Maybe you aren’t doing this but many of your peers are. They are forgetting to calculate the value of their time in to their company’s profit/loss reports and as a result your peers are not noticing a huge hole in the bucket of efficiency: They are spending too much time doing tasks that should be done by somebody else.
Let’s use you as an example although you may have already thought about it. If you were to hire yourself, how much would you pay you? Let’s look at your qualifications. For your business, you have specialized skills. In fact, your skills are so good that you were able to start a business and build it to where it is today. People have grown to trust you in your field and anybody would tell you that in your field, you would claim a high wage.
So what do you think? $50 per hour or is that too low? Let’s go with $50 just for the sake of simple math. Let’s say that you are a web designer and you charge $50 per hour for design services but the state requires some new paperwork related to your Limited Liability Company status as well as some other “red tape” government items.
To save having to pay an accountant and/or auditor, you are going to do these tasks yourself. (don’t forget, you’re a web designer, not an accountant) After researching the proper forms, filling them out, sending them to the state, getting them back because you did it wrong, sending them back again, and talking to somebody to clear up some confusion with the forms, 11 hours is spent on the project (It may seem like a lot of hours but if you’ve ever embarked on the process of knowing nothing about something to finishing a task professionally, you know that 11 hours may be conservative).
This was 11 hours that you didn’t spend working on a web design for a client. You just paid yourself $550 to file some forms that cost you $400 last year when you paid and account. The account charged you less because that’s their area of expertise and it only took them an hour to do the job.
In your mind it didn’t cost your business anything but that’s not true. You have to calculate the value of your time. That 11 hours was spent NOT growing your business. You WEREN’T bringing money in, you weren’t finding new clients, and you weren’t networking. Instead, you wasted 11 hours and spent more money than you would have if you hired somebody.
Remember that paying somebody to do a task for you isn’t always wasting money. If you can make more money running your business for those 11 hours than it will cost you to hire somebody, you still made money and when it comes to tasks like our example above, your business paperwork must be correct or financial penalties could be charged to you.