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HIVE TOPIC OPEN: May 1, 2012 - May 26, 2012

Help Us Create the Ultimate Cheat Sheet: 10 Rules for Starting a Small Business



Value Your Time

5

I mean this literally: Pick a dollar amount that your time is worth. You're not paying yourself, but just having the number can help you make many day-to-day decisions.

The problem you're trying to solve is how to decide what to do yourself, and what to have others do for you. When starting a business, you could, if you had time, do everything. Shopping, cleaning, fixing stuff... you could literally do it all. But what should you do and what should you farm out?

It's very easy to undervalue your time when you're trying to be frugal. Driving an hour to the cheapo gas station in the sticks may save you money. But if this time could have been spent doing real work, the drive may not be worth it. Perhaps the more expensive gas down the street makes sense.

With a fixed value for your time, you can decide these things quickly. Guess how long it will take you to do something, and multiply that by your hourly rate. If you could pay someone to do it for you at less cost, then have them do it.

Say your time is worth $60 an hour (a dollar a minute). If Costco will deliver your weekly supplies for $100 and it would take you 2 hours to do the shopping yourself, then Costco is the way to go, because doing it yourself would "cost" you $120.

Figuring out your hourly rate may take a couple tries, and obviously is related to how much cash you have (vs. how much time). But once you have the number, you don't have to take time worrying about what is and is not appropriate for you to do yourself. I've found that having a razor like this for making decisions is super valuable.


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