Written by Kronos Technologies on January 17, 2018
The key to growing your practice is optimization—which means becoming more efficient at performing the tasks you carry out. But it also means being ruthless about whether or not you choose to undertake those tasks in the first place. To make that decision you need to understand how much revenue you need to generate each hour to meet your annual goals—and whether each task meets that target or not.
How to determine the value of your time
To determine the value of an hour of your time start by breaking down your revenue goals. Begin with your income goal for the coming year—let’s say it’s $100,000. Next, estimate how many weeks in that year you plan to work—say 40. If you work five days a week that means you’ll be putting in 200 days a year. At eight hours per day you’re up to 1600 hours of effort next year. That means, to reach your $100,000 revenue target, you need to average $62.60 per hour. That is the value of your time against which you can judge every hour you spend and every task you undertake.
Harnessing the value of your time
Once you have identified the value of your own time by following that simple process here are three steps to follow to harness the power of understanding the value of your time.
Step 1. Clarify your role
To clearly define your role think about the big buckets of tasks in your business—things like marketing, sales, etc. Consider which ones you need to focus on or be involved with. Which can you delegate?
The question is complicated if you’re a company of one and you have to wear a lot of different hats to keep your practice running. There are a thousand things that have to get done and often it will seem like you are the only one to do them. But if you’re going to grow your business you will need to find ways to delegate some of the work. The question becomes what work will you take on, and what will you hand off?
There are two important factors in answering those questions aside from pure revenue considerations. First you need to be clear about which tasks you enjoy working on and which you don’t. Identify how to spend more time on the first, and delegate as much of the rest as possible.
Second, strive to make conscious choices about the tasks you get involved in, rather than just doing something because you assume it will be quick or easy. For example, consider all those “just-five-minute” tasks that you perform every day without even thinking. They always take longer than you imagined. How many of those tasks might you perform in a month? It can add up to a significant amount of time wasted. And time spent on those tasks keeps you from working on higher-value opportunities.
Step 2. Differentiate between high vs low value tasks
High value tasks are those that generate revenue today or contribute to future sales, and that can’t be delegated. They might include tasks such as:
- Business planning
- Marketing strategy
- Networking, introductions, relationship building
- Client meetings
Low Value Tasks, however, don’t directly impact revenue and could be delegated. Typical advisor time traps include:
- Data entry
- Record keeping/bookkeeping
- Executing steps in your marketing campaigns
When evaluating each task ask yourself how much revenue that task generates. For instance doing your own bookkeeping may save you a hundred dollars a month, but it doesn’t meet the $62.50 per hour value of your time threshold. Delegating to a bookkeeper could give you ten more hours in front of clients—a potentially significant addition to your topline.
Step 3. Delegate to people or, ideally, technology to free yourself from low-value tasks
Although many advisors see outsourcing tasks as an expense they can’t afford, the reality is the time and money saved often make the business case work. What would an extra ten hours per month spent in front of clients be worth to your practice? For each of the low-value tasks you currently are involved in consider if you could delegate to your staff, technology or outside resources.
Look into CRM solutions that could automate steps in your marketing, sales and admin processes. A good CRM will manage your activities for you. It will reduce or even eliminate data entry. Connecting all notes and docs and communications with each client and all of their insurance and financial data will save you many hours you would otherwise spend trying to manage that client file.
And reset expectations so that your staff take on more of the low-value tasks freeing you up to work at your highest level. If you have an assistant who’s time is worth a third of your own it makes sense to have them take over all the pieces of your key processes that technology can’t pick up.
In most cases advisors generate 150% of their revenue from the high value tasks they perform. It’s the low-value tasks that are a drag on the business and actually subtract from that total—bringing their actual income down to its ‘take-home’ level. Which means the less time you spend on those low-value tasks the more take-home income you preserve. Clearly defining your role, understanding what high and low-value tasks are in your practice, and delegating to staff and technology will optimize the way you work—and increase revenue while saving you time, effort and the psychic drag of working on distasteful tasks.