The Time Value Calculator
For your next project, don’t invest money.
Let’s face it. You are special. So am I, so is the person that’s sitting next to me in the office. We all have great ideas in our minds, in notepads, on to-do lists, or even out there in the real world, slowly taking shape.
The very first spark of inspiration and the initial outbursts of energy we put into these ideas are priceless and crucial. But perhaps more important is our dedication to our idea over a prolonged period of time. Ok, this is nothing new. But what if I tell you that spending just two hours a day from Monday to Friday can put much more value into your cause than you can possibly imagine?
To support that, I’ve created something called the “Time Value Calculator”. A fancy spreadsheet that I wish I could take back in time.
Around 8 years ago, I started working on a side project that consisted of a website for night-crawlers. And I’m talking about real people, not computer bots. Back then, I was living in San Telmo, one of the most vibrant neighbourhoods in Buenos Aires. I was quite a nightlife connoisseur so I loved meeting new people every day and telling them what to do, and what bars and nightclubs they should go to.
One quiet night, all the pieces fit together in a moment of inspiration and I came up with the idea of a platform that would let people see what clubs in the area were packed and what were desolated. This platform would also let people redeem 24hr happy hour vouchers and other perks. Bear in mind, this project was incubated in 2008, so apps using location services were still a bit of a novelty. Nevertheless, the opportunity was there.
After a month of heavy thinking, countless logo variation samples and coffee-stained briefs resembling the framework of what it was supposed to be a business plan, I managed to lay the foundations of this project, and I successfully convinced two of my friends to partner with me in this epic crusade.
But then, the action began to slowly diminished after a few weeks. Without realising it, I started crippling my own idea based on false assumptions: that you need A LOT of time and money at hand to keep a project alive.
So after months of no activity, I decided to kill all hopes and bury the idea forever into the depths of my laptop’s hard drive. Since we’ve got so far, we decided to scale down the original project into smaller, less glamorous accomplishments.
Just last week, I was having a chat with my friend and we ended up talking about this project. We asked to ourselves, what if we have spent two hours a day for the last seven years on this? Where would we be now? I started by playing around with numbers on a napkin, which eventually evolved into a complex spreadsheet that I’m sharing with you now.
After a few calculations, I realised that by spending just two hours per day on my idea during weekdays, (holidays and extra days excluded), for the length of seven years, I could’ve amassed a value of almost $170,000 worth of time! But it gets better:
If my two friends would’ve helped me, we could have reached a value of $1.3M during the same period. Of course, we’re not talking about real dollars here, but something much more important: THE VALUE OF TIME.
Say you accrued 2,000 hours of work during a given time frame. What would be the value those hours? The logical answer would be: “it depends”. Each year you gain more experience, so the value of one hour of work in year 5 would be much more valuable than an hour during the first month, where basically all you’re doing is learning. With so many things to consider, I created the following simple, yet subjective, approach:
1- Input your commitment
The first step of the time value calculator is to calculate your commitment input. How many hours a day will you be investing and for how long? Further down you can deduct time off and rate your hours, and in return you’ll get the total amount of hours of dedication
2- Value your time
Second step for me was to add an initial value of the time (in my case, $20 per hour) and, most importantly, the rate at which my hours would gain value over the years.
3- The Results
Third step was seeing the actual results. So I plotted a chart that showed me how much my hour value would go up over time, and what would be the accumulated value gained, which is what I pretty much wanted to find out.
4- Team Value
The last step was putting team efforts into the mix, as that was the key for my startup. All I had to do was to define how many people would help me, and since I can’t expect they are as committed as me, the actual rate of commitment, a variable that would be displayed as a percentage for this purpose.
All that analysis didn’t re-float my idea, but instead squeezed some juice from that failed experience and gave me two valuable lessons about the importance of time:
1- Time devoted to a cause over a long period of time can incur in huge value
Don’t be worried about not having enough time to dedicate to your endeavours. Even if it’s only 10 minutes a day, you’ll be making a measurable difference in the future. What’s even better, time invested can always be adjusted to meet the current situation and steer the boat in the right direction. In my case, I guess I would’ve turned my website into a mobile app by 2009.
2- Time is a currency that never loses value. On the contrary, it adds up.
Your salary devalues every day. So does your car, so does the device you’re using right now. That’s because banks, the government, even you and I contribute to deprecate the value of goods and money itself. Time is the one thing that never loses its power. Money can rent people’s time yes, but all the money in this world can’t give you your years back. You constantly reference the past to learn from the experience and do better in the future. When you succeed in something, what’s the first thing you refer to? You’ll praise your past efforts and the challenges you encountered back when it all started. J.K. Rowling conceived the idea of Harry Potter while she was on a delayed train on her way to London back in 1990. Every minute of delay of that train is worth a fortune, gaining more value day after day. Time never loses value.
It’s now the time for you to draw some numbers in the time-value calculator for your next project. Whether it is starting your own business, writing a book or getting fit for a marathon, this will help you figure out the importance of each hour and convince your colleagues to jump onboard for your next project. My recommendation, make a copy of this excel file and use it on Google Sheets, for a better experience.
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