I recently finished the tax season, but I have to admit, I didn't do too many tax returns this year. Just a few for some close friends of mine. Last year, I worked full-time at it, and I swear I worked 15-hour days right up to the deadline. I did make some decent cash, but I was exhausted. So, why wouldn't I want to continue?
It all comes down to maximizing my personal revenue.
A tax return can take at least an hour depending on how many receipts a client has. I then have to meet with them, confirm results and make any changes, if necessary. Let me tell you, there's always something to change – they sometimes forget receipts or worse, they're not happy with owing money. Don't get me started.
How much can I charge them? Not as much as I'd like. You'd be surprised how much people expect to pay. There are many people out there without training who will do a return for $40. My point is, after all that time I potentially spend, the payoff isn't always that great. I usually have to do a lot of returns to make any money.
Could I get a better return on my time somewhere else? During that same time, I could probably do a corporate tax return and easily charge 5 times as much! I'd say that's a better use of my time than doing a single personal tax return.
It's all about getting the biggest bang for you buck during the same time. I've stopped doing tax returns because clearly, there is a better investment of my time.
Now, that I'm approaching the age of 40, I'm starting to view all aspects of my life this way – is the time I spend doing something going to return the most financially to me?
I've spent the past few years doing different things to make money. I made some money here and there, but most importantly, I learned the lesson of revenue maximization. I worked part-time for at least a year and did make extra money, but I found that it started to take away from my day job – I started missing days and I wasn't operating at my peak effectiveness. Was it the best use of my time to earn revenue? Not really.
The extra money I made was offset by feeling sick and losing days of work (I'm a contractor). Also, part-time jobs tend not to get taxed properly so you can face a tax bill at the end of the year.
I also did some bookkeeping that pays fairly well, but it took me away from some of my side-projects that could earn more money in the future.
How do I now evaluate my time for maximum revenue potential?
I consider the following:
1.) Will it help my career in the long term? Or, will there be some other long-term benefits, like networking which could lead to other bigger opportunities.
2.) If I don't make any money in the short-term – and this often happens when starting businesses – will this be offset by potentially more money in the future?
3.) Will the extra time it takes affect my health negatively? If so, I tend to stay away … like staying up all hours trying to get tax returns done. Good short term money, but health effects are brutal like stress and high blood pressure.
4.) Will I gain some extraordinary experience that will help my resume or take something off my life's 'to-do' list. Working part-term as a bouncer just didn't offer this.
I think the secret to maximizing your revenue is being prepared to sacrifice some short term gain for a potentially larger longer-term one.
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