February 2014 Web Extra: Six minutes of time [excerpt from ‘The E-Myth Landscape Contractor’]

February 11, 2014 -  By

Let’s explore the financial impact of wasted time. We will start with a simple question. Is it possible that in your company, your employees waste as much as six minutes of time per day? Is it possible?

Right now, I want you to ask yourself this very question. I have asked this question of seminar attendees more than 200 times. Each and every time I ask this question, the answer is, “Yes, it is possible.” There are times when the business owner, knowing what really happens out in the field says, “It’s not only possible, I know we easily waste six minutes

Chart: The E-Myth Landscape Contractor: Why Most Landscape Companies Don't Work and What to Do About It by Michael Gerber and Anthony Bass

Chart: The E-Myth Landscape Contractor: Why Most Landscape Companies Don’t Work and What to Do About It by Michael Gerber and Anthony Bass

per day per employee stopping at the convenience store getting snacks.”

I then say, “OK. So you say it’s possible. I would like to introduce you to a chart that places a price on the impact of just six minutes of wasted time.” Let’s see where your company falls on this chart today.

Here is how to find your company on this chart. First, estimate the average wage of your employees.  You can do this by adding the hourly wages of all employees then divide the sum by the number of employees. Then locate the nearest hourly rate of employees in the left-hand column. Next, look across the top of the chart for the nearest number of employees in your firm. By aligning the average wage in your firm to the number of employees in your firm, you have a good idea of the cost of wasting just six little minutes per day per employee. Time is expressed in dollars.

Please note: These calculations are based on 225 work days in a year. Overhead was figured to equal the hourly rate. You may work more or you may work fewer days per year. Your overhead could be less or more than my estimates. But you get the point: Little minutes add up to big money.

I estimate the the average landscaping company in the U.S. had seven employees in 2011. If you have an average wage of $12 per hour, you can estimate that six minutes of wasted time costs you $3,780 per year. How does this make you feel? Have you ever wondered where the profit in your business goes? You just found part of it! It’s in your employees’ pockets.

When I introduce this concept around the discussion of time management in seminars, I always get a chuckle out of the crowd. The notion of discovering a loss of $3,780 for a company with seven employees is significant, but not life changing. And here is where I change the question.

Doing the math

I will return to my student who answered “yes” to the earlier question, “Is it possible that your employees waste as much as six minutes of time per day?” I say, I want to ask you a couple of more questions.

First, how many hours do you work per day? At times I hear eight hours per day. Others answer “sun up to sun down, we really push it during the season.” Still others say nine or 10 hours. I will say, for the sake of math, let’s compromise and say you work 10-hour days. Now I have one more question.

Is it possible, is there a chance, that in your firm your employees waste as much as six minutes of time per hour?  Is it possible?

Sheepishly, reluctantly, and with some hesitation, in almost every case, the attendee will agree, “Yes, it’s possible that we waste as much as six minutes of time per hour.” And I say, let’s go back to the chart for a moment.

If it’s possible that with your seven employees, you are in fact wasting six minutes per hour, your annual loss in profits to your firm is not $3780 but ten times greater or $37,800 per year. And the crowd lets go a deep and painful groan.

I was near our nation’s capital of Washington, D.C., for a seminar. By chance, the guy sitting in the front row owned and operated a company with 50 employees. We went through the process of calculating his estimated loss in profits from the chart above. He had an average wage of $11 per hour. We found the loss for a company with 20 employees and doubled it. Then we found the loss for 10 employees and added this to get the total. We identified his six minutes per day loss like this:

$9,900 + $9,900 + $4,950 = $24,750 per year loss

When I returned to him to calculate the annual loss (below) if, he in fact, was wasting six minutes per hour, something amazing happened. He had changed color! He was white as a sheet, he was sweating and I was concerned that he seriously ill. It took less than 60 seconds to completely change his physical condition. Here is the math:

$24,750 * 10 = $247,500 per year loss

I asked him how he felt about the reality of looking a $247,500 loss in profitability in the face. He replied, “I think I’m gonna puke!”

The crowd got a laugh. But it was no laughing matter for the contractor sitting in the front row this day. His new level of awareness about the serious financial implications of squandered time was there to stay. He sat up and listened attentively as I said, “Today’s seminar is about putting systems into your business to help you and your team use time wisely, prevent confusion and improve productivity. You see, ladies and gentlemen, locked in just six minutes of time per hour are the keys to financial prosperity. Little changes in how you operate can make huge impacts on your firm. Six-figure impacts like we just learned.”

I received an email from the 50-employee company owner a short time later. He thanked me for sharing the impact of just six minutes of time on his firm.

Time with a capital T

No one wants to lose money in business. But it happens every day. The good news is, it doesn’t have to happen to you any longer. Your level of awareness has changed. And now that you understand the financial implications of time with a little t, we can get back to the bigger question of Time with a capital T.

In order for you to have more Time with a capital T, your business must grow. You can’t do it all by yourself and build a company that has significant equity. Without the possibility of unlocking the money of equity, it is impractical to consider your operation more than a job. Perhaps you operate a profitable company, and it’s like you have a well-paying job. Congratulations! But remember, the firm must take on a life of its own. A life that can be continued without you being there day in and day out.  The life of the business continues.

The elusive question is, “How do you do it? How do you find time to place systems in your company?  How do you find time to work on the business? How do you grow to a point the business takes on a life on its own? How do you add all those clients, employees, equipment and vendors and work less?”

The answer is simple.  “You must change your work.”

This article is an excerpt from The E-Myth Landscape Contractor: Why Most Landscape Companies Don’t Work and What to Do About It by Michael Gerber and Anthony Bass. Contact Bass at 478-822-9706, tonybassconsulting.com or tony@tonybassconsulting.com.

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