The Most Profitable Time Hack
When it comes to the world of online retail, everyone is looking for the latest hack to beat the competition and dominate their market. In fact, there are millions of dollars worth of software and “insider tricks” peddled to entrepreneurs promising to “make money on autopilot.”
However, more often than not – these “magical tools” tend to be less magical in practice, and usually, it turns out that the “gurus” make most of their money from selling you their hype. This isn’t to say that there aren’t certain products that can help your business. Having accurate data or cutting-edge automation technology definitely can help, but these are just tools to make your life easier.
Since tools can only do so much to help, the real problem that needs to be solved is:
“How do I most Effectively Spend my Time and Effort to Grow My business?”
The idea is simple; if you can maximize your “money-making activities” while outsourcing the activities that don’t make you money necessarily, but simply help sustain your business – then it stands to reason that over time this would generate a beneficial compounding effect on your business.
The problem with this simple idea is; “What are the activities that generate me the MOST return on time invested?” If you’re running a business, the answer is even simpler: selling!
If you’re not selling, then you don’t have a business. If you are generating revenue, it means that you have cracked one of the first major hurdles most entrepreneurs face; “Who will buy my products?” If you do have consistent sales on a weekly or monthly basis then the only thing you need to be worrying about is, “how do I scale this?”
I’m sure there are some of you reading this thinking, “But I have so much to do – getting the product, making sure it’s being shipped, customer care, marketing, advertisement – I’m an entrepreneur…I DO EVERYTHING!”
That is precisely the point of this article – to show you how to break out of the “Rat Race” and begin to think like a successful business owner.
How Do Affluent People Think?
If you ever study the habits of the wealthy you’ll quickly notice that their time has value. They don’t tend to spend it on things that aren’t providing an equal or greater return on investment. For example, you won’t see the CEO of Youtube doing clerical work or paying the bills. They have entire departments dedicated to those activities.
Naval Ravikant speaks about assigning value to your time by the hour. In other words, how much is one hour of your time worth to you? Ravikant talks about setting an “ideal hourly rate” but also having a “real hourly rate.”
The ideal is where you’ll eventually get to as you scale the mountain of wealth – and your “real hourly rate” is how much money one hour of your day is worth right now. To figure out the current hourly rate, simply divide the hours that you work with how much you make in a single week.
Once you have established this hourly rate, you will then grade your weekly tasks accordingly and figure out which activities are NOT worth your time. This also becomes a good way to measure how much a thing costs you based on how much time you spend on it.
For example, let’s say that your real hourly rate is $50 and it takes you roughly 2-3 hours to do all of the social media posting for that week. That’s between $100-$150 dollars if you were to hire yourself to do the job. Using this model, you can begin to assign a dollar value to all of the different activities that you are doing to sustain your business.
Now that you have somewhat of an idea about how much it “costs” you to employ yourself for these lesser tasks – it’s time to laser in on your money-making activities.
Extreme Pareto
The Pareto Principle, or more commonly known as the 80/20 rule states that “20% of your actions produce 80% of your results.” In other words, 20% of the activities you do in your business produce 80% of the revenue. The trick is to identify which 20% of your activities produce most of your revenue.
To figure this out, simply write down everything that you do in any given week. I’m talking about EVERYTHING, even the activities you do at your home. To effectively understand what 20% of your activities produce 80% of your results, you need to conduct an honest and thorough audit of all of your activities.
Go through every single day, from Monday to Sunday listing how much time you spend on these activities. Once you have established this list, go through them all and figure out which activities actually make your money.
Perhaps posting on social media creates some awareness which then allows people to find your products. Perhaps it’s answering emails to new prospects, nurturing them on their path to becoming your clients.
Once you have found your 20%, it’s time to go EXTREME by applying the same principle twice. If 20% of your actions generate 80% of your result, and you re-apply the principle again, this would identify the 20% of the 20% of your activities.
Put in different terms, doing an “EXTREME Pareto” you’ll identify 4% of the activities that generate 64% of your results! This means that if you focus on this 4% and master it – you’ll hone in on the core components that drive your revenue.
Using the “hourly rate” you established in the first part of the article – you can now begin to see which activities are not worth your time to do yourself. For example, if Social Media is not part of the 4% of activities, then hiring someone else to do it in order to free up those 2-3 hours to focus on those activities will only benefit your bottom line.
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