I worked for a software company that developed small business accounting software for many years and there was one thing that was common across just about every small business we dealt with. Most didn’t even realise it was a problem.
The problem was that owners of small businesses never valued their time. Their time was a commodity to be squandered. Working around the clock was perfectly fine. Late nights, weekends – it really didn’t matter as long as the “business” was doing well.
Business owners often just accept that devoting a huge amount of time to their work is the price they pay for the “freedom” of being their own boss. It’s just what you have to do to get ahead and stay afloat.
And, while there is a certain amount of ‘investing’ that you need to do to build up a business, pouring a huge amount of unaccounted time into a business can be problematic.
Here are five reasons why not valuing your time (or at least not accounting for it) is bad for business.
1 – You miss out on the main benefit of being in business
One of the curses of being a wage slave is the whole 9-to-5 thing. You’re tied to a fixed schedule and location that doesn’t give you the freedom of hitting the beach if it’s a nice day or golfing with friends, or going out for brunch with a mate.
But if your business is consuming your every waking moment, leaving you time poor, then you no longer have that freedom and flexibility. You’ll be chasing your tail the whole day (and night), while your ‘wage slave’ friends are leaving the office and heading to the beach.
2 – You don’t know if your business is profitable or not
If you don’t have an accountant (because, case in point, you don’t value your time and choose to do it all yourself) then you might not realise that by not recording all the time you spend on the business your reporting is wildly inaccurate.
What you think is a profitable business enterprise could be a really bad use of your time.
You might even be horrified to discover your hourly rate is less than that kid who’s stuffing junk mail into your letterbox.
3 – You choose to do business tasks that end up being really time consuming
As alluded to above, a business owner takes on everything (especially if you’re a sole trader). They fancy themselves as a jack of all trades, and since they don’t put a dollar value on their time, it’s obviously cheaper to do it yourself. But because don’t have the skills (master of none, except of course their core business focus) it takes a really long time.
As a website design company, we see a lot of business owners opting for DIY solutions like Squarespace, Wix and Shopify that seem to be a good deal. The problem is they don’t factor in the amount of time they spend wrangling with the setup, and if building websites is not something you’re familiar with you can end up spending hours over things that might take a professional a few minutes.
Trust me, in true Kiwi fashion, I love doing everything DIY – from landscaping and plumbing to painting and car repairs – but I also know sometimes it’s just makes sense to stick to what you do best and pay someone else to do it.
4 – It’s hard to know what your profitable products are
Businesses that sell goods make sure they know what the margins are on every product they sell. It means they know exactly what products they need to focus on to improve cash flow and boost profitability. They also know what products they shouldn’t waste too much time on, or even discontinue.
If you’re not tracking where your time is being spent then you lose your best option for improving your overall effectiveness. And that could lead to premature business failure.
5 – It devalues a service-based business
If you don’t value and account for your time then it could lead to your clients not valuing it either. With a service-based business, your time is a primary business asset, and should be valued highly. You can’t clone yourself, and you only have 168 hours in the week, so make them count. Ideally, you should also be aiming towards working yourself out of the business – do less, earn more, right?
By learning to value your time you cultivate a healthy mindset to work, and you avoid burning yourself out and accepting less than what your worth. Know your skills, know your worth and manage your business accordingly.