Growth

Cal­cu­lat­ing true value of time in your hands

Business Daily (Kenya) - - FRONT PAGE - En­tre­pre­neur

Do you know the value of your time? Ken Se­gall, cre­ator of Ap­ple’s fa­mous “Think Dif­fer­ent” ad cam­paign for agency Chiat/day, said he got thrown out of a meet­ing once by the founder of his agency, Jay Chiat. “Why are you here?” he asked Se­gall and the art direc­tor, who’d shown up with every­body else. “We’re just re­spond­ing to the in­vi­ta­tion,” said Se­gall. Chiat told them to get lost. “Go cre­ate some­thing,” he said. Jay Chiat knew the value of his cre­ative peo­ple’s time. He knew it wasn’t worth it for them to go into that meet­ing when they could be putting to­gether the next big ad cam­paign. They were more valu­able to the com­pany do­ing the cre­ative work that made it run than at­tend­ing a meet­ing. That’s what know­ing the value of your time can do for you; it tells you what’s most im­por­tant. Time is the one re­source all of us have, but it’s also painfully fi­nite in na­ture. You can’t bank it -- all you can do is in­vest it wisely. As an en­tre­pre­neur, if you don’t know the true mon­e­tary value of your time, how are you go­ing to pri­or­i­tize your busi­ness and your life? What does it take to find the mon­e­tary value of your time?

IN­VEST YOUR TIME.

Be aware that your time is likely to ap­pre­ci­ate in value. If you’re a founder or run­ning a suc­cess­ful busi­ness, your time's value will in­crease as your busi­ness does. That’s why we re­fer to “in­vest­ing” time, not just spend­ing it. So, as your busi­ness grows and de­vel­ops, sooner or later the mon­e­tary value of your time is go­ing to sur­pass the im­por­tance of money. It’ll be more im­por­tant for you to in­vest your time in mov­ing the busi­ness for­ward be­cause your time is go­ing to be worth more. Ac­cord­ing to a 2016 pa­per by Steve Yoo, Charles Cor­bett and Guil­laume Roels, the most im­por­tant and ne­glected part of estab­lish­ing a busi­ness is the bor­ing stuff -- estab­lish­ing pro­cesses and pro­ce­dures that can save time in other ar­eas. In­vest your time on process early, lest you spend it later putting out fires.

CRUNCH THE NUM­BERS

En­tre­pre­neur James Clear de­cided to ap­proach this prob­lem sys- tem­at­i­cally -- he talked to ev­ery­one from poker play­ers to ex­ec­u­tive coaches to fig­ure out what the op­ti­mal method of mea­sur­ing his time’s value was. Then, he sat down and tracked ev­ery hour for three months. The up­shot of that time in­vest­ment was a very clear process that you can use to lay out what your time is worth. First, fig­ure out the amount of time you spend to earn money. That’s not just time spent work­ing. Are you com­mut­ing? That’s time you’re us­ing to­wards work that’s not go­ing else­where. Day­care? That counts. Drop the kids off at school? Add it on. If it’s re­lated to the time you spend earn­ing money, add it on. Clear’s es­ti­mate guesses that most full-time em­ploy­ees and en­trepreneurs spend around 2,500 hours a year on this (his ex­act es­ti­mate for him­self came out to 2,742). Then, fig­ure out how much you earn in take­home pay per year. That cal­cu­la­tion should be pretty sim­ple, though if you’re a busi­ness owner, it’ll be a lit­tle more com­plex as you fig­ure out taxes and with­hold­ing. Di­vide your to­tal earn­ings by the hours you spend to earn it. That’s your time’s value. Sur­prised? It’s prob­a­bly lower than you ex­pected, es­pe­cially if you cal­cu­lated the ex­tra hours de­voted to things like drop­ping of kids at day­care or com­mut­ing ac­cu­rately. We don’t of­ten think of our work value in terms of to­tal hours spent. Cre­ate a sys­tem of checks and bal­ances. You don’t want to just rely on that, though. Maybe you’re be­ing un­der­paid (or un­der­pay­ing your­self ). Maybe an­other fac­tor is throw­ing it off, or your math has an er­ror. Con­sider a few other fac­tors: - What do other peo­ple make to do your job? - What would you pay some­one else to do your job? - What could you make on the open mar­ket if you were to go find an­other job? Run those num­bers against each other to de­ter­mine an av­er­age. For en­trepreneurs, this changes ev­ery­thing. Once you un­der­stand this num­ber, it’ll change the way you ap­proach ev­ery­thing in your busi­ness and your life. One en­tre­pre­neur I know who un­der­stands the value of time is Ja­son Bliss, co-founder of Healthy Liv­ing Net­work. He’s built plenty of com­pa­nies him­self, worked as a ven­ture cap­i­tal­ist and more. His time is valu­able, and he knows it. I re­cently asked him what changed when he started think­ing this way. He noted, “I used to spend a lot more time on meet­ings than I do now. When you start count­ing up the amount of time you use sit­ting in rooms talk­ing about things as op­posed to ac­tu­ally do­ing them, your think­ing starts to change.” Bliss echoes the mind­set of Ken Se­gall, who sent his star de­signer away from a meet­ing that wasn't worth his time. “If you knew that a meet­ing is cost­ing you $6,000, would you be there? Would it be worth it? Or, could you find a more ef­fi­cient way to in­vest your time?” Know what your own time is worth. Re­mind your­self of it con­stantly. If you do, you’ll find your­self more pro­duc­tive, ef­fi­cient, sat­is­fied, and suc­cess­ful. So what are you wait­ing for? In­vest wisely.

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