Time is the most important leverage point because, next to our health and loved ones, time is our most precious resource. Once we use it up, it never returns (at least in this incarnation). We can make more money, but contrary to the time management mantras, we can't make more time. Mitch Axelrod discusses the value of your working hours.
“People who never think of committing suicide think nothing of dribbling life away in useless minutes and hours, every day.”
Thomas Carlyle, 1795-1881 - Author and historian
How much is your time worth? It's impossible to put a value on time. Every moment is unique, precious, and irreplaceable, although we don't always act that way. For the sake of this discussion let's discuss how much your work time is worth, in real dollars.
Here's a rough, but accurate way to identify your time value:
- Divide your income by 2,000 (50 weeks x 40 hours/week).
- If you make $50,000, you earn $25/hour. Make $100,000 and you earn $50/hour. It's estimated that fewer than 5% of us earn $100,000 annually.
- If you're earning $500,000 a year, that's $250/hour for every hour you work.
What hourly pay did you come up with?
According to a Parade magazine study, the average physician in America earns $26.80/hour or $53,600 annually. Does that surprise you? I don't know a single doctor who works only 40 hours a week. A garbage collector in New Jersey can earn as much as the average physician.
Here's the challenge: If you want to increase your time value, you must do work that pays you more than you currently earn. You must be rigorous in engaging in those activities that produce at least your hourly value, or more. Doing lower value tasks is the surest way to devalue yourself, limit your income, and reduce your profitability.
This “negative leverage” will result in you accomplishing less than you're capable of achieving, and earning far less than you're worth. We all do these tasks, but we want to reduce or eliminate them as soon as possible.
If you're in business for yourself and have the talent, skills, and ability to earn $50/hour to $100/hour for every hour you work doing what you do best, hire someone to do the $10/hour work. This is time leverage that will free you up to do $50/hour or $100/hour work, and higher.
Remember, to earn $100,000, you must average $50 for each and every one of the 2,000 hours you work.
Here's the killer: For every hour you spend doing $10 work, you must earn $90 in the next hour to average $50/hour. If you spend too many hours on low-earning tasks, you'll never recover enough to earn your true worth, regardless of your current income level. Although you can work longer hours to increase your income, working longer doesn't increase your value.
Being self-employed for half my lifetime, I know how hard it is to resist “doing it yourself” and how we often don't see how we “can afford” to hire someone else or delegate work. These are convenient excuses to avoid putting our attention on the high value work we must do if we're to increase our compensation and enhance our value. I'm guilty as charged.
Clerical and administrative tasks, bookkeeping, and product delivery are essential; a business can stop dead in its tracks if they aren't handled smoothly and efficiently. Let someone else more suited to these tasks do them. Even if that person does the job half as well or takes twice as long, you'll still save money by focusing your attention on higher-value activities. If you continue to do $10/hour work, you might as well work for someone else.
Would you sell your services to someone else for more than $10/hour? Then don't sell yourself to yourself for less! Now if you'll excuse me, I need to go process a credit card.