In the last post I talked about the importance of valuing your own time and the concept of limits to your time. I also promised to help you figure out exactly what your time is worth. A tall order for sure….until you know how simple it really is.
First you need to identify your base earnings target. That’s how much you want to keep not the gross revenue of your practice. Let’s say that figure is $300,000.00. Pretty ambitious eh? But you went to law school to make money right? Sure, we help people, defend their interests and rights, but it’s much better to have money than not, let’s be honest. Once you have your base earnings target you take the average 220 days per year that you are available to work. The Two Hundred and Twenty available days takes into account five days a week and holidays. Then you multiply that by 8 hours per day (or however many you want to work). This will give you the total number of working hours available to you per year. Your base earnings target of $300,000 divided by your number of available working hours equals your base hourly rate. In this case that is $170.45 per hour.
Next you must determine how many actual productive hours you have in a day. In a survey of Fortune 500 CEOs on average they stated that they only had 28 productive minutes per day! Lets say that you are much more productive than that and you have 1/3 of your time is productive time per day. Now multiply your base hourly of $170.45 by 3 (your actual productive hours) and that means that your time must be worth $511.36! Eye opening isn’t?
Here’s what it looks like:
Base earnings target: $300,000.00
Divided by (220 days by 8 = 1760)
Work hours in a year
÷ 1760
= base hourly figure $170.45
Times productivity vs. nonproductivity
Multiple
x 3
= What your time must be worth
per hour:
$511.36
So you see, it really is simple. Obviously this is a very rough equation but it is much better than what you had before, which was no idea. Now only focus on those tasks that help you toward achieving your goal. Is what I’m doing worth my hourly rate? If it’s not worth $511.00 per hour, have someone else do it. Someone you can pay significantly less to do it for you in order to allow you to focus on your most profitable activities. If you begin to think of your time as actually being worth what you just calculated, don’t be surprised if before long you are actually making this kind of money.
Now it may be that you need to systematize a process that, for now, only you know how to do. That’s fine. As you are finally committing that process to writing, that is getting it out of your head so that someone else can pick up that piece of paper and learn how to do it in the future, think of the leverage that you are creating. This is likely the very last time you will ever have to do this mundane task. Awesome isn’t?
I have to admit that even I fall prey and fail to do this. Just recently I committed a process to writing and systemization that I did only once a month but really hated. This task is absolutely critical, really vital to my business so I was very hesitant to let anyone else do it. Since I did it so infrequently once a month I would scratch my head and reinvent the wheel. And I really hated it. Not only because it’s boring but also because I knew in my heart that it wasn’t a great use of my time. So, I finally systematized the process, delegated it to staff and now that task is gone from my existence forever! Sure it took me an extra hour or two to write down the process but every month I get at least that hour back in saved time.
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