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Success Stopper
#6:
Trading Time for Money
by Rosemary Davies-Janes
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Did you realize that if you're a very
busy consultant, coach or professional practitioner with a posted
rack rate of $100/hour your actual hourly rate is about $37.50?
According to the Certified Management Consultants' Association, the
consultants who are doing well manage to bill only 100 days a year
at their full rack rate. To calculate your hourly rate, apply this
equation to your typical 40 hour work week
15 Hours @ $100/hour (Full rack rate work (20 x 45 minute
client sessions))
10 Hours @ $0/hour
(Administration/banking/mailing/couriers/accounting)
10 Hours @ $0/hour (Meeting
Prospects/Networking/Generating Proposals)
.5 Hours @ $0/hour (Client meetings/e-mails/directing
client support)
Then divide dollars per week by hours per week and you'll see what
you are really selling your time for. in this example 40 Hours /
$1500 = $37.50
Ok, so now that you know that you are actually trading your time for
less money than you may have realized - let's look at some other
aspects of exchanging your time for money. When you trade time for
money and you take time off, you don't get paid. When you are sick,
you don't get paid. What happens when you want to take a month off
to go on an African Safari, or when you are ready to retire?
One rather obvious solution is to
find others to fulfill the functions that are non-billable in the
example above.
If you could find someone to take on your 10 hours of administration
each week, you might end up paying them $15/hour which would create
an expense of $150 per week an an opportunity for you to earn $1000
additional dollars in the time that is freed up.
You might consider investing in some well developed marketing tools
that would attract business without consuming your time. By
reducing your sales and marketing hours from 10 each week to 5, you
could income generating potential jumps by an additional $500. Over
the course of a year, an additional $500 per week translates into a
whopping $26,000. Would you be willing to spend up to one third of
that figure to build an effective, highly automated website with a
high customer conversion rate? Perhaps another fraction of that
figure could be invested in software to automate administrative and
accounting functions which could cut your Administrative time in
half to save about $4000 a year.
Another, less obvious alternative is to begin developing or sourcing
products that can be sold or licensed to generate additional revenue
streams, whether you are hard at work or on safari. By devoting a
percentage of your time each week to developing saleable products,
you are creating a unique and innovative retirement savings program.
Products can be sold through traditional outlets, distributed in a
"direct sales" approach or sold through your website. The right
selling approach depends on your preferences and the nature of the
product. (Thorough research will reveal the perfect fit.) Here's a
sample equation to consider
Time for Money Income: 30 hours @ $100/hour = $3000
Product A Sales: 250 units @ $05 profit per unit = $1250
Product B Sales: 100 units @ $50 profit per unit = $5000
Product C Sales: 12 units @ $125 profit per unit = $1500
It's clear to see that it is quite conceivable that your product
sales income could fully replace your "time for money" income -
freeing you up to travel, retire, volunteer, start another business
or create more products!
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