Over the last several years, since becoming a business owner, I have slowly converted to a concept that, if understood, will make you and me a lot of money. The concept: understanding the value of your time, and behaving accordingly. You already know this, right? Cognitively, this is a simple principle: Your time is worth a lot of money. But most people, including high-income dentists, don’t always understand or follow this principle. Are you one of them?
When I first started Practice Financial Group (then called Symmetric Wealth Management) in early 2010, I needed to file several complicated compliance documents with the State of Oregon to become a Registered Investment Advisor (RIA). There was a firm called “RIA in a Box” who, for the meager fee of $2,500, would do all this work and set up my RIA for me. But I was smart and I knew how to read and ask questions, so I declined their offer to help. More importantly, I was a new business owner and cash was tight. So I decided to do it myself. Big mistake.
After several weeks of nothing but frustration, including an audit from the State of Oregon Securities Division (which I did pass), I had all the necessary documents for my RIA and we were in business…finally. But, because of the lost time – and corresponding lost revenue – this was the most expensive way I could have possibly established my RIA.
Over the years of running my business I have learned from experience that I need to attach real value to my time. Then I need to spend my time on those activities that either make me money or bring non-monetary fulfillment (i.e. time with family, service, exercise). And then I (you) need to delegate the rest.
To quantify what your time is worth, try this: Calculate the annual collections in your practice. Then divide this number by the hours you work in a year; there’s your number. For example, if you collect $1,000,000 and you work 1,536 hours (8 hours/day x 4 days/week x 48 weeks/year) then your time is worth $651 per hour. (Yeah, I know you don’t produce for hygiene; but I include it in the equation because you own and are responsible for the hygiene department, correct?)
This first principle on the value of your time – namely that your time has value – is easy to understand. The second principle is much harder for all of us to apply. Here it is: If you want to increase the value of your time, say, to $1,000 per hour, you have to start acting like a $1,000-per-hour doctor long before you actually get there. In other words, you need to spend your time treating your patients, growing your practice by finding new patients, and working on your business to make it run more efficiently (see Michael Gerber’s “The E-Myth Revisited”); then delegate everything else. Smart $1,000-per-hour doctors don’t waste their time running their own payroll, keeping their own books, paying bills, cleaning the break room, etc. It’s not that they’re above these tasks; it’s that they can’t afford to spend $1,000 to have the break room cleaned (assuming it takes an hour).
You might think you don’t have this problem. For your sake, I hope you’re right. Here are some behaviors I have observed in myself and others that evidence a lack of understanding for the value of time:
- Taking on certain accounting responsibilities in your practice, like keeping your books or running your own payroll because “it only takes you a couple of hours.”
- Cleaning your own office (unless you’re cleaning it together with your kids).
- Running errands for the practice.
- Getting involved with other “businesses” or “investments” that take time or focus away from your practice. Remember that an “investment” is something you do not manage; otherwise it’s a second, probably less profitable, job.
- Saying things like, “when I’m making a lot of money then I’ll delegate ___, but until then I have time so I’ll do it myself.” This is difficult. Just remember that to grow your practice takes a lot of time and energy; as you’re trying to grow be careful to not squander these resources on things that can and should be delegated.
In conclusion, remember these simple principles and you’ll be a more effective, prosperous dentist:
- Your time has real, monetary value. Figure out what that is and start acting accordingly.
- In order to increase the value of your time, you have to start acting like it’s worth more money long before you actually make the money.
- Focus your time on those activities that either make you money now or in the future (treating patients, growing the practice, etc.) or bring you some other non-monetary value (i.e. it’s fun). If whatever you’re doing doesn’t fall into those categories, perhaps you should delegate those activities and tasks to someone else.
What are your thoughts? What can you share to shed more light on this topic, specifically the appropriate applications of these principles?