Business people are often asked what their most valuable resource is. They’re unlikely to dreamily gaze into the middle distance and respond with a powdery “love”, but they may think philosophically and say “people”. However, it doesn’t take a genius to realise that it is in fact “time”. Time is without question the most valuable resource at our disposal. It’s true for your business and personal life, after all “anything is possible, given enough time”.
As much as we know time is valuable, we seldom let that sink in to our actions. We frequently get caught up in the daily grind of petty issues and irrelevant arguments that steal our time away from what we should be doing.
We lose an hour here and 30 minutes there, sometimes even getting annoyed as we realise time is disappearing, and we won’t get it back. Mostly though, we don’t realise just how precious or valuable that time actually is.
So here’s the question – what is your time worth?
To your children, spouse and family – it’s invaluable. No number can ever trump that. Ask anybody who’s lost a loved one and they would give almost anything for just a little more time with that person.
But for the rest of the world chasing our time, let’s do the math.
Mike is the CEO of his young startup. He has some funding and they are earning revenue. He earns R50k a month. 22 working days a month, 9 hours a day, that’s 198 hours, call it 200 hours (he’s a young entrepreneur, he puts in a lot more, but let’s keep it simple for illustration purposes).On a per hour basis, he gets paid R250. But that’s not the value of his time.
Mike is the main earner of revenue for the business. He currently spends 100% of his time acquiring new customers, to the value of R 1 Million – every month. At R 1 Million per month, his time is now valued at R5 000 per hour. If that customer renews for the next few years, you could add this revenue to this amount.
Now, for illustration purposes, let’s add an investor, like a Venture Capital or Angel Investor. Let’s say that all money coming into the business from investors is expected to generate a 10 times return, at minimum. Assuming a 20% profit margin, you can generate (in a simplified world) R 1 000 net margin per hour. Any money you reinvest in your high growth business could generate that 10 times return on money (maybe 100 times in value eventually).
So, that is R10k (10X) to R100k (100X) in value you are either adding to your company by selling, or knocking off your eventual value by not being there to sell. Multiply that by your shareholding. So losing 3 hours in a week is theoretically R30k to R300k I might be knocking of my company’s future value.
Are you starting to get an idea of what your time is worth? The calculation is overly rough and doesn’t account for the time value of money, but I think you get the point.
How many things are you doing that don’t add value but take away from your eventual business value:
- Half a day for you to sort out a coding error that somebody else could do
- An hour on Facebook in the middle of the day
- That coffee with the guys you can never say no to
- Hours redoing work from an employee that you should have released long ago but you don’t have the heart to.
Slowly but surely, you are destroying future value.
Now, let’s be balanced. To make the big sales, you need to have down time. I’m not suggesting never stop. I’m saying when you stop, stop. Relax. Properly. When you go, GO. But focus on understanding -busy does not mean creating value. Are you spending your time on the things that add a R1million to your future business value, or the things that make it worth less?
So next time you stop for a quick 30 minutes on Candy Crush, remember it’s not costing the R11,99 on the tag, it’s actually R5k to R50k for those 30 mins…and maybe that’s not a great idea!