How to Turn Your Time into Money
After my first week of full time entrepreneurship, one thing was certain. I need help. When I created a list of tasks that needed to be done to accomplish the week’s goals, it was apparent that there were several items that were important, but were time consuming. Sure, there were some things that I knocked off the list and deemed as not important, but most of it was work that needed to be done and there were simply not enough hours in the days to do it (even with my husband’s assistance).
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My friend and fellow BiggerPockets blogger Steph suggested that I read Dan Kennedy’s No B.S. Time Management for Entrepreneurs. I actually read that book back in October, but I knew that I clearly needed to read it again. In the very first chapter, Dan talks about how to turn time into money and how its important to know “your number.” In other words, how much is your time worth?
**How to Know Your Number**
1. Determine your base earnings target. How much cash do you want to make as a real estate investor in one year? (And if you’re the owner of a larger company with employees, determine how much of the business’ bottom line profit goal will be provided by your managers/employees and how much will be linked directly to you. The amount that will be directly linked to you will be your base earnings target).
2. Divide by your number of work hours in a year. For our below example, let’s assume 220 work days at 8 hours a day (which is 1,760 work hours — this gives you the equivalent of 8 weeks of non-working vacation time in a year). This gives you your base hourly number.
3. Multiply your base hourly number by a productivity multiple. According to Kennedy, for the average person, about one-third of our work time is actually productive, so the multiple would be “3”. However, if you’ve put a lot of other productivity tips into practice, you may say that about one-half of your time is productive or “billable” so that multiple would be “2”.
4. Now you have what your time must be worth per hour!
So for today’s example, let’s say your desired yearly profit (not gross revenues…we’re talking bottom line profit after expenses) is $150,000, and you’ll be working 1,760 hours that year at a 50% “billable” productivity level. Here’s how much your time would be worth per hour:
$150,000 earning target / 1,760 hours = $85.23 base hourly hour
$85.23 x 2 (productivity multiple) = $170.46 per hour
Now you have your number which leads to two very important points for your business.
- You need to respect the value of your time and also ensure that you surround yourself with people who value and respect your time.
- You have to eliminate or delegate tasks that simply don’t match up with the value of your time.
**The Next Step**
Make a list of all the activities for your real estate investing business and categorize them based off of value (high value vs. low value activities) and time (time consuming vs. not so time consuming) and figure out which items you should eliminate, which you should personally focus on, and which items you should get assistance with.
The first order of business for me personally is hiring an assistant who can handle a number of administrative tasks for our business. In fact, I’m interviewing today.
Many people have concerns about having virtual assistants overseas or even outside of their area. Not to worry. Quite frankly, with the current economic situation in the United States, there are likely a number of highly skilled assistants right there in your city who are out of work, are enthusiastic, and are willing to work for $7-15 per hour. If you have 5 hours worth of work to get done, you’re only talking about a $35-75 per week expense! If you think “I can’t afford that! That’s a lot of money!” then go back to your number to recall how much one hour of your time is worth. Think about it. I should also add that if you’re looking for a more advanced level of skills and experience from your assistant, you can expect to see U.S. rates from $25-40/hr. but if your needs are basic administrative tasks, you can certainly keep your expenses low.
**What can a virtual assistant do for your real estate business?**
Regardless of whether you hire a virtual assistant who is working from their home locally in your city or working outside of the state or country, there are several tasks that assistants can help you with for your real estate business. Here’s just a few:
- Manage your direct mail campaigns (handwritten envelopes, stuffing, addressing, and stamping)
- Call back motivated seller leads and qualify them via a script
- Set appointments for meetings, home inspections
- Create online classified ads to find buyers and sellers
- Update your lead/CRM systems
- Email/Fax contracts
Ongoing communication will be very important with your assistant, and also keep in mind that virtual assistants are professionals and often work with multiple clients so its not the same as having an employee. You can’t exactly call your virtual assistant and expect them to drop everything to do something urgent for you. Be sure to agree on expectations and understand how your potential assistants operate…and feel free to read about the 4 key lessons I learned from my rotten virtual assistant experience six months ago – there were some great comments on that post.
Now go turn your time into money!