Employees get paid a clear hourly rate, or at least a salary. Business owners might work 10 to 16 hours a day, calculate their net profit at the end of the year, but they never calculate their effective hourly rate.
What if you were to calculate your hourly rate in your business, and find out you’re working for minimum wage?
You might laugh, but it’s an important reality check. It tells you that you’re not doing the right activities in your business.
In this video,filmed at the Titanium Mastermind in Jamaica, Norbert Orlewicz talks about calculating – and increasing – the value of your time.
CALCULATE THE VALUE OF YOUR TIME
What is your time worth? What is the monetary value of your time? If you don’t know, you can’t make effective decisions about which activities you should be doing and which activities someone else in your business should be doing.
To calculate your effective hourly rate, start with how much you earned in the last 12 months. Then divide by the number of hours you worked. To find the number of hours you worked for the whole year, start with the average number of hours you worked per day, multiplied by how many days per week you worked, multiplied by 52.
Hopefully, the number you get is better than minimum wage. But if it’s a nasty surprise, at least you now know that improvements need to be made.
DOES IT MATCH YOUR TARGET?
If you’re not happy with your effective hourly rate, what effective hourly rate would make you happy?
To help yourself answer this question, start with your yearly income goal. Then, decide how many hours you’re willing to work, in order to find how much your time needs to be worth to reach your goals.
Be realistic. Don’t say you’re going to work 80 hours a week if you know you’re not able to do it. If you’re only able to commit to just 10 hours a week, at least you’re being honest.
Multiply your number of hours per week by 52, to get your total hours for the year. Divide your yearly income target by this number and you’ll arrive at your target hourly rate.
START VALUING YOUR TIME
Chances are, your actual hourly rate falls short of your target hourly rate. Now, it’s time to look at the way you spend hour hours and choose your activities wisely.
Many activities take up time but don’t earn you any money. In fact, they come at an opportunity cost.
For example, you could hire someone to do your cleaning and laundry for $15–20 / hour. If you’re currently doing this yourself, think twice. If you know you need to earn $200 / hour, why are you spending your time doing $15–20 / hour activities?
The difference between you and billionaires is that billionaires value their time extremely highly and they are fiercely protective of it. When you put a dollar value on your time, you will start thinking about it in the same way.
Ready to scale your business through successive revenue ceilings? More strategies like this one are shared with members in the MOBE Titanium Mastermind. To learn more about the Titanium Mastermind, click HERE.