This is a bit off-topic, but related: taking the maxim "time is money," has anyone tried to apply the YNAB philosophy to time management itself? Could this be replicated by let's say using two Google Calendars, one for the "budget" and the other for "actual"?
-dr_andus
I agree with Wraith that not only could it work, but may be interesting to try.
FWIW, I always planned for billable time in my companies. And I actually created an inventory item called "tech hours" for each of my techs and contractors.
That time "inventory" got budgeted and monitored just like any other expense/sale item for planning and control purposes. And it was easy to do. You had an employee/vendor hour at a fixed cost of $X with a related sell price of $Y. And an average available pool of 2000 potential billable hours, since 50 weeks times 40 hours is 2K hours for an employee. Unbilled (or
unliquidated if you prefer) hours are the equivalent of "spoilage" since once the week goes by, those hours are lost forever. Just like a barrel of apples or anything else with an expiration date. Any hours used purely for company purposes get "billed" to the company.
By looking at hours as a "product" with an opportunity sales value and a fixed cost, you can get an immediate feel for how effectively you're utilizing your marketable time resources. And even more important, you're able to track and analyze using some solid numbers for management purposes.
You could also do the same with your personal time. Just think of it as an inventory item, with an expiration date, associated cost, and sell price and you're on your way.
One other thing to keep in mind. Accounting is not just about actual dollars. It's about discovering patterns and trends. The dollars on the books
don't always represent actual money.
They're just markers used for convenience. And since "everything has it's price," money becomes a common unit of measure that actually works quite well for management purposes. But you could assign "happiness" or "fulfillment" points - or whatever else makes sense for
you - to do the tracking. All that's important is that you understand your unit(s) of measure and consistently apply them. AFter that, budgeting and determining whether you're "gaining" or "losing" becomes relatively easy to do.
Here's a grossly oversimplified simplified way of looking at how you might do it with a computer tech. (In a real business case, these projections would involve the use of historic data, industry trends, business seasonality variables, statistical analysis, and some modeling.)
Assumptions:
Available billable hours = 2000 per 12 month period.
Estimated billable hours best case: 1600 hrs.
Estimate billable hours worst case: 600 hrs.
Expected billable hours average case: 1200 hrs.
Projected billable hours based on above: 1166 hrs per 12 month period
Costs:
Salary $75,000
Benefits: $6000
Total annual cost of labor: $81,000 (essentially fixed for most purposes)
Total cost per hour for 2000 hr. year: $40.50 (81,000/2000)
Average billable hour rate: $90 (I'll skip how that number might be determined.)
Breakeven hours on annual basis: 900 billable hrs. (81000/90 = 900)
Projected profit: (projected billable hours x average billable hourly rate - cost of annual salary and benefits)
Best case: $63,000
Worst case: <$27,000> (loss!)
Expected: $$27,000
You'd need to do this for each employee or vendor. If people are paid hourly, it gets a little more complicated and involves a little more educated guesswork. But it's still very doable.
With all this worked out, yo can project a fairly decent estimate of your expected profitability from time. But you'll need to offset that by operating and fixed expenses. So this is just the tip of the iceberg. But it's a good place to start. Because doing this exercise helps you decide if it's even worth getting into a specific service type business. Maybe you can sell all your hours. But the projected profitability may not cover expenses. Or be worth it to you even if it does. Many times you'll realize that there's a lot of people who opened a small business - but aren't operating a business in the truest sense - they merely "bought themselves their job." Because most barely pay the owner and cover expenses. Which is why they fail so often the minute there's a downturn in the economy or they hit a snag. There's no buffer to cover contingencies or tide them over a lean season.
So it goes.
Ok. End of lecture.
Now here's an extra credit exercise: How could the above concepts be applied to personal time management when
not thinking solely in terms of financial opportunity and cost? Why would it be worth it for you to start thinking of it that way? How would you do it if you decided to?
