Valuing my time

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Valuing my time

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Doozer

posts: 23

Nov 12, 2007 3:49 PM ET Quote Report Abuse

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Hello all,

This is my first post, I hope I can be of help when I have the expertise as well as get help with my concerns from others.

I have a questiion that has nagged me for a long time. I am a sole proprietor and do all of the billable labor myself. My wife is the only employee and handles ordering and bookeeping. I sometimes need to know if, both in my business and personally whether my time is better spent doing what I do in my business, or taking the time to make a needed repair or maybe buy a replacement. Assuming that my workload is steady and time taken away from my work diminishes my income, I need to know the value of my time. For example, If I one of my machines breaks down and I know I can fix it, should I take the 2 or 3 hours it may require, or would it make more sense to pay a repair person? Also, personally, if a repair is needed at home, would taking time away from my business make sense? I know there are other factor involved here, but I`d like to be able to balance them against an actual dollar comparison. That would give me the answer I need to make accurate decisions.

Thanks,

Rich

glgcpa

posts: 86

Nov 12, 2007 4:43 PM ET Quote Report Abuse

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The most obvious answer is that if you have work you could be paid to do at that same time, then it`s more valuable to do the work you will be compensated for. If you are so new to your business, whatever that may be (as you didn`t state), that you do not have enough customers/clients to keep you busy and you`ve done all the knocking on doors and other marketing you can think of, and you know how to properly do this other work, then do it. If you could be doing either billable work or work that will get you billable work, then do that.

-------------------------

Gina L. Gwozdz, CPA
http://GLGcpa.com
http://TaxTreasures.com

CFOtoGo

posts: 67

Nov 12, 2007 5:43 PM ET Quote Report Abuse

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I think you need to look at what you would pay someone to do the billable work that you do. Then you can switch the question around a bit and ask does it make more sense to pay someone to work in my business, or to do the work around the house.

Then like Gina says, if you`ve got billable work to do, or could do things to get more billable work, those should be the highest priority.

Doozer

posts: 23

Nov 12, 2007 8:15 PM ET Quote Report Abuse

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Thanks for the replies! Long story short, I`ve been in business doing reupholstery work in different configurations for 30 years. Paying customers are there most of the time, and the other times are good for fabricating items I will use throughout the year, but there is a certain seasonality to the work. Repairs, of course, don`t usually wait for the slow season. I`ve had more employees than I can remember over the years and for the last 18 have been doing it as I described. I think that there is a point at which it is more expensive to pay someone else for a product or service than to take care of it myself and on the other side of that point, more expensive to take my time than to pay another. I was hoping someone could direct me to a calculation that would reveal what that point is.

Thanks,

Rich

greatmanagement

posts: 269

Nov 13, 2007 2:42 AM ET Quote Report Abuse

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Rich,

As you own your own company, it is more imperative that you spend your time wisely, because it can have an immediate impact on your income.

How much is your time worth (billing hour)? To work that out, create a list of activities that are not directly related to creating income, such as bookkeeping, website maintenance, cleaning, repairing, etc. Based on the previous month, how many hours were spent doing each task?

If you bill $30/hour for your service and you spend 15 hours per month bookkeeping it has cost you $450 that month. It may also have cost you 15 more hours away from your family and friends or impeded on actual production time. Perhaps you would do better to pay someone to complete the bookkeeping for you. It will give you more time for important tasks and may be accomplished in less time if the person is more skilled than yourself.

Does that help?

Andrew

Doozer

posts: 23

Nov 13, 2007 11:52 AM ET Quote Report Abuse

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Andrew, It seems that you are saying that every hour spent doing anything in my business is equal to the charging rate/hour. I have come to understand that non-billable time (such as paperwork) is a necessary product of direct labor time and gets added to that time to arrive at the charging rate/hr. If that`s true, wouldn`t it mean that non-billable time is not equal to the carging rate to the customer? I would like to find out how the loss of an hour (or a day) affects my bottom line. Then, I`d have something to value that time as a comparison.

Thanks,

Rich

greatmanagement

posts: 269

Nov 13, 2007 12:40 PM ET Quote Report Abuse

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Rich,

It seems that you are saying that every hour spent doing anything in my business is equal to the charging rate/hour.

I am saying that because you could be providing your service which, let`s say gains you $30 per hour, instead of doing repairing. So by doing repairing, you not earning $30 because you are not providing a service. By getting someone else to do the repairing for, say, $20, you carry on providing the service for $30 and you are gaining by $10 ($30 for the service you provide minus the $20 you have spend on getting someone else to do the repairing).

Does that make sense?

Andrew

Doozer

posts: 23

Nov 13, 2007 5:52 PM ET Quote Report Abuse

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First, thanks for taking the time to answer my questions Andrew. I see what you are saying, after all forfeiting an hour of labor is lost time and money. But here is where I get tripped up. Let`s say I work 9 hours/day for 5 days/wk and no matter how hard I try, I can`t manage to turn in a full week (45 hrs.) of chargeable labor. I still find that I have to set up my work, clean up afterwards, answer the phone, talk to my customers etc. After all is said and done, I actually end up doing labor that is billable to my customers about 4.5 hrs./day. At $30.00/hr. labor charge to my customers, I end up with $675.00 at the end of the week for 22.5 hrs. billed, rather than $1,350.00 for the 45 hrs. I put in. If I took the whole week off to do something I couldn`t bill my customers for. Would I then say that I lost $1,350.00 that week, or $675.00?

Thanks,

Rich

greatmanagement

posts: 269

Nov 14, 2007 2:14 PM ET Quote Report Abuse

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Rich,

If you didn`t have to do `set up my work, clean up afterwards, answer the phone, talk to my customers etc`, would you be in a position to bill your customers for 9 hours everyday. If yes, then I think you are loosing $1,350.00 for the week you are not working.

Andrew

Doozer

posts: 23

Nov 14, 2007 4:10 PM ET Quote Report Abuse

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Andrew,

I see you are in business management, have you ever actually seen a business that operates at 100% efficiency? Or, are you suggesting that with employees doing all the non-essential work, I could come close to that myself?

Thanks,

Rich

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