Thursday, 19 September 2013 13:18

Owners Should Know the Value of their Time

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A few years ago my wife and I had an amazing landscaping project completed for our home. The finished product involved the leveling of a huge hill, installing a massive retaining wall and reseeding the front and back lawns. The result was an amazing yard with some of the greenest, thickest grass around. I took a lot of pride in that yard. I would pour countless hours into my yard in hopes that my efforts would land me on the cover of Manly Yards Magazine. My wife would routinely suggest that I hire a service to relieve me of some of these duties. It wasn’t until I began to feel the increasing demands on my time that I asked the question, “How much more productive could I be if I shifted some or all of that yard work to a professional?”

Yard Work by the Numbers

On Saturday I would start on my lawn around 8 a.m. The entire process involved cutting the grass, edging the entire lawn, pruning flowers and shrubs, and at times watering. The process would usually conclude with me standing in front of the house in my Captain Morgan pose admiring my handy work. I looked forward to the boys riding their bikes while I worked, the smell of freshly cut grass, and some down time in what was surely a busy week. This took place week after week and I never thought anything of it; but in the end numbers don’t lie. When I sat down with my calculator to determine how much cutting my own lawn was costing me this is what I came up with (using a $100 average hourly project rate).

  • Cutting the grass-2 hours @ $100/hour = $200
  • Edging the yard-1½ hours @ $100/hour = $150
  • Clean-up, Flower/Bush Trimming, Watering-1½ hours @ $100/hour =$150.
  • (5 gallon gas)($4.26/gallon)(1/4 usage)= $5.33 spent each time grass was cut.

When I finished crunching the numbers I found that a job that would have cost me $50 on the high end was actually costing me about $505.33 when I factored in opportunity cost.

Understanding Opportunity Cost

Opportunity cost is an economic term that translates into the foregone cost of choosing one action over another. Simply put, what is it that you would have done with that time if you didn’t make a particular choice? Depending on the weather, I would race home to beat an impending storm that would have sure made my job more difficult. If I weren’t out cutting the grass at that time I would have been working on something related to growing The Entrepreneur Café, LLC. The opportunity cost associate with me cutting the lawn at that time translated into an estimated $505.33.

There are two important lessons that I think a business owner can take away from my lawn dilemma. For starters, I think many entrepreneurs lack a true value of what their time is worth. If they did I believe there would be a dramatic shift in how they used their limited time and resources. Instead there would be a greater focus on those areas of the business that help their companies see the greatest possible return. Secondly, entrepreneurs should look to identify what their core competencies are or what it is that they do better than anyone else in their organization. Then they have to be comfortable with leaving all secondary tasks to those individuals on their teams that can handle those tasks better than they can.

Cavanaugh L. Gray

Cavanaugh L. Gray (cgray@ecafellc.com) is the Director of Business Development for The Entrepreneur Café, L.L.C (877) 511-4820.  For more information on what makes a great start-up or to read a chapter from his new book The Entrepreneurial Spirit Lives: 25 Tales to Help Entrepreneurs Start, Grow, and Succeed in Small Business log on to www.ecafellc.com.  For more information on how to start, grow and succeed in small business, ‘Like’ on Facebook, ‘Follow’ on Twitter @TheECafe or ‘Connect’ on LinkedIn.

Website: www.ecafellc.com