A small-business owner’s time is perhaps his/her most valuable asset. The result is that the way he allocates time embodies the focus and/or priorities of the organization. As the business becomes larger and employees are added, the owner can delegate more specified responsibilities to others. The choice of tasks delegated may be based on expertise, preferences (likes/dislikes), etc. But regardless of how or where done in the organization, delegation of responsibility potentially alters, perhaps drastically, the time an owner allots to specific business activities or tasks. This issue of the National Small Business Poll, therefore, focuses on the small-business owner’s Time Allocation.
Americans believe small-business owners work hard. A Rasmussen poll published on July 23, 2012, indicates that 77 percent of the public think small-business owners work harder than the typical American; just 2 percent hold the opposite view. The data presented here, though self-reported and therefore subject to exaggeration, support the popular view. Small-business owners worked an average of just over 50 hours (median also 50 hours) during the prior week (late September or early October depending on the interview data) (Q#2). Almost half (48%) labored between 50 and 70 hours in that period. Just 18 percent worked less than 40 hours, a portion of those for reasons such as ill health. (The comparable figure for all workers in the United States was about 37½ hours.)
Less experienced owners, particularly those with fewer than 15 years in the business, work somewhat longer hours than those with more. However, personal age does not appear a significant difference in hours worked, except among owners over 65. The latter group of small employers clearly has reduced its hours, though owners in it still work noticeably longer than the typical American. In addition, there is a modestly positive, but statistically insignificant relationship between hours worked and growth, measured by employee change over the last three years.
The owner/manager factor provides the greatest differential in hours worked and not necessarily in the manner anticipated. Eighty-three (83) percent of respondents are owner-managers; 8 percent owners, but not managers; and 9 percent managers, but not owners (Q#D1). While the one without equity (managers, but not owners) would have been the position expected to put in the fewest hours, it was the owner who is not a manager that did. Forty-five (45) percent of that group worked less than 40 hours in the prior week, compared to 16 percent for owner-managers and 17 percent for manager non-owners. The principal difference between the latter two groups is the extreme hours put in by some owner-managers. Manager non-owners just put in very long hours. These data suggest that it is management more than ownership that demands time, a controversial proposition at best.
The time selected to interview small-business owners for the survey was designed to occur in a normal operating period, not one influenced by strong seasonal factors, such as Christmas (December) or a typical vacation period (July or August). To examine the success achieving this intent, the survey asked owners if the prior week was “typical”. Seventy-nine (79) percent reported the week was not unusual (Q#2a); 21 percent reported that it was. However, owners reporting an unusual work-week were almost evenly divided between those claiming the week was unusually short (11%) and those claiming it was unusually long (10%). Long hours were typically “somewhat” longer than usual compared to a few with a “lot” longer hours, while short hours were accompanied by more frequent reports of a “lot” shorter hours.
The principal reason that 21 percent worked unusual hours the prior week was seasonality. Thirty-four (34) percent of the group working unusual hours or 7 percent of the entire population cited their working hours influenced by a seasonal cause (Q#2a1). The second most common reason for unusual hours (19%) was personal reasons, matters ranging from family illnesses to vacations. Other reasons cited were highly varied, such as a special project, but appear consistent with normal business operations. Given the number claiming a normal week plus the reasonably symmetrical distribution of the unusual hours they claim, the data support the proposition that the week was normal.
“In-the-Office” or Out
Small-businessmen and women have three places from which they can work: their primary business location, their home, or a place outside either the primary business location or the home. The latter could be a job site, a client’s office, or scouting the purchase of a new machine. In cases of home-based businesses, the principal business location and the home are the same thing. About one-quarter (26%) of small employers operate from the home (home-based business) (Q#1). The following examines the proportion of working time spent in each of these possible job locations.
Small employers whose primary location is outside the home are likely to spend a substantially greater share of their time at that location, that is, “in the office”, than those business owners operating principally in the home. Sixty-five (65) percent spend three-quarters or more of their work time at their principal business location (Q#2c); 31 percent spend all of their work time there. In contrast, 43 percent of home-based business owners spend three-quarters or more of their working hours operating from their primary business location – the home (Q#2b); 22 percent work at home exclusively. Similarly, just 13 percent of nonhome- based business owners spend less than 25 percent of their time in the office while 34 percent of home-based owners do. Thus, the average amount of time spent “in-the-office” by owners of home-based businesses is 55 percent; the equivalent figure for non-homebased businesses is 71 percent.
