As business owners, we know how quickly time rushes by every day. We know what we want to achieve in our business, but do we REALLY know what our 1,440 minutes every day are worth in cold, hard cash? Watch this to find out…
Hi, and welcome to another episode of Baranov TV, designed to demystify the world of accounts and tax and to help your business grow.
I’ve got a number for you today. It’s this one; 1,440, which is the number of minutes every single one of us has in every single day.
Now, we all know that we can often get to the end of a day and wonder where that day has gone. The time just flies. So, we really, as business owners, need to be very conscious of where that time is going.
We can be very careful; we can try and batch jobs and make calls all together. We can try and manage our interruptions and distractions, but the biggest thing that we’ve found over the years is getting people to work out what every hour of their time needs to be worth.
So, if you work out what you would like to earn at the end of the year, what you’d like to see going into your bank account, you can work back from there to work out what each hour NEEDS to be worth. So, work out that amount, divide that by the number of hours you want to work every year. So, multiply out from each day, to each week, to each month and that will give you, when you divide the two, that will give you an hourly charge out rate.
Only it doesn’t, because what that gives you is what you would be earning if you were 100% productive every hour of your working life, and that just isn’t realistic!
Some people are only productive for perhaps a quarter of their time, maybe a half. Three quarters is getting really good, but realistically we all have lots of things that we deal with that aren’t actually chargeable. Particularly if you travel a lot or if you do a lot of admin for yourself. So, what you need to do is take that original hourly rate and multiply that by how productive you think you might be. So, if 25% of your time is productive you need to multiply that rate by four, which makes a massive difference and then you need to start to look at how you can improve your productivity because that number is probably quite a shock.
So, you can either increase your pricing, you can increase your productivity, or you can reduce the amount that you want to earn every year, and that’s unlikely to be your preferred option!
Start to look at the ways that you can improve your productivity and it may be that actually when you look at those numbers it becomes far more attractive to start to think, well, actually, can I outsource some of this stuff? Some of the £10 a hour jobs that I don’t need to be doing to improve my own productivity and get me closer to that figure at the end of the year.
So, that’s my thought for you for this episode. If you need any help with that then do please get in touch because we can help. We can give you lots of ideas on how to improve your productivity and your efficiencies within the business.
I’ll leave you with that thought and I’ll see you all very soon.