In a discussion focused on entrepreneurial efficiency and value assessment, the speakers unpack the significance of understanding one's true hourly rate, which is based on profit rather than revenue. They emphasize the importance of this metric in determining which tasks are worth an entrepreneur's time and which should be outsourced. The conversation, led by Speaker A, delves into the practical application of this concept, illustrating how entrepreneurs can use their hourly rate to make informed decisions about task delegation, scaling their business, and personal spending. Speaker D also encourages listeners to support the podcast to aid the entrepreneurial community. The dialogue ultimately centers on the strategic elevation of an entrepreneur's activities to maximize profitability and time management.
"So one of the interesting things about being an entrepreneur is that we don't always know what our hourly rate really is, right? We like to say we make x per hour or whatever it is, right. But do you really know what your true hourly rate is? It's not your revenue."
This quote emphasizes the common misconception among entrepreneurs regarding hourly rates, highlighting that revenue is not an accurate measure of what one truly earns per hour.
"It is your profit. And so a quick back of Nappian formula can get you to what your true hourly rate is."
Here, the speaker clarifies that the true hourly rate is derived from profit, not revenue, and suggests that a simple formula can be used to calculate it.
"Now if you take that number and divide it by 2000, which is roughly a 40 hours work week... That means you make $25 per hour."
The speaker provides a straightforward method for calculating the hourly rate based on a standard workweek, giving a concrete example to illustrate the concept.
"Now here's where it gets interesting, is that if you think that you work 80 hours a week, then it doubles and you're making per hour cuts in half."
This quote highlights how doubling the number of work hours, such as from a 40-hour week to an 80-hour week, inversely halves the hourly rate.
"But the reason that I like to bring it up is because there's two ways you can use that number to quantify what activities you want to engage in, right?"
The speaker suggests that knowing the hourly rate can be a useful tool for entrepreneurs to evaluate and choose their activities strategically.
"The thing is, if you actually look at their numbers, it's actually not beneath them. It might be higher than what they're currently making."
This quote points out that entrepreneurs may undervalue certain tasks without realizing that these tasks could be economically beneficial compared to their current hourly earnings.
"But let's just talk about reality, not fantasy."
The speaker urges entrepreneurs to ground their financial assessments in reality, avoiding the pitfalls of wishful thinking.
"And the reasons why it isn't as high as it should be, right?"
By questioning the justifications for lower profits, the speaker encourages entrepreneurs to critically examine the factors affecting their financial outcomes.
The next thing is that it also allows you to draw a line in the sand and say, over time, I want to decrease the activities that I could replace with someone else doing this for me for less than what I currently make per hour.
This quote highlights the importance of valuing one's time to prioritize tasks and delegate those that can be done at a lower cost, thereby focusing on more valuable activities.
Now, the first thing that many people have to outsource in a baseline service is just the actual low level fulfillment of what they're doing, right?
Speaker A discusses the initial step in the outsourcing process, which involves delegating the most basic and low-level tasks.
And so if you look at your purchases, if you look at your real hourly rate and then you look at the purchases that you make, would you then say, I would spend 4 hours of my time working to get that? A lot of times it's sobering and you're like, no, I actually wouldn't do that.
This quote explains how assessing purchases against the time required to earn the money for them can lead to more prudent spending, as one might reconsider if the expense is worth the hours of work.
Real quick, guys, you guys already know that I don't run any ads on this, and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the word so we can help more entrepreneurs make more money, feed their families, make better products, and have better experiences for their employees and customers.
This quote highlights the podcast's mission to support entrepreneurs without the use of ads or sales, and the importance of audience engagement in achieving that mission.
If you can rate and review and share this podcast. So the single thing that I ask.
Speaker D is requesting the listeners to engage with the podcast by rating, reviewing, and sharing to help reach more entrepreneurs.
It would mean the absolute world to me. And more importantly, it may change the world for someone else.
Speaker D expresses the personal significance of audience support and its potential broader impact on others.
The other real interesting piece about this is kind of what I was touching on earlier, related to ego, is that it's just so many times we don't want to do activities that we know will generate money because we have some sort of ego associated with it.
Speaker A introduces the topic of how ego can negatively influence business decisions by avoiding profitable activities.
And so when I had my gyms and I had six of them, I still was selling every day because I knew what I made per hour.
Speaker A provides a personal anecdote to illustrate the value of direct selling in their own business experience.
And so I see people right now who don't want to take sales calls way too soon because you don't have the bandwidth, you don't have the margin, you don't have the padding to outsource your sales so soon.
This quote advises entrepreneurs against outsourcing sales too early, emphasizing the necessity of building sufficient business resources first.
Instead, outsource everything else that's not revenue generating, so that you can focus all of your time on that thing until eventually you acquire the next skill set that you can bring someone else in and you have enough margin, you have enough padding so that you can take a decrease in sales.
Speaker A recommends prioritizing revenue generation and outsourcing less critical tasks to maximize business growth and prepare for future scaling.
Because once someone comes in, the most expensive part of sales is them not selling. That's the cost of getting someone new, and it's the lost opportunities, the revenue that you should have made, that you would have made if you had been selling.
The quote emphasizes the hidden costs associated with training new salespeople, including the lost revenue opportunities during the learning period.
First, quantify how much you actually make per hour in the real world. Number two, and you do that first on 2000 hours, but then you can do second on how many hours you actually work, which is probably more than that.
Speaker D provides a method for determining the true value of one's time, based on both a standard work year and actual hours worked.
Next, reverse quantify your purchases. Quantify your purchase in terms of how much time it would cost you to get that thing.
This quote suggests a technique for evaluating potential purchases by the amount of work time required to make the purchase, aiding in financial decision-making.
"And the next piece of this is making sure that when you look at all the activities that you're doing, an easy way of doing this is doing a time study, which every time I've done a time study, I always tell myself I'm going to do it again every month and I don't. But I end up doing one like once a quarter or twice a year."
This quote explains the speaker's personal experience with time studies and suggests their usefulness despite the difficulty in maintaining the habit of conducting them regularly.
"If you think this will take you time, it will save you so much time and productivity. I promise you that the ten minutes of actual writing that it will cost you will cost you far less in the amount of time that you want to now get credit for working well and working efficiently."
The speaker assures that the initial time invested in tracking activities will ultimately lead to greater time savings and increased productivity.
"Because ultimately, if you think about the entrepreneurial journey from a spiritual standpoint, from a skill standpoint, is that all we're doing is practicing higher level skills with more and more leverage."
This quote reflects on the entrepreneurial journey as a process of mastering increasingly complex skills and gaining leverage.
"First we're doing the things, then we're managing people who do the things, then we're leading people who manage people who do the things. And then we're simply thinking and guiding things strategically."
The speaker breaks down the entrepreneurial progression into stages, highlighting the shift from hands-on work to strategic leadership.
"Anything that's below this I shouldn't do, but anything that is above this I should do right? And then over time, outsourcing the activities from bottom to top of what you can replace at market value for an equivalent level of service."
This quote advises prioritizing tasks based on their value relative to one's hourly rate and suggests a strategic approach to outsourcing.
"So anyways, hope that was valuable for you. If you think that was useful, please drop a comment or a like share with friends and all of that good stuff. So have an amazing Tuesday. Catch you guys soon. Lots of love and bye."
The speaker wraps up the discussion, encourages audience interaction, and leaves with a friendly farewell, reinforcing the conversational and supportive tone of the podcast.