Have you ever found yourself trying to meet a deadline and wishing you had a couple extra hours in the day?
Guess what? There are things you can do to find those extra hours.
As freelancers and business owners, we face enormous pressures to get things done. If it's not sending something off to a client for review, it's accounting, payroll, business development, not to mention trying to squeeze in a life.
We make tons of small decisions about where to spend our time throughout the day. Each choice has an opportunity cost. Doing one thing means giving up the opportunity to do something else during that stretch of time. Unfortunately, most of us rarely pay attention to these opportunity costs, and we don't do a good job of valuing our time. As such, we spend too much time on low-value activities and not enough time on the things that move our businesses ahead.
To unlock those extra hours, you need to place a value on your time, define your priorities, and make better trade-offs so that your priority activities get done.
Time is Money
We've all heard Benjamin Franklin's adage that "Time is money". However, there is plenty of research that shows most of us don't act like this is the case. Our decisions about time seem to follow different rules than our decisions about money.
If you were to ask me if I would pay $25 for an extra hour in the day to finish some work or spend time with my family, I would probably say yes (at least during times when I'm really busy). That same day, I might proceed to waste two hours taking a bus back and forth to work rather than spending $25 on a cab that would cut my travel time in half. Essentially, for the price of a cab ride, I could buy an hour of time.
Some recent research shows that people who are paid on an hourly basis are more likely to equate time with money, and hence spend more time on paid vs. non-paid activities. In a series of experiments, DeVoe and Pfeffer demonstrated that respondents who simply calculated their hourly wage before answering a series of questions became more willing to trade off time for money.
Think of your friends who are lawyers or consultants. They probably have a pretty
inflated solid view of what their time is worth. Knowing that they bill out at hundreds of dollars an hour and that they have a quota of 1,800 billable hours in the year helps them prioritize where they spend time at work.
How can you use this?
If you want to cut to the chase and decide whether some work is worth doing, you should sit down and calculate your hourly salary (more on this below), and think of it when you are choosing between what tasks to complete each day. By framing decisions this way, you will begin to allocate your time to the most valuable activities.
If you are earning $50 / hour, you'll start asking yourself questions like "does it make sense to do all my own bookkeeping when someone else would do it faster, better, and for less" (at least if you are like me). Your thoughts about perfecting something that a client won't value (a popular form of procrastination for creatives), or spending time on Facebook may also change.
Be warned that there are some dangers lurking here as well. You don't want to be too ruthless about looking at the dollar value of your time. In a follow up study, "Time, money, and happiness: How does putting a price on time affect our ability to smell the roses?", the same professors demonstrated that thinking about time in terms of hourly wages, can reduce the happiness that people derive from leisure time.
The lesson here is that you've got to strike a balance between placing a dollar value on your time and making sure that you can still enjoy leisure activities. All hours in life can't be billable.
5 Steps To Investing Time Where it Matters
O.K., I've thrown enough studies at you. What should you do next to improve your time management?
1. Calculate the value of your time
This shouldn't just be your take home pay. If you are an employee, it should cover the cost of your salary, benefits, payroll taxes, etc. that your employer would be paying. If you are self-employed, the cost should include all of your overhead like rent, business development, marketing, travel, etc. The idea here is to look at the total revenue that you need to generate in order to meet your financial goals.
Next divide these annual costs by the number of working hours in the year. I've done the math, and once you subtract weekends, statutory holidays, vacations, sick-days, etc., you end up with just 1,900 hours to knock your business out of the park.
Now that you have your hourly rate, think of it as you make decisions about where to allocate your time during the day. I promise that it will start to change your behavior.
2. Track how you spend your time
Even if you don't bill for projects by the hour, you should develop a good sense of where you are spending your time. A time tracking tool on your smartphone can make it easier to track your hours. I've covered a couple good tools in my post on how to run your production business like a boss.
3. Define your priorities
Once you have a firm idea of your priorities, you should try breaking down your week and figuring out how much time should be spent on each area. For example, if one of your goals is to land some new clients, then you need to decide how much time you should spend on this task each week.
I've got a lot on my plate right now and get the feeling that I'm bouncing between activities and not getting the all the things I need to do done. As a result, I'm in the process of outlining my goals for the next couple of months, figuring out how much time I should be spending on each activity during the week, and then tracking how far off the mark I am. I'll be doing a follow up post to let you know how it goes.
4. Measure if you are spending the right amount of time on each of your priorities
Once you start tracking your time, it quickly becomes apparent whether your time is being spent on your priorities, or if a disproportionate amount of time is being spent on activities that don't contribute to your business.
If you are like most of us, some re-balancing will be required. Too often we spent time on the things that seem urgent rather than the things that are really important. Similarly, it's easier to spend time working on our strengths than it is to work on those areas where we tend to struggle. For many of the video professionals that I've spoken with, this seems to be getting new business.
Hopefully developing an honest understanding of where your time goes will help you invest time in important areas that haven't been getting enough attention.
5. Start outsourcing
Once you start to see where you are spending your time, I suspect you'll uncover a bunch of things that take up time, but aren't worth the $X per hour that you should be valuing your time at.
Some of these activities can probably be eliminated all-together, and it's a good idea to start by getting rid of these activities.
Then there are activities that can be done more efficiently if you change your workflow. I'll use ScreenLight as an example of this. Why waste time coordinating review sessions, uploading files to an FTP site, and collating feedback that is scattered across email threads when there is a tool that can take care of all of this for you. You can save hours of time each month, and this is worth more than the price of the service.
Now that you've dropped some activities, adopted processes and tools that make you more efficient, it's time to look at outsourcing. I'm just starting to experiment with this as we grow ScreenLight, so I'm going to introduce you to my friend Quinn, who has years of experience outsourcing jobs and creating virtual teams. He can help guide you on what jobs to start with (his quick answer - tasks that don't make you money, tasks you hate doing, and tasks that can easily be outsourced), how to hire the right team, and how to make sure you get high quality work that you can count on.
A guest post on outsourcing from Quinn is coming soon.
Watch Your Production Business Grow
All of this takes applied effort, but properly valuing your time is going to help shift your business into the next gear. You'll have more time to invest in things that matter, like: giving your existing customers the attention they deserve; getting more referrals; and winning new business. Bet you can't wait to outsource the task of counting all your money.