Valuing my time

Doozer

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

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.

Doozer

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

Doozer

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

Doozer

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

Doozer

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
Doozer11/14/2007 4:14 PM

Doozer

Andrew,
I`m trying to arrive at a dollar figure that represents what one hour of my time is worth. Let`s suppose it turns out to be $30.00/hr. With that in mind, if I am quoted a price to do some repair work on one of my machines in my shop of $200.00 labor and I know I can do the job in 4 hours, I might be inclined to set a lighter work schedule one day and do the work myself to save the $80.00. But if I found that my time was really worth $50.00/hr, I might decide to have the repair co. do the work and not bother with it myself since there would be no savings (although the tax situation could shift it in my favor).
In my business I have to travel to do on-site installations. There is time loading up my truck, driving to the site, unloading, etc.etc. I think it would be impractical to think of outsourcing this work, there are just some things that any operation has to do on their own. Even in businesses where it is possible, there is always some unbillable time involved in the mix that has to be passed on to the customer in the form of overhead.
Rich

Schimeon

Andrew that was a great way to explain how the hours break down into dollars and cents.
 
Rich every business has activities that make them money and activities that just have to be done to stay in business. I believe that Andrew is implying that you outsource the activities that don`t make you money like follow up calls, bookkeeping, answering phones and appointment setting. I know that you have had issues with past employees, have you considered a Virtual Assistant. Virtual Assistant`s are trained professionals that help you manage your business and handle those back office tasks, which leaves you more time to spend with your family or concentrating on bringing more money in the door.
Best of all you only pay for what you need, no payroll tax or employee benefits, and if you choose a virtual assistant company you won`t have to be concerned with sick days either.
I happen to own a company that offers support to small businesses and our VA`s are all college graduates and our rates start as low as $10. per hour.
 
There are others companies out there just google Virtual Assistant.





 
Happy hunting.
 
Schimeon
 

Doozer

Hi Schimeon,
That sounds like a good idea, but one I`m not familiar with. How would someone else get back to my customer, know the right questions to ask them about what equipment they have that needs attention and then relay that to me without me taking my time to provide extensive training?
Thanks,
Rich

Schimeon

Rich,


 


I agree with Aither any good Virtual Assistant will have at least 5 years in Corporate America, and you should definatly interview a few to find the right fit for your business. Most have an extensive questionnaire for each client to complete that will educate them on the nuances of your particular business. Even after that you will have to spend some time training them on how you prefer to have things done. I would also suggest compiling a frequently asked questions sheet so that they can field general questions about your business, and
 if there are specific technical questions that need to be answered they can refer those to you once the lead has been qualified.
Other types of calls that they can perform are follow-up calls, customer service calls, and  courtesy calls, to list a few.


 


If you would like a free consultation, I`d be happy to speak with you to answer any questions and sort out your needs. Feel free to use my company or take the information and use another vendor.
 
Either way I`m sure that a Virtual Assistant will help your business immensely.
 
Schimeon
 

Doozer

Well, like I said, that sounds like a good idea-for some people. But, for what I spend so much of my time doing on the phone, I `m not sure a VA would be a savings to me. I am in such an obscure field that a VA, even with extensive training in an office, would probably need even more extensive training from me (a time commitment for me) to be effective. I reupholster seating for dentists and doctors and a thorough knowledge of dental and medical equipment, (brands, models, options, etc.) is necessary to be able to provide this service. I can see some tasks such as sending color swatches, ordering materials, scheduling work, etc. being a help, but not enough to warrant this. We also ship some of the products I make and although help with shipping would save time, they would not be in a physical position to cover that.
Thanks for the suggestions, but, unless I was shown a way that I can`t envision right now, I`d say no to a VA.
Anyway, back to my original question; doesn`t anyone know how to put a dollar figure on one`s time?
Rich
Doozer11/17/2007 5:12 PM