3 Reasons Your Decisions Should Include Time Value
This last week we had a small tornado come...
For a couple of months, I needed to repair a fence post. I bought the metal post, brackets, and concrete. I dreaded digging the concrete out of the ground because this could take hours and all my energy. I finally decided that it wasn’t the best use of my time. I needed to hire someone who has more knowledge, better tools, and experience. In what would have taken me possibly 3 hours and most of my energy and willpower for the day, he did it in one hour. He told me that he would have completed it faster if the person before me hadn’t buried the concrete so deep. Yes, that was me. Not only I did spend several hours replacing that fence post a few years ago, I didn’t do a great job of it.
Is there are a risk of trying to do everything yourself? In economics, it is called opportunity cost. As a Finance and Accounting person, I am always looking for ways to save money. I have been involved in many home improvement projects that I should have contracted out. More than I can count. I don’t want you to think that I am just talking about home improvement. I am talking about anything you do. If you own a business, do you try to wear all the hats? Do you do Business Development, IT, Accounting, HR, Customer Service, and Operations? Do you like doing everything? That is the real question.
Below are 5 reasons why you are risking revenue and profits in your business if you are doing too much.
The real question is what is your revenue generation worth on an hourly basis. When we are in high school, college, and or in our first job, our hourly economic value might not be worth very much. As we become more experienced and specialized, this changes. We all have talent and passions in different areas. We should spend our time where our talent, passion, and business value is the highest. A common example to demonstrate my point is a business owner who tries to do everything. This owner has the ability to do most everything since he/she has grown with the business. If so, first assess your hourly rate. How much revenue can you generate or bring into the business? Is it $200, $300, or $400 an hour? If you brought in $200,000 in new revenue last year, then your hourly worth is at least $200-$300 an hour. Focus on work that only you can do and try to delegate the rest. Don’t get stuck doing accounting, HR, payroll, IT, or any other administrative tasks. Usually, you can outsource this work to people more qualified and at a lower hourly rate.
In Rabbi Daniel Lapin’s book Business Secrets of the Bible, he expresses the importance of understanding specialization and cooperation. In the 18th Century, Adam Smith identified what Jewish wisdom knew for years. The wisdom is when people focus and specialize on what they are gifted in doing, they will be more productive, add more value to others, and be more connected to others. Obviously, most of us don’t grow our own food, make our own clothes, and build our own houses today. Why don’t we do this with our career and life? I am not saying to take this to an extreme. We all have to have hobbies and have to get away from our work. If you like to do yard work, you don’t have to pay for a someone to mow the yard. On the other hand, if you don’t like yard work and you can add value to others, that is worth more than the $20-$30 you save by doing it yourself, and maybe you should pay someone else to do it faster and most likely better.
Daniel Ally has a list of questions that he says everyone should ask themselves. One question is “How would the person I would like to become do what I am about to do”? Most of us probably like to believe that in five years from now, we will be a better person than we are today. Considering all the self-help books, we are all striving to be more than we are today. Some people focus on money, influence, or possibly faith. Personally, I strive to be more like Jesus in my walk and fall very short. Thinking in terms of five years is a little easier for me to grasp. In the business world, if you desire to grow your company to more revenues, clients, and employees, then you should start acting this way. This question will help you focus more on what is important. It isn’t the only question you should ask yourself, but it it is powerful.
Delegation and empowerment are important in any organization, business, or family. Empowering others to learn how to do something builds confidence and a sense of ownership in your team. I wrote about the value of empowerment and building trust in my post “How to Delegate, Save Time, and Build Trust With Your Employees.” People typically want to be trusted to learn more. If you are wearing many hats in your organization and micromanaging your employees, you will hit a ceiling, limit growth, and increase frustration among your employees and yourself.
Let’s continue with the business owner example. How much freedom do you have if everything is up to you? How much pressure is on your shoulders? The idea of specializing and focusing on what you are good at and hiring or outsourcing areas in which you are less experienced will give you more freedom and peace of mind. None of us can know everything. Information, technology, laws, and new products and services change every day. Focus on your area of expertise. Although I provide CFO services, I work with strategic partners who know taxes, payroll, contracts, IT, and many other details better than I do. I learn from them and we help each other by adding value.
I am not saying this is easy to do. I think we have to take it in baby steps sometimes. The most important takeaway in all this is to continue to become the person God created you to be by looking for ways to add value. Consider your worth, gifts of specialization, your future self, your need to delegate and empower others, and your desire for freedom before you decide to do something that you could have someone else do. Can they do it faster, do it better, or do they have more knowledge? If so, take it easy on yourself and have them do it.
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