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        Another AHBBO Article
        The Money Value of Time

        You have, no doubt, heard the phrase "the time value of
        money".  It means that a dollar in your hand today is worth
        more than a dollar in your hand a year from now.  Why?
        Because of what you can do with that dollar over the next
        year.  You can invest that dollar in an interest bearing
        account and have $1.05 at the end of the year.  If you
        decide to take your buck in a year, your opportunity cost
        (foregone investment) will be five cents.  Not to mention
        what inflation will have done to your purchasing power in
        the meantime.

        As interesting as the time value of money is to economists
        and financial  planners, if you're anything like me, you
        probably find the whole subject just a little short of riveting. 
        So here's something more interesting to think about.  The
        money value of time.  Your time, that is.

        Why do you need to think about the money value of time?
        Because, quite simply, once you truly understand what your
        time is worth, in dollar terms, you will work your business
        more productively and efficiently than ever before.

        In my other life, I'm an attorney.  I work for a downtown
        Los Angeles law firm and, like any other law firm, what
        counts is how many billable hours I clock each month.
        We have software to track it all for us of course.  My
        time is charged out at $250 an hour.  In a minimum of
        six minute increments.  This means that if I so much as
        pick up and read a one paragraph letter from another
        attorney, my client is billed $25. 

        Spend enough time tracking your time like this, getting
        to the end of the day and needing to see at least seven
        billable hours totaled on your computer screen and you
        soon develop a very healthy respect for the dollar value
        of time. 

        And because I don't want to have to be at the office for
        ten hours before I've generated seven that are billable,
        let me assure you I work very efficiently indeed. 

        In the process, I've become an expert at avoiding time
        wasters and unproductive activities.  As a result I can
        usually generate seven billable hours from being in the
        office for only eight.  (The other hour is unavoidable
        non-billable general admin type stuff.)

        My point?  Start thinking like an attorney when it comes
        to how you value and spend your time.  Here's how.

        First, decide what level of income you need from your
        business.  For the purposes of our example, let's say
        it's $52,000 per year or $1,000 per week.

        Next, decide how many hours you want to work each
        week.  To keep the math simple, let's say you're going to
        work 50 hours a week.  Therefore, on average, you need
        to generate $20 for every hour of time you spend working
        in your business. 

        But not all of your time will be revenue-generating (i.e.,
        "billable") time.  Any business has its share of non-billable
        time - those routine administrative tasks that must be
        done even though they make no contribution to your
        bottom line.

        So, now you have a choice.   You can either work more
        hours each week to cover your non-billable time, or you
        can increase the amount you need to earn from every
        billable hour.  The first option means working longer.  The
        second option means working smarter.  Your choice.

        Whatever you decide, keep that hourly rate firmly in
        mind.  Every hour of your time is worth $20 (or whatever
        rate you have calculated for yourself).

        Think about that when the phone rings on a work day and
        it's your sister wanting you to go with her to mall this
        afternoon.  There's three hours or $60 you've just thrown
        away (not to mention what you spend at the mall!).  Tell
        her you'll go with her on Saturday instead.  You have to
        work today.  Think twice about the hour and a half it will
        take you to do your errands this afternoon.  Another $30
        gone.  Do them on your own time, not your business's. 

        Think $30 here or there won't make any difference?  Think
        about this.  Do it twice a week and you've just lost over
        $3,000 for the year in potential business.  And when you
        consider that some of that $3,000 in business would have
        become repeat business, you're cheating your business
        out of some serious income.

        Apply the same thought process to when you actually
        ARE working also.  What's the better use of your time --
        writing an article for this week's issue of your ezine which
        will hopefully be picked up by other sites and publishers,
        thereby providing you with valuable free publicity  -- or
        stopping what you're doing every ten minutes each time
        you get new email?  And reading it.

        Remember: the hour or two you spend writing your
        article needs to return the equivalent of $40 in income. 
        Writing articles is the equivalent of free advertising. 
        You can *easily* generate at *least* $40 in income
        with that sort of no-cost publicity.  My articles published
        on other websites and in other ezines bring me hundreds
        of new visitors each week.  All for about two hours worth
        of work on my part.  No amount of time spent reading
        email will ever do that.

        Contrast how much income you generate by reading non-
        business-related email during working hours.  Zero.  It
        makes absolutely no contribution to your bottom line.  So,
        don't do it when you're working.  Do it on your own time.

        By having your "hourly rate" uppermost in mind at all
        times, you can always decide what's the best use of
        your time.  Quite simply, it's whatever alternative will make
        a direct contribution to your bottom line. 

        Now, obviously, no-one's going to step forward and hand
        you $20 every time you complete an hour's work.  You're
        not someone else's employee - you're running your own
        show.

        Some weeks you'll put in 50 hours but will only receive
        $100 that week.  Or less.  But other weeks, you'll put in
        the same number of hours and bank $1,500.  It's swings
        and roundabouts. 

        It's a good idea to review your expenditure of time against
        revenue generated on a monthly or bi-monthly basis to get
        an accurate picture of how you're tracking.

        The point is to know what your time is worth so you can
        ensure you're getting the maximum return on your
        investment that you possibly can. 

        It will also help you to determine when the all-important
        big step of hiring employees is the most cost-effective
        thing to do.  If you can generate more income from each
        hour if you are free to devote your time to business
        development activities than it will cost you to pay an
        employee to take over the routine, administrative tasks
        that are currently sucking up all your time, you should
        hire the employee.  If you don't know what your time
        is worth though, how will you ever know when that time
        has come?

        So, next time you're not feeling particularly motivated
        to write that article and think you'll maybe just go read
        the newspaper for an hour or so instead, consider this.
        Would you rather spend $20 to read the newspaper at
        11:15 on a Tuesday morning or would you rather read
        it for free at 7:30?

        Time is money and money is time.  Spend them wisely.

        _________________________

        Elena Fawkner is editor of A Home-Based Business Online ... practical ideas, resources and strategies for your home-based or online business.

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        ** Reprinting of this article is welcome! **
        This article may be freely reproduced provided that: (1) you
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        Here's the resource box to use if reprinting this article:

        Elena Fawkner is editor of Home-Based Business Online. Best business ideas and opportunities for your home-based or online business.



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