Entrepreneurship can be a challenging – albeit rewarding – experience. You’ve invested time and effort to build your business. But if you want to retain effective use of these two resources, you’ll find that it’s neither practical nor desirable to continue to handle everything yourself.
Once you’ve reached a certain level of success you’ll want to consider outsourcing – a smart way to save both time and money. However, before you decide which business tasks to farm out, it pays to take a look at how much you’ll save by calculating your hourly wage.
How much is your time worth?
You’re probably thinking, “Now, wait a minute! I’m not some nine-to-fiver. I’m an entrepreneur. I don’t have an hourly wage.” Sure you do! Every project and work-related task to manage the daily operations of your business is factored into your weekly time committment.
Track your time spent working on your business with apps like Timesheet or Hours. Review a snapshot of your weekly time commitment and divide it by the corresponding sales made in that same period. This will give you a good estimate of your hourly wage.
This number is not only a snapshot of what you’ve made, but the value of an hour you spend on any given task — including tasks that can be done more quickly and cheaply, by specialists. This is an excellent approach to measure where your business is today and where you want it to be in the future.
Ask yourself: “What is my current hourly wage?” And don’t stop there. What is your target hourly wage? How much do you want your hourly wage to be?
Real Business Scenario: Should I hire a bookkeeper?
For years, I hesitated to hire a business bookkeeper. I knew my company was not a simple, straightforward “money in, money out” type of business. We held funds for people, had deferred payments, and my employee setup was different. My books were complex.
So, rather than hire a bookkeeper, I kept my own books. The problem was, I spent a lot of time doing it. When I didn’t have time due to other demands, I didn’t update my records. I knew I needed to outsource this task. Turns out, not only did it make sense from a time-management perspective, it also saved me money.
Here’s a deeper look at this scenario:
My effective hourly wage (at the time): $140/hour
Targeted hourly wage (at the time): $250/hour
Monthly hours spent on bookkeeping: 9 hours
Effective and targeted cost: $1,260 – $2,250/month
This means that any bookkeeper whose services cost less than $1,260 immediately represented a savings to my business. And as my hourly wage grew, the savings would grow as well.
In the end, I found a high-quality bookkeeper for $250/month. The time I freed up allowed me to focus on other revenue-generating activities that had a direct impact on raising my effective hourly wage.
Time really is money: Outsourcing benefits
Let’s face it: time is your most valuable asset as a business owner. Every hour that ticks by with you toiling away on tasks that could be outsourced is an hour you could invest in tasks better suited to your skill set.
Let’s consider the concrete benefits of outsourcing based on your hourly wage:
Harness the power of the 1440
In his book, 15 Secrets Successful People Know About Time Management, entrepreneur Kevin Kruse encourages readers to write “1440” on a piece of paper and display it prominently in their office.
One thousand, four hundred forty minutes: that’s what we’re all given each and every day. You can’t pack more into the day, so you need to make every single one count. Money can be replaced, fun can be had, and work can be done, but once your minutes are gone, they’re gone.
Compare your wage to the cost of outsourcing the most tedious and low-level business tasks. Outsourcing frees you up to make a smarter use of your time, and spend time where it’s the most beneficial to raise your hourly wage, grow your business and meet your goals.
Business value can’t be measured on a clock
Outsourcing can actually increase the value of your business – especially if you run an online business. It’s true that online businesses are valued based on their earnings, but that value is absolutely affected by the efficiency of the business. Greater efficiency means lower costs, which means you receive a higher hourly wage.
Streamline workflow with specialists
Your business involves a number of processes — billing, marketing, customer support, accounting — that must be accomplished. But that doesn’t mean you’re the one who has to do them.
As the owner and operator, you’re the biggest cog in what should be a well-oiled machine. But not every cog fits every task. If you can replace your competent, but relatively inefficient, labor with the work of someone who lives to complete a given task at a reasonable cost, you’re ahead of the game in both time and money.
Just because you can, doesn’t mean you should
One of the biggest favors you can do for yourself and your business is to banish the idea that you, and only you, can get the job done properly.
Maybe it’s bookkeeping, marketing, or something as simple as social media management. Whatever your it is, chances are you’ll be better off outsourcing if it can be done more cheaply and efficiently by someone else.
Understand your hourly wage, explore your options, and soon you can outsource your way to more time, more money, and a more valuable company.
This article has been edited.
Mark Daoust is the founder and CEO of Quiet Light Brokerage, an internet business brokerage firm advising entreprenuers on the exit of their e-commerce, SaaS, Amazon, and other web based businesses. Mark is also the author of the recently published Ultimate Guide to Website Value.