How do you value your time?

So many times, I’ve seen small business owners getting excited about deals that look terrible to me. The other day, for example, someone was telling me about this “great contract” he made with a client of his. I’m going to explain why I advised him to get out of it. This story is about a person I know who got into a contract that I thought was unwise, but the real topic of this post is how should we, as small business owners, value our time.

I got together with a person I’ve known for a few years for coffee the other day, and we got into talking about prospects for new business opportunities. He mentioned that he had recently brought in a new client for a contract that would make him about $30,000 that year. He was really excited, as that would give him a significant boost in his sales. I’m sure he expected me to be happy for him, but I wasn’t.

As we talked more about it, I realized that he didn’t give much thought to how much effort he’d need to invest to fulfill this contract from his end. $30,000 is a great deal of money to most of us, and getting a new client willing to pay that kind of money is really great. However, it seemed to me that the reason the client wanted to outsource that particular job was because if hey hired an employee to do the work they’d be paying in the $80,000 range. Great deal for the client, to not have to hire another employee, and at the same time save $50,000. Not such a great deal for my friend.

Now, I’m sure that my friend could accomplsh this work in less than 40 hours a week, most small business owners are far more efficient than a wage-slave employee. However, I wouldn’t anticipate this taking him less than 15-20 hours a week. It’s not the type of job he could easily sub-contract to someone in India either. I think he’s going to be working very hard for this contract, and I hope he can negotiate the contract up soon.

The point then? Consider how much effort you need to put out on your end before signing the contract. $30,000, and the job only takes you 50 hours to accomplish, great deal for most anyone. $30,000, and you can outsource it for $20,000, great deal. $30,000, and you can hire an employee for $15,000 to do the work, great deal. $30,000, and you have to put in 800 hours, at least 15 hours every week for the year, not so great a deal.