The Secret to More R&R is to Track Your Real Rate
Do you know how much an hour of your time is worth?
As a virtual business owner, time management is everything. How you spend your time doesn’t just impact your efficiency and productivity, it affects your bottom line.
Your Real-Rate is a metric that lets you know how much an hour of your time is actually worth.
It’s kind of like Accuweather’s RealFeel®. The actual temperature reading may indicate one number, but when you take into account things like sunlight and wind chill, the weather that you experience outside actually feels a few degrees different.
It’s the same with your Real Rate.
You may think that an hour of your time is worth one dollar amount, but when you really look at the way you spend your time (and how much of it is lost to distractions), you’ll probably get a different picture.
Tracking your Real Rate helps you as a work from home business owner in two important ways.
For one, you’ll be able to maximize your earnings because you’ll know exactly how you’re spending your time and what tasks make you the most money. It’ll also help you have more time for R&R (rest and relaxation) because you’ll be able to structure your time more proactively.
Once you learn how to manage your time, you can free up more of it to spend time with family and do the things you love doing.
To track your Real Rate, you’ll first need to figure out what it is. Here’s an easy calculation that you can use: Start with your monthly profit – which is the amount of money you made in a month minus your costs. Remember, as a VBO, your costs should be relatively low. You’re not paying for office space and you’re not paying back business loans. Once you’ve got your monthly profit, you’re going to divide it by the number of hours you worked that month.
The equation looks like this:
(monthly revenue - costs)/hours worked that month = Real Rate.
Do the calculation and see what your Real Rate is. Is it lower than what you thought an hour of your time was worth? No worries, there are things you can do to drive your Real Rate up.
1. Track your time
You’ve got to know how much time you actually spend working every month to calculate your Real Rate.
And by working, I mean doing the essential, revenue-generating things that drive your business forward. The time you lose browsing Twitter or sifting through junk email doesn’t count.
Don’t worry, we’ll get on to eliminating distractions in a second.
Install time management software on your computer to help you track your time. Toggl is one of our favorite VBO tools for this purpose. You can track your time by project, client, and task. You’ll also get clear reports that break down exactly where your time is going.
2. Cut unnecessary business costs
Another way to boost your Real Rate is to stop spending on business costs that aren’t serving you well.
Is there a paid subscription that isn’t helping you optimize? Are you paying for a program or software that you never use? Is there a particular marketing strategy that isn’t delivering the ROI you expected? Are there cheaper alternatives that can serve you better?
Take a look at all of your business costs and evaluate. What’s working? What’s not?
If you eliminate expenses that aren’t doing much for your bottom line, you’ll be able to increase your profit and drive your Real Rate up.
3. Eliminate distractions
Once you start tracking your time, you’ll get a good picture of how much of it you use effectively, and how much of it you’re wasting.
When you sit down in your home office (or your closet office), you need to be working. If you’re constantly getting distracted by social media, phone calls and whatever else is taking your focus, you’re cheating yourself out of having a higher Real Rate.
Turn off those pesky push notifications on your phone when your working.
Your social media feeds and that game you love playing will be there for you during your R&R time. It’s also a good idea to put your phone on silent altogether during your working hours.
If you need to call clients, be sure to put those calls on a schedule and stick to it. Allot a specific amount of time for your calls so that you’re not losing valuable on unnecessarily lengthy conversations.
Your phone is one of the biggest potential time sucks. Be disciplined and don’t let it take your time away.
Tracking your Real Rate will give you an accurate picture of how you’re doing as a VBO.
You’ll know exactly where your time is going and how much it’s worth.
If you monitor your time, evaluate your costs and cut distractions, you’ll boost your Real Rate with ease. You’ll be more productive and profitable, which will allow you to spend more of your time on R&R in the long run.