Even with a principal location in typical business settings, some small employers bring work home. However, only 53 percent reported that they do while 47 percent said they leave their work at the office (Q#2c1). Of those who do, virtually all spend less than 25 percent of their total working hours at home. The average is about 7.5 percent of total working hours. As a result, small-business owners with a primary business location outside the home spend between 40 and 50 percent more of their time in the office (primary location and home) than do home-based business owners.
Small-business owners spent a large portion of their working hours outside of the office – 22 percent among those with a primary business location outside the home and 45 percent among home-based business owners (calculated as a residual). That represents a significant share of a day’s work, and is therefore notable. The questionnaire did not delve into the reason for these absences from the office. However, working at a job site or in a client’s office, making sales calls, investigating purchases, making deliveries, and serving customers are all common tasks that occur away from the venture’s principal location. Another possible reason they may be working “out-of-the-office” is business travel.
An unknown portion of the working hours spent outside either the primary business location or the home are spent “on the road”, that is, far away enough from home that distance requires an over-night stay elsewhere. Thirteen (13) percent spent at least one night away from home on business during the prior week (Q#3). Owners of larger, small firms are twice as likely to do so as are owners of smaller, small firms (24% to 12%). The difference is likely tied to the greater breadth of markets. However, the latter is also a function of industry, growth patterns, etc., factors that often entail greater travel.
The size of the enterprise bears some relationship to amount of time spent at the firm’s primary location. Owners of smaller firms spend relatively less time there and owners of larger firms relatively more. For example, 34 percent of home-based business owners spend less than 25 percent of their time “in-theoffice”. That likely stems from the ability of those owning larger firms to delegate tasks to employees. One surveyed owner of a very small firm, for example, spent a substantial amount of time “picking up parts.” That is not likely to occur in a larger venture. It was noted above that owners of larger, small businesses travel more often than owners of smaller, small ones. This suggests the possibility of a parabolic relationship between firm size and the proportion of time owners spend out-of-the-office. If a parabolic relationship exists, it was not immediately evident from the data, perhaps due to the number of cases available.
There is an industry effect. Retail, for example, has traditionally been based on a location, typically the venture’s primary location. The owner is typically at the firm’s primary location. A construction business moves the location of its work continually. The owner usually moves with the job site.
Summarizing the work location of all small employers, the survey found that they averaged two-thirds (67%) of their working hours at the firm’s primary business location (home, for a home-based business), 6 percent at home and 27 percent working neither in the firm’s primary location nor the home (“out-of-the-office”).
Time Allocation on the Job
Over half of small employers spent the most time during the prior week either producing goods or services (27%), or serving customers/clients (26%) (Q#4). Twelve (12) percent spent most of their time on marketing and/or sales, 11 percent on finance, and 10 percent on planning or strategizing. Fewer worked primarily on employee-related matters (3%) or learning/gathering information (3%). Administration was purposefully omitted from the list of possible activities; though 1 percent mentioned it anyway as did another 1 percent who indicated they spread their time across all of these activities and perhaps others as well. Three percent identified other things.
Nine percent of small employers reported that they spent 100 percent of their work time in the past week on a single activity (Q#4a.) Thirty-three (33) percent said they spent between 75 percent and 99 percent of their time on one and another 33 percent spent between 50 percent and 74 percent on one. The popular image of a small-business owner is of someone who is constantly in motion, moving from problem to opportunity to problem and back to opportunity again. This is likely true, but it conceals the fact that most owners (75%) spend a majority of their time during a week performing a single activity. That specific function (activity) varies considerably across the population, though owners usually spend considerable time on the one selected. Just 25 percent claim to have spent less than half of their work hours the prior week on a single activity. Small employer time allocation, therefore, suggests considerably more focus, at least for a limited period, than popularly thought.
