Your ability to invest and leverage resources determines your success in business. How do you measure up?
The Internet has taught us we can be experts in anything we choose. So we try to be experts in everything. Or worse, we learn just enough to fool ourselves into thinking we are experts because we don’t have the time or passion for achieving mastery.
I see this a lot with small business owners.
For example, they figure out how to build their website and do online marketing because they see every dollar as coming out of their pockets. This is a habit that often lasts well beyond start-up. It might take them ten times longer than a professional to build something inherently less effective. You start to believe saving money is the same as making money.
I’ve been there. I’ve made those same mistakes.
Time Is Money
Time isn’t money. Time is your life.
Money is valuable because you want things other people have exchanged time to create or they are scarce. Money is a promise of future value and as such only has value if people believe it does.
Unlike money, you don’t know how much time you have to spend. We don’t need to dwell on this. The fact is we all have a finite amount of time here, and only a fraction of that to grow your business.
So we can start to look at time more wisely as it pertains to your business.
Stop Trading Time for Money
I see this phrase used a lot in the expert industry by people teaching their version of making more for less effort. Unfortunately, it comes across as you are doing it wrong and I will show you the right way.
This should be about teaching the concept of leverage and impact. Instead, it says that what you do is inherently wrong, and you should stop.
Your wrong is not my wrong. We need to find our own path to creating value.
Leverage is applied in multiple ways. It could mean going from a one-on-one coaching model to doing group masterminds. Or it could mean hiring people to do the work where you don’t add the most value. The coach could outsource administration and marketing so that they have more time to spend coaching.
Whether you are coaching at $300 per hour or doing a group mastermind for $3000 per hour, you are still trading time for money. The multiplier is potentially higher because the reach or impact is greater. This is only true if masterminds are where you create value. If your talent is one on one breakthrough coaching, then your biggest impact is doing that.
Or you build a coaching organization that can leverage your skills over hundreds of coaches and impact thousands. You leverage a team of people to create a business that can run without you.
80/20 Time Leveraging
Say your company makes $2 million per year in revenue, and you work 2000 hours per year. If you ignore all the other people in your business for a minute, your business makes $1000 for every hour you work.
Applying the 80/20 rule you should focus on the work that will generate $1000 per hour first, then the work that makes $200 per hour, etc. You should avoid the work that generates significantly less than your market rate. Delegate it.
If you want to grow your business significantly, start focusing on the work that will generate $10,000 per hour in the future.
Investing and Time
Investing is defined by putting resources into something with the goal of getting your investment back plus something more to justify taking the risk. Investments can be passive or active. They can be income producing, or they can generate capital gains when you sell the assets, or some combination in between. Income that doesn’t require much of your time is called passive or residual income.
Warrant Buffet made billions off the principle of buying well-managed companies and letting them grow over long periods of time.
A relative small regular investment will compound for an enormous impact over time. The best time to invest is 50 years ago. The second best time to invest is now. Time and rate of return are the two big factors in the power compounding.
This works for investing in your business as well.
Applying the Lessons
Every time you trade your time to work on things where you don’t offer the most value or have the required expertise you are potentially losing the power of leverage and time. When you defer making a decision to start an initiative that will improve business results you are lessening the time your investments can compound.
What if you have those new clients now rather than in six months? Could you use that new cash flow to reinvest some in more marketing over those six months so that you can grow even more six months out?
The key is to use the power of leverage and investment to multiply the growth of your business over time. Small gains compounding over time lead to incredible results 5 to 10 years out.
It isn’t easy to stay focused and disciplined. It isn’t easy to invest when there are no guarantees.
If it were easy, being a highly successful entrepreneur wouldn’t be a big thing.
Image credit (modified) – Pixabay