One of the biggest challenges for a business owner is deciding whether doing a particular task is worth it. Here’s a simple way to make that choice.
Calculate your effective rate for any unit of time (hour, day, week, month, etc) by taking your annual salary and dividing it by the number of units you worked. For example, if you were paid $100,000 last year and you worked a standard full-time work year with 2 weeks of vacation, your effective rate would be:
If you run a design business and you design for your clients, that means you spent some amount of your year paying yourself $50/hour to design for your clients. That seems reasonable if you compare it to being paid, say, $15/hour to work at a fast food restaurant. You get paid more than that because you have a higher value job that requires a more skilled worker.
But, if you run a design business, you probably aren’t just designing for your clients. You’re probably doing other things too, like replying to emails and doing some bookkeeping.
Would you pay yourself $50/hour to reply to emails?
Would you pay yourself $50/hour to do bookkeeping?
Unless you personally enjoy either of these things, the answer is probably “no,” for different reasons.
You probably wouldn’t pay yourself $50/hour to reply to emails because you might be able to hire someone like a virtual assistant or a college student to reply to certain emails on your behalf for $25/hour or even $15/hour. This is an area that’s not worth it for you to do yourself because you could save money by paying someone less skilled to do it for less.
You probably wouldn’t pay yourself $50/hour to do bookkeeping because, unless you took some accounting classes, you probably suck at bookkeeping. Why pay yourself a high rate to do something you suck at? It would make more sense to pay a professional bookkeeper or an accountant $50/hour to do something they’re trained to do than to pay yourself the same amount to do something you’re not trained to do. The savings doesn’t come from a lower rate; it comes from the fact that it might take you 2 days to do your books while it would take a professional bookkeeper 2 hours. Rather than paying yourself $900 (16 hours × $50/hour) to do your books poorly, pay a bookkeeper $100 (2 hours × $50/hour) to do them well.
These are the gateways to delegation, which is a gateway to growing and scaling your business.
Next time you find yourself doing a task that’s not your main job, ask yourself, “Would someone else pay me to do this? Would I pay me to do this?”
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