Leverage, Luxury, or Laziness?

“Remember, 80% done by someone else is 100% freaking awesome.”

– Dan Martell

Leverage, Luxury, or Laziness?

My first lesson in people leverage came when I cut my entrepreneurial teeth with a lawn mowing business in high school. I knocked on doors and secured three lawns for the summer. To mow and trim a lawn I charged $20 (or about $65 in today’s dollars.) Sixty dollars a week was big money for a high school freshman. I could ride my ten-speed to Gridley’s Bar-B-Q for a rack of ribs and still have plenty left for comics and other stuff.

When we went on vacation that summer, my friend Larry asked if he could mow my lawns. He offered to do it for $10 a lawn. I did the math and a record skipped somewhere in the universe. Somehow, I would make $30 for doing absolutely nothing!

That night, my elation ebbed and a tide of doubt swept in. I asked my dad if it was wrong not to give my friend all $20 for each lawn. To his credit, his answer was firm and unambiguous. “Absolutely not! He’s asking because he didn’t knock on doors and get his own lawns. You did that hard work. Ten dollars is fine for him to do the work while you’re gone.”

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Leverage

The word “leverage” is based on the concept of a lever, like a crowbar, that provides the user with a mechanical advantage. People leverage is paying someone to do a task or job you might normally do. A basic principle of people leverage many miss is that it should be earned. This not only means you can afford to pay someone but also that you will earn more income while they complete tasks that used to occupy your time. People leverage is a form of arbitrage and the asset you’re trading is your time.

If you made $100,000 last year, your time is worth about $50/hr. While we know entrepreneurs often work longer hours, a typical work year would be 2,000 hours (50 x 40-hour work weeks.) Divide whatever you made last year by 2,000 and you get an approximation of your dollars per hour ($/hr). We all know that not all our time is equal. We get paid for finding business and servicing it. But there is a slew of other work that must be done for a business to function. Admin tasks should be leveraged out first. If you can leverage out admin tasks at $25/hr, while you focus on revenue-driving activities worth $50/hr, you’ve effectively arbitraged your time. Because you now can focus 100% on high-dollar activities, your net income should go up substantially despite the net costs. That’s people leverage done right.

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Luxury

There are two ways people get leverage wrong. First, they hire out low-wage tasks but fail to consistently do high-wage activities. If you hired an admin to handle Ops while you work on lead gen, that’s leverage. However, if you just sip coffee from your “Nacho Average Boss” mug, that’s luxury. Don’t get me wrong, buying back your time is one of the highest uses of wealth. Just don’t mislabel it.
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Laziness?

The second people leverage mistake is delegating tasks too early in the life cycle of a business. As mentioned, the first roles to leverage are typically administrative. Next, you can hire people to make and deliver the widgets (if you have a product business) to deliver the services you offer. If you’ve mastered your game, it may take several people to replace you in these roles. You’re that good. Sales can be the same. It may take a team, a machine, or both to duplicate your lead generation results. The last roles you step out of (if ever) are financial oversight and vision. When business people rush the process, they can put the whole enterprise at risk.

Yes, you want things to happen faster. All entrepreneurs do. As Warren Buffett said, “No matter how great the talent or effort, some things just take time: you can’t produce a baby in one month by getting nine women pregnant.”

Most point to impatience when roles get delegated too quickly. That’s a part of it. At its core, it’s a form of laziness. They are just trying to pull a Tom Sawyer and avoid the work. Hiring is the beginning of leverage, not the finish. At each step of the journey, document your systems, establish KPIs, and coach for success. If your business is big enough, you build in redundancy and cross training. Sooner or later, someone will leave. If you’ve done the work, you don’t get the job back for long or at all.

One question to ponder in your thinking time: Do you know how much your time is worth??

Make an Impact!
Jay Papasan

Co-author of The One Thing & The Millionaire Real Estate Agent ​

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