Business coaches and seminars will tell you that you should value your time. The best ones will even teach you how to do that. There are two ways, decide how much you want to make each year or use your current salary. With that number you calculate your hourly rate based on this formula:
Your salary*/48 weeks (assuming 4 weeks vacation) / 40 hours a week = your hourly rate
*if you own or have shares in your business, you need to add the value of that to your salary, so that your hourly activity is increasing the value of the business as well
Here are the two examples to calculate your hourly rate:
A.) Your Actual Salary
$125,000 / 48 weeks / 40 hour = $65 hourly rate
Any tasks that you are doing that can be outsourced for less than $65/hr should be handed off to someone else. That could include bookkeeping, HR tasks, cold calling, social media management, etc.
B.) Decide how much money you want to make per year
Your desired salary = $360,000
$180,000 / 48 weeks / 40 hours a week = $93.75 hourly rate
This one can be tricky. If you are just starting your business and bootstrapping it, chances are you are involved in every aspect. You need to be, you need to learn as much as you can to find what your strengths and weaknesses are. You also need to discover what strategies are generating income. (See our goal tracking worksheet to really track this.)
Once you have learned your business and you become profitable, start handing off tasks that drain your time and energy so you can focus on the below tasks. If you are taking out a business loan or bringing on a VC, you can start to build your team and outsource faster.
What tasks should I be doing?
You should be doing the tasks that generate 80% of your revenue, build your team and cost more than your hourly rate. Usually, those tasks are:
- Meeting with clients
- Creating video or audio content
- Vision planning/goal setting
- Employee mentoring
- Networking or coffees
Some of these tasks should not be outsourced simply because it keeps you as the face of your business. If you grew it from the ground up that means your clients like dealing with you, so keep at the forefront. If you no longer want to be the forefront you should be creating a succession plan to exit your business in the future.
Calculating your hourly rate gives you a time frame of when to outsource tasks. Make a list of all of the tasks you are completing in your business with an hourly rate beside them which is the cost it will be to outsource it or to hire someone on. Once you hit the number, get it off your plate.
What are the next tasks you need to get off your plate?
–Derek Burbidge, Manager of Sales & Marketing