The second most time-consuming business activity among owners who did not spend all of their work hours during the prior week on only a single activity was customer/client service or relations. Seventeen (17) percent cited it (Q#5). However, the second most time consuming business activity was broadly dispersed. Just after the 17 percent naming customer/client service or relations came selling or marketing (16%), planning/strategizing (15%), finance (12%), and employeerelated matters (11%). Particularly noteworthy is that activities supporting production and sales become much more common in a secondary role (at least as far as owner time is concerned). Finance and employee-related functions are examples. Few spend the greatest amount of their time on them, but considerably more spend their second greatest amount of time on them.
Time allocated to the second most time consuming function tends to be modest. While 8 percent said that they spent 50 percent (most of these split their time 50-50 between two activities) or more (not mathematically possible for the second most time consuming activity), 57 percent allocated less than 25 percent of their time to their second most time consuming activity (Q#5a).
Still, small-business owners often did spend at least a little bit of time in many identifiable areas. The average number was four of the seven business activities evaluated. For example, though 41 percent listed customer services or relations as the area to which they either allocated most of their time or second most time, another 32 percent spent at least some of their time on the activity (Q#6F). Only 26 percent spent no time at all the prior week on customer service or relations. The most common number (mode) of functions undertaken was two (28%). However, 21 percent engaged in six, 16 percent in five, and 11 percent in all seven.
The activity most frequently ignored (no time spent) was employee-related matters. Over half, 55 percent, spent no time on them (Q#6E). About 40 percent allocated no time to the remaining activities assessed during the week. Forty (40) percent did no planning or strategizing in the prior week (Q#6D); 42 percent did no finance (Q#6C); 43 percent did no selling or marketing (Q#6A); 43 percent no learning or gathering information (Q#6G); and, 44 percent did no producing of goods and/ or services (Q#6B).
The “Correct” Distribution of Time
Small-business owners work long hours. Yet, a frequent complaint one hears from them is that there never seems to be enough time. Long hours combined with insufficient time raises the possibility that their time is not allocated efficiently, that too much is spent on some activities and not enough on others. The survey asked owners about a time misallocation possibility and 35 percent agreed it occurs in their case (Q#7). They spend too much time on some things and not enough on others, including time-off. Sixty (60) percent thought their time was allocated appropriately and 6 percent did not know.
Small employers, who thought their time was misallocated, identified producing goods and services (17%) as the activity they were most likely to spend too much time on (Q#9). However, other areas vied for the most frequently cited. Finance (17%) and customer service or relations (14%) followed goods and service production. Thirteen (13) percent volunteered “not spending too much time on anything”, effectively meaning they needed to spend more hours working. Twelve (12) percent named employee-related matters as the area they were spending too much time, though few spent much time there (relatively) to begin with.
Forty-two (42) percent thought that they also spent too much time on a second area of business activity (Q#9a). Finance was the area mentioned most often (28%) with employeerelated matters following (22%) (Q#9a1). The number of cases involved in evaluation of the second activity on which too much time is spent is small however (n = 51), meaning one must be cautious in assessing the data’s meaning. However, they re-enforce reports of the most prominent areas where too much time is spent.
The largest share of owners who thought their time misallocated (31%) thought that they spent too little time on selling or marketing (Q#8). Small employers having that perspective were also typically those most likely already heavily engaged in selling and marketing, at least as represented by time spent on it the prior week. The second greatest number (20%) believed that they were shorting planning and strategizing. The third greatest number identified producing goods and services (12%). Given that a large number also believed that they were spending too much time on producing goods and services, the number suggesting that they are spending too little time on the activity suggests that the time allocated to producing goods and or services is difficult to get right.
Comparatively few thought that they were spending too little time on any other specific activity. But 8 percent volunteered that they were spending too little time with the family, on personal matters, etc. In other words, they were spending too much time at work. The survey did not specifically ask a values question about hours spent working and their trade-off with personal and/or family time.
Almost two-thirds (62%) of small employers who thought they spent too little time on one activity also thought they shorted a second activity (Q#8a). Selling or marketing was again mentioned most frequently (17%) (Q#8a1). The same number cited planning and strategizing. Customer service and relations, and time-off followed, both with 13 percent. As a result, 15 percent of the total population thought they did not spend enough time on selling or marketing and 11 percent thought they short-changed planning and strategizing. The remainder of shorted activities appear scattered.
