Time equals cost

Knowing how much your time is worth gives you a sense of where to pin financial goals for yourself and for your business. By working through things like budgets and expense reports the bigger picture starts to become clearer.

When time is not enough or when you have too much time.

Dear Diary,

Considering the fact that I now work for myself, my reality of how I spend my time changed drastically. I still find myself sitting and waiting at my desk. Perhaps for instruction or inspiration to strike or both to jump start me into my routine. As much as I don’t have to get up at the crack of dawn to ready myself for someone else’s business, I must evaluate how my time will be spent within the day.

I now have to prioritize what I do and at what time, as opposed to other things just done at random that don’t serve the end goal. Similarly, this means that I am becoming more disciplined as my day goes along. I sort and organize my day and find that I often have to do this ahead of time so that on the day in question I dive right in and hit the ground running. If I don’t plan ahead then I sit in the morning for long periods at a time (like the whole morning) trying to organize my tasks for the day.

Does one take a day in advance to sit and go through what is a priority and what is not and set a schedule based on the findings? How much is this of value to me as a newfound business person? Does it mean I’m losing days or gaining them by comparison to my job as an employee? What if I assign a cost to my days? To see how much my chosen free time and working time are affecting my budget?

I have put together a rough budget to evaluate how that affects my per hour cost. I must start by managing myself in order to manage my business effectively.

Personal expenses report

By writing down all my expenses and assigning a cost per hour to it I can see how much my time is costing me in my business. This budget merely takes into account my personal expenses. The business will also incur expenses for itself, which will add to my personal expenses. It is important to count the cost of running a business to see if you can afford it. Otherwise, you can place yourself under added financial pressure. My proposed business is internet based and is seemingly less expensive in terms of an initial financial outlay. However, I am still responsible for buying related software and licenses, perhaps even additional equipment to make an online business work.

I have roughly calculated that my per hour personal expense is a cost of R76.43. So for every hour that I choose not to do something for my business, I lose R76.43 alone. I have become a cost to my business too, I am it’s employee now, it has to look after me and pay me for work supplied. I have to work not only to cover my business costs but also my personal costs, which the business incurred when I decided to start it. My business has expenses and costs that desperately need to be covered by a certain time before it even starts to operate within the market properly. Scary thought.

Prioritize

This means that I cannot afford to be idle. I have to use my time wisely. I have to decide if I am causing added expense for my business or if I am working productively. Meaning, Is watching Netflix helping me produce work that is saleable for my business to make a profit in those hours? Or surely doing sales calls for that amount of time is better for my business. Comparatively, my time vs business time has to be prioritized.

Because I now work for myself, I might need to work on weekends and on public holidays to get work done. If I choose not to work and I compare it to the day rate I would’ve made as an employee, this becomes a personal cost to me. Provided it is within reason as it is related to how much money one wishes to make, achieving certain financial goals within a set time limit. It becomes an even greater personal cost if I have not produced income receiving work within my work week. As a result, I make a loss because my expenses will inevitably pile up while no income is received.

If I made R980 as an employee on a public holiday, how can I recover that ‘loss of income’ within my business? Does this mean I now have to work each and every holiday plus days in the week and weekends to recover money lost? No, this is why setting a budget for myself is important. How do I do this?

Budget questions

  • What do I need? (meaning what is urgent)
  • What do I want? (meaning, what is a luxury that I can wait for?)
  • What can I do without? (can I sell or trade something to ease financial burden) e.g lighting equipment from my photography hobby, old cell phone, my second car, etc.
  • What are my expenses? (everything I must pay for)
  • What are all my sources of income? Including spouse’s contributions
  • What are my savings? (money saved up from fixed deposits, 32-day accounts, investments)

As we answer these questions by writing them down, our budget starts formulating. Knowing how much your time is worth you get a sense of where to pin financial goals for yourself and for your business. By working through things like budgets and expense reports the bigger picture starts to become clearer. A business needs to focus on sales. There must be a focus on income. This leads us to think of ways in which we can become better at sales in order to get an income. Sounds obvious, but it’s not always logical when we just look at the peak of the mountain that is business. There is so much to it. Clearly defined, logical ‘pathways’ are required for us to get to the top.

How can we focus on income?

  • Invest in sales training (free courses are available online)
  • Read books and online articles
  • Ask to be trained, by a mentor or business wiling to help, volunteer
  • Work in sales part-time
  • Practice by doing it in your business (sales calls, email marketing, direct sales)

I have lots to think about regarding my time and having costs assigned to it now that I am in business for myself. I may have more liberties as a self-employed person, but that doesn’t mean that I can do as I please. Our time becomes more valuable, which means we choose wisely what we spend it on. It could mean the difference between failure and success.

Until tomorrow, dear Diary.

What is in your hand?

A good place to start: What are the talents and skills I posses to help me
get started.

