You’re better at things that make you happy.
You first improve your effective hourly rate (EHR) by moving low-value roles off your plate. These are the tasks that can easily be described in a checklist or “if-then” document, and these are the roles that can be quickly filled by binary thinkers.
But replacements become more expensive as the roles become more complex. Specialists work for generalists, and as the tasks performed by your specialists rise in value, so does the cost of replacement.
Eventually, two roles of a comparable cost will emerge as the next to be removed from the entrepreneur’s plate. Or an owner might hesitate to make a next-level hire because of the expense. For example, if a software developer earns $80 per hour and the owner’s EHR is under $50, they might wait to hire the specialist and muddle through themselves. The EHR equation is earned revenue over time.
But there’s really a third dimension: energy.
As the entrepreneur matures, time becomes more valuable and energy becomes scarce. Decision fatigue, stress and long hours all sap the entrepreneur’s energy. Lack of focus, lack of fitness and an increasing daily volume of distractions all draw from the energy bank.
The entrepreneur must be aware of energy levels and protect them. For that reason alone, it’s often essential to hire staff to replace you in work that drains you, leaving you free to pursue work that energizes you.
How do you know which is which? Do an energy audit.
Energy Audit: Step by Step
I learned this technique from my friend Trevor Mauch at Carrot (www.carrot.com). Trevor runs a huge company that generates leads for real-estate salespeople. In any given day, he can be pulled in a thousand different directions. But he’s an influential leader because he spends his time working on tasks that provide him with energy, and he delegates everything else.
He told me, “We become entrepreneurs because we want four things: freedom, flexibility, finances and impact.
“When you’re doing work that zaps your energy, and also when you’re doing work in a business that has a boom and bust business model, you could be making great money, but during the year you’re stressed out. You lose your flexibility. You might have the finances, but you don’t have the mental capacity or time to make the impact you want to make.
“This exercise literally 10X’d my income. It 10X’d my net profit well into the seven figures—that’s my net taxable income today. I’m not saying that to sound cool. I’m saying it because this process unlocked all of it.”
Here’s how to do it, using the roles and tasks exercise from the previous post in this series:
First, take a blank sheet of paper. Draw a vertical line down the middle.
At the top, in the left column, write, “Gives Energy.” In the right column, write, “Drains Energy.”
Now take your list of roles from yesterday’s exercise. Copy the roles that supply energy into the Gives list. If they don’t actively fire you up, copy them to the Drains list.
If you want to get really deep, do the exercise with tasks instead of roles (that list should contain hundreds of tasks instead of the dozen or so roles). Any job that doesn’t excite and energize you should be placed on the Drains list. The roles associated with that task should be delegated out first.
As you approach the hiring of managerial or specialty staff, first eliminate the roles with an EHR of less than $50. Then replace yourself according to the Drains list, retaining only the roles and tasks that fall on the Gives list.
This is a step toward the Tinker phase of entrepreneurship—the third stage.
Mauch publishes his “Energy Audit” for free at oncarrot.com/energy. But even if you’re running everything yourself, it’s still a good idea to outsource the work you hate. It will free up your mind and—more importantly—your energy.
Then you’ll have more enthusiasm for the relationships that matter, and you won’t spend your time dreading the drudgery you dislike.