Preferred Business Activities and Not
Most people like to perform certain work tasks better than others. Small-business owners are no different. The issue for present purposes is the extent to which likes and dislikes complement or impede a small-business owner’s efficient allocation of time.
The activity most commonly considered the most enjoyable to small employers is customer service or relations. One in three (34%) said that they find interacting with customers the most enjoyable part of their work (Q#13). The second most frequently cited task is producing goods or services. One in four (25%) reported that doing something or making something was their most enjoyable part of the job. The remaining listed activities were not as popular. Fourteen (14) percent thought selling or marketing was most enjoyable and 10 percent identified planning, strategizing. No other activity obtained double-digit mention.
Sixty-eight (68) percent reported that they had a second most enjoyable task (Q#13a). That list is headed by planning, strategizing (20%) and customer relations or service (20%) (Q#13a1). Producing goods or services and selling or marketing placed next (15%). In total, 47 percent of the entire population identified customer service or relations as one of the top two most enjoyable business activities with a non-mutually exclusive 47 percent named production of goods or services.
The least enjoyable activity tended to be the exact opposite of the most enjoyable. For example, few enjoyed finance or employeerelated matters most while a large percentage enjoyed them least. Thirty-seven (37) percent enjoyed finance least (Q#14). Another 25 percent enjoyed employee-related matters least. Neither activity found many who liked them a lot.
Both finance and employee-related matters have strong firm size relationships. Owners of smaller, small enterprises are much more likely to enjoy finance least (40%) than are those owning larger, small firms (26%). The reverse appears with employee-related matters. Owners of larger, small enterprises are much more likely to enjoy employee-related matters least (44%) than are those owning smaller, small firms (22%). Responsibilities in these issues areas are often delegated. A potential reason for them to be delegated as often as they are is that business owners do not like to perform them; they would rather do other things. More will be said about this later.
The other named least enjoyable activities varied significantly. Eight percent named selling or marketing. The next largest group contained only 5 percent of the population. Particularly instructive were the volunteered comments. Two were notable: the first was cleaning, including cleaning toilets. Several small employers explicitly pointed out that they did not like cleaning at all. But they did it! Another common volunteered complaint was paperwork, especially government-generated paperwork. That provided an area of pointed commentary.
Thirty-four (34) percent claimed to have a second least favorite business activity (Q#14a). The two second least favorites were employee-related matters (27%) and finance (23%) (Q#14a). So, when one of the two was not the absolutely least enjoyable, it often proved the second least enjoyable. In total, 45 percent considered finance as one of their two least favorite business activities while 36 percent named employee-related matters as one of their two. Customer service or relations (13%) received the third greatest number of negative mentions, at odds with the activity’s typical popularity. Still, only 4 percent of the entire population identified customer service or relations as one of their two least favorite activities.
There appears to be no systematically paired most liked activities and least liked activities. The most frequently linked pair (15%) was customer relations and service (most liked) and finance (least liked) followed by selling or marketing (most liked) and finance (least liked) (11%). Another 8 percent selected customer relations and service (most liked) and employee-related matters (least liked).
Small employers can obtain help to perform their managerial tasks simply by hiring employees designated to execute those responsibilities in whole or in part. Owners of the very smallest ventures typically delegate few, if any, managerial responsibilities; they usually handle such responsibilities themselves and perform other tasks as well. However, as the size of the firm becomes larger, though not necessarily very large, a management structure emerges with both line and staff employees. Employees take over the performance of designated business activities from owners and managers. The relevant issue for present purposes is whether the introduction of additional people changes the small employer’s allocation of time, and how.
Fifty-three (53) percent of small businesses have one or more employees working in the business who have managerial or supervisory responsibilities as a part of their job (Q#10). That figure excludes the principal manager. Most have one (47%) or two (27%) employees with such responsibilities (Q#10a). However, 7 percent have more than five. Employment of such people is strongly related to firm size. Forty-three (43) percent among the smallest firms (defined as fewer than 10 employees) have at least one compared to 96 percent among the largest (defined as 20 or more employees).
