Value yourself

As the new year starts we all set goals and have ambitions to make it a year to remember – as we should. But sometimes we need simple philosophical shifts too. Small shifts that can have a dramatic impact. One of mine is to ‘value myself appropriately’. As startup entrepreneurs an important part of the process is to be a bootstrapper, to maximise the limited resources we have to gain the momentum we need. This often leads us to doing it all ourselves. To be our own courier, printer, door knocker, community manager, clerk, mail room assistant…. anything and everything which is possible to do ourselves. And this is one of the greatest false economies in startup land. A simple rule to circumvent such folly is this:

Never do a task which can be outsourced at a lower hourly rate than what the open market would pay you for that hour.

While it’s easy to argue that we aren’t actually paying ourselves the market rate, it is certainly true that we should be creating the value of our market rate. And this is usually at least double the pay rate. Hence a person earning $100 per hour, should be generating at least $200 per hour for their organisation. Every hour wasted doing a menial task, has more impact than we actually think. Let’s take this simple example:

If we work 60 hours a week for 50 weeks for 2 years and end up with an equity stake valued at $3 million our hourly rate comes out at $500.

Which doesn’t leave many tasks that are worth doing ourselves. Startup blog says value yourself in 2013!


3 Comments Value yourself

  1. Peter Cain

    Great little gem of knowledge there Steve. This is something I have seen other people use with success, but never really fully utilised myself (..but plan to in 2013). And I guess outsourcing just doesn’t mean overseas projects that commonly come to my mind (ie logos, graphics, and web tweaks using services like 99designs, freelancer, and Tweaky), but also things like SEM, book keeping etc.. leverage experts working for you, instead of doing a half baked job yourself and taking 10x longer of your already limited time.

    What would your top (5?) things to ‘outsource’ be?

    NB; i have also seen outsourcing, particularly on web projects, go horribly wrong where the outsourcing has been significantly more costly due to a multitude of elements..i suppose the point is quickly identifying and correcting when a breakdown like this arises.

  2. Paul

    This is a great gem Steve, I’m currently working on and have been doing a lot of things myself that I could easily be outsourcing. It’s amazing to see you do the maths on the hourly rate, it really makes me think that Entrepreneurship needs to be about your passions and not about the money.

    I could probably just as easy become an accountant or lawyer if I wanted to make that type of money…

  3. Sharon

    “Which doesn’t leave many tasks that are worth doing ourselves” – really guys? I might be worth three figures an hour to my company now, but when we were starting out, valuing (ie backing) ourselves meant cleaning the toilets, bookkeeping, marketing, helping an employee move house on the weekend so he didn’t have to take time off work – whatever it took to keep the wheels turning. The open market didn’t pay a cent for our great ideas, self belief and bloody-minded tenacity, but therein lay our value. Only now that the market understands our vision we can afford to “Never do a task which can be outsourced at a lower hourly rate than what the open market would pay you for that hour”.

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