Dear Diary

What can I do? What am I good at. I have decided to make a list of things I enjoy doing, things I am naturally good at…

  • Sitting at a restaurant drinking coffee (this should be a real talent, it’s practiced so often)
  • Encouraging people to go after their dreams
  • Critical thinker
  • Creative thinker
  • Writing
  • Photography
  • Cooking and Baking

These are just a few things off the top of my head Diary. I think it’s a great place to start and really stop for a while and spend some time here. I have asked myself if I would do these things without the need for pep talking from myself or others. That I can be trusted to commit to the desire to perform these tasks. A subliminal outworking of something held dear. Surely if I already enjoy doing something and inadvertently do so without payment, then why not try to monetize this ability? Because I am already somewhat committed at inception and therefore less likely to give up on something I am very fond of. This makes sense to me Diary!

This means that what is in my hand is my current ability. A natural gift, education acquired or learned experience. When we break it down like this I feel less overwhelmed, less focused on the enormous picture ahead of me but see steps that are more manageable to try.

So how will I do this, how will I monetize my skills?

I love to cook and bake, this drives my thinking toward opening my own Restaurant or Coffee Shop. However, this is ridiculously expensive for me. I have no capital for this. Now it seems I have a problem Diary before my dream has taken off, it’s crashed and burned. Let’s think a bit deeper. Is it possible that a dream can evolve before it comes true before you make it true? What if we consider goals or steps to get to opening a Coffee Shop eventually. What do I have in my hand right now? Well, I love to write, cook and bake as mentioned. So how can I monetize this in the short term and get to my long term goal of opening my Coffee shop? I can start a Food Blog! Become a Food Writer. This is truly exciting Diary!! But, how will I monetize this?

What are some of the ways in which I can do this?

  • I can come up with creative ways to present food via a blog
  • I can blog about associated food products online and create an online store for people to purchase products
  • I can create my own products and sell them online
  • I can earn commissions off of brand referrals and ad links
  • I can come up with creative ways to build a following and get paid to promote other establishments or products, become an influencer in the food industry

This opens up a whole new world of possibilities for me Diary! And it seems it can be done with far less capital than what’s needed for a well-positioned start-up restaurant. But what about my dream of having a real live Coffee Shop? What will I need for that?

I would need to compare the two ideas and look at affordability and profitability.

Let’s look at what I can do for opening a Restaurant. First, I would have to look at market conditions:

  • How saturated is the market? How many Coffee Shops exist in your current chosen area for business?
  • How competitive is this environment, what services and products do they offer?
  • How will you be unique?
  • How many shops have opened and closed in the area and why?
  • What possible gaps are there in this market to gain entry or foothold?
  • Is there a revolutionary product or service I can contribute to capture Market Share?
  • What are the costs upfront: Number of skilled staff, Size of premises and Rent, Equipment, Product and stock, Positioning when entering the market and level of competitiveness (relative to an outlay of funds), Shop-fitment, Location, Certifications, and permits. (to name a few)
  • What are some of the hidden costs: Marketing fees, Insurance, Maintenance, Legal Fees, Embellishments to facade e.g. special fitments and fixtures, paintings or pictures, etc. (to name a few)
  • Rapidly changing trends, how to evolve in an ever-changing market?
  • The future of restaurants as fixed locations.

Wow, this sounds like a mouthful Diary, and frankly quite overwhelming to say the least. It seems like just having a dream is not that simple. Plus, how do I know that it will serve a real purpose in the community? Does it have relevance? Is it something that is needed or even wanted? Sometimes we have a dream to start a business and we present it to the world as if to say: “here, this is my dream, I hope you love it too”. But then we find that people don’t relate to it, can’t identify with it right now or ever and therefore reject it. This hurts but perhaps it is best to ask people what they want. To observe what they are drawn to. This is surely a huge return on investment like no other. I think a business should strive to meet its customers halfway and try to work out a relatable compromise.

So Diary, I see now that I have to put my dreams to the test. To see if they are:

  • Versatile
  • Relatable
  • Able to evolve
  • Resilient
  • Competent in reality
  • Serving needs of others

A personal testament:

A few years ago I discovered that I had reactions to eating foods containing gluten. I decided to adopt a gluten-free diet as a result. Upon doing this I also discovered that the type of gluten-free food available in the market was of very low quality and not very appetizing at all. This lead me to start my own gluten-free brand called “The Gluten-Free Gastronome”. I had developed my own gluten-free flour and sold it to bakeries and private individuals for home use. I quickly began to see there was a real need to educate people on how to bake with gluten-free flours, as there was such confusion around that which clearly led to poor results. This has been a fun learning exercise for me and one example of seeing a need in the community and then coming up with creative ways to meet the need. Here is the website: https://thegastronome.co.za/

Until tomorrow, dear Diary.