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How Much is Your Time Really Worth?
And as an entrepreneur, the two most profitable ways to spend our time are serving clients and marketing.
If we're serving clients we're making money and if we're marketing or creating new products and services then we're working on things that will make us money.
But most everything else actually costs us to do it ourselves.
Want to see how much? The most realistic way to calculate the value of your time comes from Dan Kennedy's book, No BS Guide to Time Management, because it factors in productivity.
Let's face it-no one is truly productive for eight hours a day.
In fact, he cites a study of Fortune 500 executives who said they averaged only about 28 minutes of productivity a day.
(Of course, they have someone paying them whether they're productive or not!).
But for the purposes of this exercise, he suggests estimating that one-third of your time will be productive.
What do you want to earn this year? (Aim high, within reason.
) $_____________ 2.
How many days do you plan to work this year? ______________ 3.
Hours you plan to work a day______________ 4.
Multiply lines 2 and 3 to get your base hourly rate $_____________ 5.
Productivity multiple (which is 3 if you use the 1/3 suggestion)__ 6.
Multiply lines 4 and 5 to get your rate per productive hour.
$_____________ For example, if you want to earn $100,000 this year, assume 220 work days of eight hours a day, and one-third productivity, one hour is worth $175.
16 to you.
Calculate this number and start evaluating everything you do against it.
Does it make sense to keep doing those website yourself, when you could hire someone for $50 and use the newly freed-up hour to focus on making that $175? Or, is it that important to meet in-person, since the 20 minutes to and from the meeting is costing you $113 of time? The answer may be yes if it's an important prospect or a friend you really want to see.
But you'll quickly realize which trips aren't worth the time.