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April 26, 2013 at 12:20 AM
What is an hour of your time worth? If you don’t know the answer to this simple question, it could dramatically affect which activities you choose to spend your time on.
Let’s take Joe Advisor as an example. Joe is constantly struggling to balance the various operations at his firm. Some of his biggest time commitments include case preparation, data entry, application completion and processing, prospecting, appointment scheduling, workshop mailings, client events and other marketing activities.
Considering all the responsibilities Joe has, what would you guess one hour of Joe’s time is worth? Let’s calculate that figure based on last year’s numbers:
- Joe made $350,000 in gross revenue.
- He worked an average of 45 hours per week.
- He took four weeks of vacation, leaving 48 weeks of work.
Given these numbers, Joe made a wage of $162 per hour. Let’s focus on the time Joe spends on just one of his many non-revenue producing tasks. On any given week, Joe devotes roughly five hours to filling out applications. Would you pay someone $162 per hour to fill out applications? That is exactly what Joe has done by “hiring” himself to do this task.
Joe has finally had enough of this arrangement and hires an assistant to fill out applications for him. He pays his assistant $20 per hour.
