Stop Wasting Time—Read This!

How to calculate the value of your time and identify which tasks to delegate to make optimize your best resource—you.

It’s not even noon, and already, you’ve been demoted from entrepreneur to cleripreneur. You’ve covered for your $7/hour assistant (because she’s driving across town with an urgent client delivery), a $24/hour technician (because he’s on a call for your biggest customer), and an $18/hour customer-satisfaction specialist (because she’s soothing the customer who’s getting the package in your assistant’s trunk).

Is this really the best way to advance your business? Do the math. Several years ago, economist Ian Walker at Warwick University in England, came up with a formula to calculate how much your time is worth. It’s for personal time, but the general principle works for business, too:

Walker found that a British minute was worth about 15 cents for men, and 12 cents for women. Using this formula, it quickly became clear that something as basic as cooking supper is a poor use of time: The cost of doing it yourself, including the value of time spent and ingredients, was about $15.72. Ordering takeout was a relative steal at $7.31.

V=(W ((100-t)/100))/C

V is the value of an hour, W is a person's hourly wage, t is the tax rate and C is the local cost of living, indexed to a national baseline (if you live in an area that is 50% more expensive than the baseline, C=1.5).

You can use the same principle to examine how you spend your working hours. Start by tracking your time. This has helped Nick Seamon, founder of the Black Sheep Deli in Amherst, Mass., see that to take his business to the next level he has to take himself off the front line.

“I started because I love to bake bread,” he says. But within a year, he realized that baking was limiting his growth potential. First, he delegated the baking. As the bakery grew into a restaurant, he spent most of his time on the floor. “Then it became painfully clear I was spending too much time in the restaurant,” says Seamon, who hired a restaurant manager so that he could focus on catering, marketing, and growth plans. After 20 years, Black Sheep now has 40 employees, with revenues in the $2 million range. The catering business is booming, and Seamon has just opened a small café in nearby Holyoke.

With the help of John Seiffer, a Brookfield, Conn.-based small-business coach, Seamon has learned to concentrate on big-picture issues. Now, he’ll still jump in and help “if someone is in the weeds,” he says. “I’ll plate pastries, mop floors, empty the grease traps—I’ll even clean bathrooms.” But he does so with restraint—and largely to build morale.

To stop wasting valuable time, it helps to really think about time as money—something that many business owners fail to do. “We’re used to transacting in money, and we understand its value, so we remember it when we overspend $100,” says Erica Mina Osada, an assistant professor at the University of Washington’s business school, who specializes in judgment and decision-making. “Time is much more ambiguous, so it’s easy to forget all the times we wasted three hours trying to save $10.”

Here are five ways to think about how you spend your time as well as your money:

1. Clarify your goals. Are you yearning to build a $5 million company--or just to make a living? “For some people, the goal is simply to keep going, and that’s fine,” says Seiffer. In that case, choosing to do lower-level work won’t divert you from your larger ambitions, “just as as long as you’ve delegated the more valuable growth and management issues to someone capable of doing them well.”
   
   
2. Calculate your true hourly rate and then look at how you are spending your time. On what do you spend the most time each week--managing employees, customer service, planning, prospecting, putting out small fires? Estimate what it would cost to hire someone to do any of those tasks. Then, Seiffer advises, ask the bigger question: What could you do with those reclaimed hours? If you can double the time spent calling on potential customers, it clarifies your thinking about delegating collections.
   
   
3. Budget your time as you would your money. Osada’s research indicates that people are too willing to commit to an unspecified time request, say to follow up “sometime next week” on a meeting.” You’ll manage your time better if you count every hour, as if it were cash. “We’re much more conservative with our time when someone says, `Are you free this Tuesday at 3:00?’ When people are asked to block out those specific hours, they are more likely to see the monetary value of keeping that hour free,” she says.
   
   
4. Hire an administrative assistant, even if it’s just for two days a week. “It will get you in the habit of learning how to delegate better, and constantly remind you that you don’t have to get lost in the administrivia,” Seiffer says.
   
   
5. Be honest with yourself. If you just love the scut work that goes with your business, treat is as a pastime--as long as you recognize that there is a cost, says Osada. And, she points out, it is cheaper than paying for greens fees.

HOW TO SPEND TIME WISELY*

Worst Use of Time Best Use of Time Management by crisis Tasks that build relationships with key clients Telephone interruptions Tasks that build relationships with key employees Inadequate staffing Tasks that lead to growth Ineffective delegation Personal touches that remind clients that you actively manage your business Confused responsibility or authority Any work task you enjoy, as long as it’s not preventing your from doing something important *Adapted from R. Alec MacKenzie’s The Time Trap: The Classic Book on Time Managment