Most entrepreneurs understand the importance of profitability in business; you need to produce goods and services using as little money as possible while charging more than you’ve spent. Without that fundamental structure, you’ll end up spending more than you bring in, or otherwise, you’ll never be able to make the money you need to pay yourself and your employees.
This seems obvious, yet there’s a very similar concept that many entrepreneurs—especially new ones—overlook. Time works much in the same way. You need to spend your time efficiently, wasting as little as possible, and invest it in the actions that will earn you the greatest reward. Otherwise, you’ll end up spending more time than you can afford doing things that don’t ultimately make you more profitable.
Let’s take a look at some illustrations of why this is the case, and what you can do to make the most of your time.
Prioritizing High-Yield Investments
When investing your money, it’s a best practice to seek investments that offer the highest possible return with the lowest possible risk. The same is true for how you spend your time, even if you don’t see a return immediately. For example, spending an hour working at a minimum wage job will earn you $7.25 (or more, depending on where you live), but spending an hour on coursework in a Master’s program could contribute to you earning far more over the course of a lifetime. As such, it’s usually better to spend your time doing things that develop yourself in some way.
Forever Jobless illustrates this perfectly with an anecdote on their blog: a woman approaches Picasso on a bench and asks for a portrait. Picasso complies, sketches her in a minute or two, and asks for $5,000 in compensation. Outraged, the woman states he’s spent a minute on the illustration, but Picasso retorts that he’s spent his entire life on it.
The time you invest in your skills and abilities is worth it, always.
Budgeting Your Time Like Capital
Startups have a finite amount of capital to work with, even if they have an injection of funding from an outside investor. There’s only so much you can afford to spend each month, so you need to forecast your needs and only pay for as much as your budget will allow. Quickbooks and other authorities are quick to offer resources to help entrepreneurs with this budgeting, but time budgeting should work the same way and should get the same amount of attention.
You only have so many hours a day, and so many days a week to work. How are you going to spend it? Just like in budgeting money, you need to focus on your high-level needs, then your low-level needs, then your wants, and possibly make some cuts if you’re running short.
Spending Your Time Wisely
In that same budgeting mentality, it’s important that you don’t spend your time on things you don’t need to—it’s like buying junk food at the grocery store when money’s tight. According to Marjorie Adams, the founder of Fourlane, one of the biggest problems entrepreneurs face is spending time on things outside—or especially below—your area of expertise. If someone else on your team can handle a task, delegate it to them. If an independent contractor can accomplish something faster and better than you can, hire them. Don’t tie up your precious hours in unnecessary or inefficient tasks; spend your time on the most valuable and necessary tasks you have.
Knowing How Much Your Time Is Worth
It’s also important to know how much your time is worth (even though it’s a notoriously difficult metric to calculate). You can start by basing your hourly rate on what you made in a previous, recent job (though this isn’t always accurate), or use experimentation to figure out your approximate rate as a consultant or contractor. Once you know approximately how much you’re worth as a worker, you can use that figure to estimate whether or not tasks are worth your time. For example, if you’re worth $50 an hour, and you have a task that someone else will complete at $20 an hour, delegate it to them. This will also help you determine which client projects are most valuable, and how much of a return you get on your work.
'Time is money' is more than a simple adage; it’s one of a few secrets to becoming a better entrepreneur. Once you have a firmer grasp on your time budgeting and conceptualization of personal effort, you’ll see yourself (and your team) become more efficient, better focused, and of course, more profitable at the same time.