The craziest number you don’t know about your business
Do you know what is an hour of your time worth? It’s amazing how not knowing the answer to this simple math problem can dramatically affect the activities you spend your valuable time focusing on.
Let’s use Joe Advisor as an example. Joe Advisor is constantly struggling to run a balancing act in his business as he manages most of the operations at his firm. Some of his biggest time constraints include case preparation and data entry, filling out and processing applications, chasing prospects and booking appointments, organizing workshop mailings, client events, and other marketing activities. Is anyone else worn out?
Considering all of his responsibilities, what would you guess one hour of Joe’s time is worth? Let’s calculate based on Joe’s numbers last year:
- Joe made $350,000 in gross revenue
- He worked an average of 45 hours per week
- He took four weeks of vacation, leaving 48 work weeks for the year
Let’s focus on the time Joe spends on just of the many non-revenue-producing tasks he has on his plate. During any given week, Joe devotes roughly five hours to filling out applications. Would you pay $162 per hour for someone to fill out applications? That is exactly what Joe has done by hiring himself to do it (at a cost of $810 of his time per week).
Joe has finally had enough and decides to hire an assistant to fill out applications for him. He pays this person $20 per hour. Let’s look at the power of delegating just this one task:
Immediately, Joe has an additional five hours available in his schedule each week – 240 hours per year! Conservatively, let’s say Joe is able to replace just one of those five hours per week with a revenue producing activity, such as meeting with a qualified prospect. Once again, ultra-conservatively, let’s say Joe averages a case size of $100,000, with an average of a 6 percent commission per case, bringing in $6,000 of revenue with his newly available time.
What would Joe’s new numbers look like at the end of the year?
- Total cost for assistant = $38,400 ($20 per hr x 40 hrs per week x 48 work weeks)
- Total additional revenue to firm = $288,000 ($6,000 x 48 work weeks) Total Net Return = $249,600
- Delegate: Don’t waste time on tasks that you can delegate to others in your office. Empower your employees to handle paperwork, applications, appointments and errands so you can focus on revenue producing activities.
- Automate: There are plenty of automation tools that can save you and your staff hours each day. Tools like CopyTalk or Mobile Assistant for transcribing notes after a meeting, Google Alerts to feed you specifics on important news and topics, or HootSuite to automate social media activities, just to name a few.
- Guard your time: Create time constraints for clients, prospects and yourself. Instead of offering a “free consultation,” offer a “free 30-minute consultation.” By defining expectations, you minimize the risk of wasting time. (I plan to write a future article on just this topic.)