said 'You can't buy time' is wrong. You can buy time.

"Change your thoughts and you change your world". Norman Vincent Peale