What is your time worth when you aren’t managing your small business?
From Joan Isabella, StartupNation Radio consultant
I painted my son’s bedroom. Four coats later I was asking myself why I didn’t hire a painter to do the job.
Deciding to farm out a job–whether it’s outsourcing for your business, or hiring a painter– depends on more than the money involved. It really depends on how much you want to do the work and what other things you’d like to accomplish in the same time period. It’s called opportunity cost.
Some people love to do jobs around the house from making curtains to installing hardwood floors; it gives them a sense of satisfaction and pride. I decided to paint my son’s room, because I wanted to do it for him. It was like a personal gift and I felt good about doing it. But the opportunity cost was higher than I anticipated — I didn’t accomplish much else that week.
So how do you know whether it’s better to hire the job out? The desire, pride and accomplishment aspect is completely up to you. As for the cost, there are websites where you can determine the monetary value of your time. One wage calculator is part of msn.com; another is a real wage calculator on the personal site of a self-designated geek named Hugh Chou. You plug in some info including your income, commuting time, and childcare costs and it tells you what could be the sad truth about how much you really earn per hour. Then you can figure out if it makes financial sense to hire out the job.
There is one last question you have to answer: How valuable is your leisure time– the answer may be much more than the amount you make in a hour. Most people have about 12 hours of leisure time a day, and two thirds of it is spent sleeping. That leaves four hours to bath, eat meals, do housework, spend time with your loved ones, and relax. How much is that worth?
That painter at $35 an hour is looking like a bargain.