The true cost of your time as a business owner

Earlier this year I began looking at all the processes we have within the business and getting them down on paper. Here what it has improved:

  • Using our resources more efficiently
  • Consistency of operations
  • Getting more valuable work done
  • Making fewer errors
  • Fast and effective training

I started by building an overall process map or macro map for the business. I tried to keep it as simple as possible and then worked through each of the individual processes to identify the steps behind each box.

Continuing on from this I decided to make a process map for myself. I started by asking what tasks I do each day and assigning a value to each task. I also assigned a value for my time (a yield per hour) and it became apparent right away that my time was not being spent on the processes that could add the most value to the business.

I needed to spend more of my time more wisely and delegate or outsource tasks that had a value below my yield per hour. It changed my mindset on hiring and outsourcing and now, rather than seeing either of them as an expense I see it as an investment, freeing up my time to add more value. [See simplified example below]

For Example: If a business owner values their time at €100 p/hr and they find that they are responsible for tasks that are worth only €40 p/hr to the business. This means there is an opportunity cost of €60p/hr. Therefore these tasks should be outsourced or delegated with proper processes so that the owner can spend more time doing what’s most valuable for the business.

What really struck me was that I realised I needed to move the actual ‘responsibility’ for many tasks to someone else and not just who ‘does’ them. Process mapping has helped me do that too.

Here are the steps:

  1. Identify each of your tasks
  2. Give each task a box
  3. Cost each box (how much is it worth to the business)
  4. Work out your yield per hour*
  5. Color code the boxes by who is responsible for the task
  6. Evaluate the boxes that are yours
  7. Decide what’s the best use of your time and concentrate on those tasks
  8. Process map the others and delegate or outsource over time

*Working out your yield per hour (YPH):

YPH =

Desired Monthly Salary

Monthly Hours Worked

Note: I suggest you use desired monthly salary as it will take some time to eliminate tasks from your list and you may also be a bit away from your desired salary if your business is young.

 

If you would like to see how Ingenuity could be of benefit to your company click below to contact one of our consultants.  

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