The Business Owner’s Time Trap
In an ideal world, we would all spend 30-40 hours a week, working on fee-paying work, take at least five weeks’ holiday a year, with no business interruptions and have weekends and evenings free to spend with family and friends. This would be the perfect work/life balance.
As a business owner, this is very rarely pans out. We find ourselves in the whirlwind of working for our fee-paying clients for part of our working week and spending the rest of the time either preparing for the work or catching up with all the administrative tasks that are created by being in business.
Our potential 30-40 hour week turns into a 60-80 hour week, and we become too tired and preoccupied to fully enjoy the reasons that we went into business in the first place.
Calculate your hourly rate as a business owner:
- Annual income: Either gross salary (before tax) or your total revenue minus business expenses if you’re self-employed.
- Annual hours worked: Multiply the average number of hours you work per week by the number of weeks you work per year. Typically, this is around 2,000 hours, allowing for some holiday (40 hours/week 50 weeks).
Hourly Rate = Annual Income / Total Annual Work Hours
For example, if you earn £50,000 per year and work 2,000 hours, your basic hourly rate is £25.
However, have you considered that an hour spent on non-income-generating tasks has a lost opportunity cost too? Think of it this way:
Cost of your hourly rate for that one hour £25.00
Missed billing opportunity (charge to client), say £45.00
TOTAL £70.00
So, the true cost of one hour is actually your hourly rate PLUS the potential revenue you sacrificed. It really adds up for business owners!
What is your time worth as a business owner?
- What would a client pay for an hour of your time?
- What if you spent that hour securing new business?
- Could you generate more income by focusing on high-value activities?
- Are you treating your time as the asset it is?
- Would taking some downtime be more valuable to you?
Most of us don’t see our time as being a valuable commodity, we bumble along, being busy, working hard and putting in the hours, but don’t consider whether what we are doing is adding value to our business. Value might be monetary, but it could also be something that takes us one step nearer our business goal of being successful. One way of discovering if we are using our time wisely is to ask yourself the following questions:
Are you the best person for the job?
Could it be automated?
- What is your rate of pay per hour and is this task worth that amount?
- Is it something that you enjoy doing?
- Do you have the skills and knowledge to carry out the work effectively?
- How efficient are you at doing this work?
- Is it something you could delegate to the right person?
- What could you be doing if you weren’t doing this?
How might your time be better spent?
Successful business owners use their time wisely, concentrating on the elements of business which directly increase revenue and maximise growth and stability. Interacting with customers, generating sales, designing new products, updating skills, marketing and planning can all have a very positive impact.
Spending time with friends and family away from the business is also important, it clears the mind, creates thinking time and helps recharge the batteries. Our mental health is important if we are to succeed in our chosen careers, and taking time out to look after ourselves can greatly improve our ability to be productive when we are working.
What are your choices?
Carry on as you are
If you carry on as you are chances are that either your business will stand still, you will burn out or you will get more and more disillusioned with the business world. You may miss out on time with the people you love and not have the energy to enjoy the things that are important to you.
Employ someone to help
Employing staff is a huge responsibility and requires a financial and personal commitment to ensure that there is consistent work and the finances to support an employee. There is also the moral dilemma of employing someone who has an existing secure job and things not working out as you have planned and promised.
Costs of employing staff
- Annual salary
- 5.6 weeks holiday
- Employers’ National Insurance liability
- Pension contributions
- Training
- Equipment (desk, chair, computer equipment etc)
- Management time
- Insurance
- Running payroll
- HR time and Contracts
- Unproductive/wasted time (making coffee, comfort breaks, socialising etc)
- Sick leave
- Maternity/paternity leave
Outsource the work
Outsourcing can provide the benefits of having an employee, but without the commitment from you as the employer. With the right service, you could add a dedicated person to your team, who has all the skills and experience you need but comes without the overhead costs and responsibilities.
If you choose a company to outsource to, you will often have access to the skills and knowledge of a team of trained and experienced people, so that you are not reliant on one person. The team may also be available to you on a full-time basis even when you’re only paying for part-time support. Get the answers you need, exactly when you need them, from someone who knows your business inside and out.
As either a short-term or long-term solution, these services provide a reliable, flexible, cost-effective workforce who will integrate seamlessly into your team and that you can call upon as and when you need them.
