1: “I can’t afford it.” That’s what many entrepreneurs tell themselves.
“Far too many entrepreneurs,” Dan Martell writes in his book Buy Back Your Time, “spend their time grinding because they erroneously believe that they’re the only person for the job, they can’t afford any help, or they feel guilty not doing certain work.”
What gets in their way? As their business grows, they hire wrong. They hire to fill a position or a role. Making themselves the administrator.
“Over time,” Dan observes, “their day looks like a full list of to-dos that they never signed up for, and that also don’t pay well.”
They live in the Delegation Quadrant [hyperlink], where the activities don’t generate a lot of money and drain their energy.
There is a better way: Hire to buy back our time.
Dan’s life-changing insight: “Until we learn to buy back our time from the low-value tasks and start focusing on the high-value ones, we won’t be able to build the lives we want.”
2: “The first thing everyone does is say they can’t afford anything,”
“I disagree,” he notes. “Everyone can afford something.”
We begin by getting clear on what our time is worth.
“Let me make it easy for you,” Dan writes. Our “time is worth how much our business pays us divided by two thousand hours.
“Two thousand hours is a normal work year,” he shares. “Yes, I know we’re probably grinding out more hours than that, but this is a rough estimate to help get us started.
That includes our salaries, discretionary expenses, plus any other profits of the business paid to us after all expenses are paid.
“If our company pays us $1,000,000 a year, then we make $500 per hour. If our company pays us $100,000 a year, we make $50 per hour. If we take in $24,000 a year, then we make $12 per hour.”
3: We’ve just established how much our company is paying us. Next question: How much can we afford to pay someone else?
“I’d like to introduce. . . our Buyback Rate,” Dan writes.
“My rule of thumb is that no one—not a founder, not an administrative assistant, not a baseball player, not a barista—should be performing a work task that they could outsource for one-fourth (i.e., 25 percent) of their current effective hourly rate.”
Dan explains: “Why do I calculate our Buyback Rate as one-fourth of our hourly rate? Because I want us to get four times our ROI when we’re hiring someone using our Buyback Rate.”
Example: If our hourly rate is $100 an hour, then our Buyback Rate is $25 an hour.
Imagine Tina, a small business owner. Assume she makes $160,000 a year from her business. So, her business is effectively paying her $80 per hour. Her Buyback Rate is 25 percent of that, or $20 per hour.
“Every time Tina’s doing something (like paying invoices or editing video) that she could have paid someone else $20 an hour to do,” Dan notes, “she’s taking from her own company.”
But what if we are already spending everything we are paid? What if we don’t have anything left over?
“Well, that’s the issue,” Dan explains. “Instead of leasing that new premium car, why not buy used and invest in a great executive assistant and work to trade that free time into the ability to get that brand-new car from the increase in profits?”
We can start small. One idea: Hire interns. “In the early days of building my company,” he recalls, “I would use students from the local college. It helped them gain experience, and it helped me buy back my time.”
We can get creative. We can use online sites like UpWork to hire web developers, administrative assistants, and social media experts in other parts of the world at affordable rates.
Also, this is not a “one and done” process.
“When we have more money, we buy back more time,” Dan writes, and deposit all that extra time into “those few tasks that light us up and that make us money.”
It is an infinite game. It never stops. “The more money we make, the higher our Buyback Rate,” he observes. We “keep working to increase it. Turn it into a game.”
Good things happen when we put all our time there: 1: We’ll get paid more. 2: We’ll enjoy our work more. 3: We’ll be giving someone else a job.
Nice.
More tomorrow!
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Reflection: Am I holding myself back with the belief that I can’t afford help, or can I start small and buy back my time so I can maximize my impact?
Action: Calculate my effective hourly rate, determine my Buyback Rate, and identify one low-value task I can outsource or delegate this week—even if it’s just a small step.
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