This is not a number people talk about, but it’s one that’s really worth thinking about! After all, if you have a job, you definitely know your hourly rate of pay, or if you are on a salary, you can very quickly determine how much your time is being valued.
So just because you own a business, why wouldn’t you also want to know this number? Probably because no one ever really talks about it! But let’s end that now, shall we?
It shouldn’t be a hard value to come up with. Look at the profit you made for the last year. Then add in anything you pay yourself through the business, including your salary, benefits, and things you run through the business like your car or cell phone or personal spending (yes, nearly everyone does this!).
Once you have that number, then divide it by how many hours you worked last year. Add in some time to account for answering emails on the weekend or those extra long days. Add in hours when you were nominally on vacation but still checking in with the office.
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Now you have an hourly rate for your time. How does it look? More importantly, how does it compare with other things you could be doing?
If your business is running well, growing and profitable, then hopefully the money you are earning from owning this business exceeds what you’d be earning doing anything else.
If it doesn’t, but it’s close, and you really enjoy being a business owner, then of course money isn’t everything, and it still may be the best option. Aside from that, if you are building a sellable business (and you should be!), then you are also building value that way you can cash out down the road, and that adds to the value of your time investment even though you can’t see it.
Suppose your business isn’t paying you as much as you could earn from just getting a job, however, and it’s also adding a lot of stress, or debt, or requiring you to work way more hours than you want?
In that case, it’s time to seriously consider how to fix that and not just keep blindly plowing ahead. Either you need to find a clear path to the business making enough to justify the time it’s taking you, or else figure out how to exit or wind it down. Why kill yourself fifty or sixty hours a week to earn $11 an hour? Or nothing at all and be putting money in on top of it?
If you look at the business from the outside, today and wouldn’t trade places with yourself if you had the chance, then that’s a pretty good sign it’s time right now to figure out how to make changes. Time is the one thing we have in limited supply and which we can’t get more of or get back. So spend it very wisely in a way that rewards you for the effort.
Take stock of the amount your business pays you per hour for your time, and if you don’t like the answer, fix it, one way or the other. I hope that for all of you the answer is a pleasant surprise and a nice bonus on top of doing something that is already intrinsically rewarding. But if it isn’t, then please find something that is!