A substantial number of employees with managerial or supervisory responsibilities have other responsibilities in the business as well. Fifty-two (52) percent of small enterprises possessing employees with managerial or supervisory responsibilities have at least one employee who assumes those responsibilities full-time (Q#10b). That means just over one in four of all small businesses have at least one such employee. Yet, half (51%) employ only one. Another 34 percent employ two. Those with three or more typically are larger, small firms, employing 20 or more people.
The ratio of additional managerial or supervisory employees to total employees in the firm bears a relationship to owner hours worked. The larger the managerial ratio, that is, the relatively larger the number of managerial employees, the fewer hours the owner works. In other words, the owner effectively is substituting his capital for his labor. And, he is paying for time-off, if one can call more than 40 hours per week time-off, by paying for another’s time. While this relationship is not unexpected, the data presented here are more suggestive than definitive due to the number of cases available to examine.
The two least liked business activities are finance and employee-related matters. It is possible that small employers who do not like to perform them hire people, either line or staff officers, to do that type of work in their stead. While at some point growth will dictate that both be delegated, a personal dislike for them may stimulate small-business owners to introduce this type of employee earlier than they otherwise might. Thirty-two (32) percent of small businesses have a chief financial officer, or the equivalent, someone largely responsible for handling the firm’s budget and/or books (Q#11). Owners of larger, small firms are somewhat more likely to have one (45%) than owners of smaller, small firms (30%), though the difference is less than might have been expected. The limited presence of CFO-type employees means that small-business owners and managers undertake the finance function themselves in a majority (55%) of instances. That does not necessarily mean they perform all finance functions, such as taxes, but it does indicate that they carry the day-to-day burden.
No relationship appears between an owner’s like/dislike of finance and the presence of a chief financial officer or its equivalent. Owner attitudes toward the function seem to play little or no role in engaging another person to perform it. However, a relationship between engagement of a chief financial officer and an owner’s hours exists, but is not linear. It is modestly parabolic with the owner most likely to have one at the two time extremes and least likely to have one when working 60-69 hours. The reason for the shape of the relationship is not clear.
Hiring/firing is a subset of the employeerelated matters activity that most small employers find so relatively distasteful. Yet, 80 percent of small employers do ALL of the hiring and firing (Q#13). That percentage varies substantially by firm size. Owners of smaller, small firms retain the function in 85 percent of cases while 53 percent retain it in larger, small firms. However, no relation appears between the owner’s like/dislike for the function and control of hiring/firing. The possibility of one may be shielded by the overwhelming importance of firm size and the number of cases.
Nine percent of survey respondents were managers, but not owners of the firm (Q#D1). That raises several questions about the role firm owners, such as where they are and what do they do in/for their business. About half (48%) spend time in the venture’s day-to-day management. The number of cases is unfortunately too small when inquiring about their hours and/or the functions they perform for the firm. However, they are more likely to spend their time engaged in planning, strategizing than other owners.
Small employers undoubtedly spend considerable time at work, reporting hours that would make most people in the labor force cringe. Such commitment, even single-mindedness, often stems from a passion and/or drive few can appreciate, let alone comprehend. But it can also lead to serious misunderstandings: the owner, for example, can fail to understand why an employee is not as concerned or interested in working as hard as he or she does. The employee cannot understand why the owner does not “get a life” beyond the business. Outsiders cannot appreciate that the business is often an extension of the owner’s person, and the owner cannot understand why outsiders cannot understand that. Still, the public largely admires their dedication, and their dedication largely pays them some type of dividend or else they would not do it.
Owners occupy their time on a myriad of tasks; they face numerous interruptions. However, this survey shows that small employers spend large chunks of their week concentrating on one or two business activities. They do not typically devote reasonably equal time to a wide variety of them; they may not even touch important activities during a week. The business activities they choose to concentrate on are not always the ones they prefer to perform. However, they tend to be, most of the time. That should not surprise – who goes into the business to do what one does not like to do? Therefore, producing goods and/or services or working with customers, customer service and relations, consume the largest amount of time for most small employers and in a majority of cases are the most liked activity performed. The question that cannot be answered here is whether that time allocation yields the optimal personal satisfaction result, the optimal business result, neither or both. A substantial percentage (35%) certainly thinks that they could be allocating their time better. Too many of those unfortunately think that the improvement would come from allocating even more time to work.