Tag : profitability

What’s Your Time *Really* Worth?

Time is MoneyWhat do you make an hour?

I’m not asking for you to tell me—just wonder if you know.

“What does it matter?” you might ask. “I don’t get paid by the hour.”

Actually, you do. Everybody does. Whether you’re a high schooler making minimum wage, a manager on a salary, or a business owner netting six or seven figures, people pay you for your time.

“No, they pay me a commission,” you might say—or, “No, I get the same check every week, regardless of time worked.”

95% of biplane productions‘ 2010 work has been invoiced via flat fees, not hourly billing (94% in 2009). But I can tell you what I make an hour per quarter, per client, per auction type, per individual auction, even per task within each auction—for every auction biplane productions has ever helped advertise. I can tell you how many minutes it typically takes me to upload your files to the print shop, how many minutes I spend on the phone with or typing emails to you, and how many minutes I spent manipulating budgets of your media expenditures. Diagnose me with a disorder, but it has given me great insight into what I do and how it’s done.

See, the more efficiently I work, the more I make an hour. Same goes for you. Efficiency can either earn you the same pay but with extra hours with family, friends, or unconsciousness—or earn you more dollars for the same amount of hours at the grindstone. Either way, you can make the hours you work worth more to you and to your clients.

But ambiguously trying to streamline your work flow without tracking your time is like trying to get out of debt without establishing a budget. And simply blocking time in your Day-Timer or iCal only tells you when work will be done. You have to record receipts of your time and store them in a format that can compare them, add them, average them. Lots of industries do this—lawyers, accountants, engineers, ad agencies, auto mechanics—they just use it for billing purposes.

Whether you record the time with a time stamp machine, a pen and paper, or with electronics doesn’t matter. It could be 3×5 cards you keep in your pocket or a slick iPhone app. Mine is a sheet of lined paper on the front of each project folder (assisted sometimes by sticky notes) and a formula-filled Excel spreadsheet.

The key is that you can see patterns and anomalies.

It’s not as complicated as you think. The insight you gain from this collection will be more than worth the five to 15 minutes per auction (or other project) you’ll spend recording your time. You will be surprised at some point. I have. Some jobs that seem to have taken forever or been a schedule pain have proved surprisingly profitable for me, and some jobs I’ve thought were a breeze actually netted me a disappointingly-lower wage for my time than I would have guessed.

I’ve added some columns over the years that give me even more telling information such as: type of auction property, number of auctions per campaign, number of properties per auction, number of days from invoice to payment, number of days a folder sits on my desk, and number of days before the auction that I get all materials from my client. By adding dates, I have almost eight years’ worth of trends to tell me the best time to take a vacation, when to anticipate hearing from my less consistent clients, etc. Combined with QuickBooks graphs, I have reliable accuracy in estimating my daily schedule and general cash flow.

If none of this appeals to you, what if I told you it might help you book a sale? Let’s say you’re presenting a proposal to someone who thinks all an auctioneer does is spend an hour talking to newspapers and a sign company, another couple hours at an open house, and then shows up to the auction. Now imagine you can show them number of calls fielded on average, the time spent managing advertising, or the average amount of cumulative man hours for that kind of asset. You can prove your worth and assure a seller their money is well spent.

It might even change how you do auctions. Maybe you find that online-only auctions net you more dollars per hour. Maybe you find that you can charge less for residential auctions than commercial. It might give you a competitive advantage in proposed commission structure. Instead of closing your multi-par auction after the whole-property bids, you realize you can substantially increase a month’s worth of dollars per hour with an auction that’s 30 or 60 minutes longer—by reopening the bidding up to single tract and combination bids.

For me, it’s changed who I take on as clients—and to whom I market my services. It’s shown me where to subcontract certain services and where to keep tasks in-house. I’ve seen bumps in efficiency after buying a larger monitor, after going to FTP technology. I’ve been able to keep my annual price adjustments inflational while giving myself a raise each year—just by getting more efficient.

How about you? Do you have a metric for profitability? Since “time is money,” you can determine true profitability only when you can see your value in terms of rates instead of income.

Capitalism allows supply and demand to set our prices. But efficiency allows us to set our wages.
[tip]

Today, I again played with this ESPN salary calculator, which calculates how much a person’s annual income would buy in terms of a famous athlete’s performance. For instance, a Yankees pitcher makes my annual income for fewer than two strike outs (which might take me a year to do). An L.A. Laker makes my yearly wages for less than five rebounds. My 400 auctions in 2009 were worth less than 40 yards thrown by a recently-fired NFL quarterback.

Now, I could get discouraged by that; or I could realize that we are professionally worth what people will pay for us to do that. While we can’t control what culture pays for various professions, we can work to be on the top end of our respective industries. The harder realization for me is that my growing hourly worth in biplane’s hangar doesn’t make me worth any more as a person. My vote counts as much as Warren Buffet’s. I’ve been given the same amount of hours in a day as Steve Jobs has. Jesus died for panhandlers and Gulf Stream owners, me and you.

So, while some lives may have more public value than others, we all have the challenge to make the most of the lives we’ve been given. We can’t arbitrarily add days to our lives, but we can add life to our days.

The apostle Paul told us to number our days, to “redeem the time, because the days are evil.” The Bible regularly suggests that we leverage our relatively-short lives for eternity. So, how much Life inhabits your days? And how contagious is that Life in the lives around you?

[footer]Image(s) used by permission through purchase from iStockPhoto.com ©2010[/footer]

Get these articles delivered to you.

Don't set a reminder to check the site for new content. Have new content sent to you when it posts.
* = required field
×