At coffee shops around the world, you can order a pour-over coffee.

A great pour-over starts with great beans, freshly ground. Then the barista heats the water to volcanic temperatures and slowly pours it through the grinds in a clockwise motion. Instead of flowing straight down through the middle of a filter, every drop of water touches fresh grounds, making for a much richer cup. It’s worth the wait. You can buy pour-over machines, but they’re not cheap.

A friend of mine, Jonathan, didn’t have time to sit over a coffee pot, and he couldn’t afford a pour-over machine, so he built one himself. It’s a simple DIY project, and the outcome is a fantastic cup of coffee. But it’s not a great use of your time as an entrepreneur.

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When you’re launching your business, you’ll have to decide where your time is best spent. On your first day as an entrepreneur, you do every little task yourself to save money, and that’s fine. You don’t have any money yet, and frankly, your time isn’t worth much. But I want you to think a few months ahead and plan to break free from the DIY mindset typical to founders.

There’s no shortage of media content online about “lean startups,” “putting in the work,” and my favorite, “grinding.” These are usually the mottos of struggling entrepreneurs. They don’t know what to do, so they just do all of it. Or they avoid the problematic hard work by doing everything else instead.

In The War of Art, Steven Pressfield writes about “the resistance,” a mysterious force that stops you from doing the real work. Resistance comes in many forms—procrastination, distraction, multitasking—and you’re going to run into it at some point.

It will be very tempting to assemble a new desk instead of picking up the phone to cold-call a doctor’s office. You’ll want to install your own flooring instead of inviting another therapist out to lunch. Or you’ll want to spend 25 minutes making a cup of coffee. You’ll tell yourself you’re saving money or embracing the hustle. This is the trap of DIY: Work will always expand to fill the time and space you give it.

In the first week of your new business, you should be walking into doctors’ offices with sandwiches and referral pads. You should NOT be painting the walls of your clinic, but you will be tempted to do that work instead of the hard stuff that only you can do. It’s a trap. Your key asset, the one thing that you can leverage to build a successful company and the real measuring stick isn’t money; it’s time. You open a business to earn a higher return on your time, not to buy yourself a job.

Soon, your time will be far too valuable to spend on DIY projects. Hire someone out, and then find work that will cover the cost. Here’s how to do it.

businessman with calculator

strelok ©

Calculate Your EHR (Effective Hourly Rate)

One of my business mentors, Dan Martell, uses a formula he calls “Effective Hourly Rate” to determine where an entrepreneur should be spending his time:

“Every entrepreneur has a thing I call the EHR. Your Effective Hourly Rate. The easiest way to get to that is just to take the gross revenue in your business and divide it by 2,000. That’s about the hours that you work in a year. Figuring 100,000 in revenue divided by 2,000, that’s $50 an hour. Once you know your EHR, and if you’re doing a million, it’s 5,000 an hour. There are real numbers involved.”

Martell’s formula has value because every task you perform can be held up against this standard:

“Once I know my EHR, I make a list of all the activities that I work on a weekly and biweekly basis, then I rank-order them based on the cost it would take for me to get somebody else to support me in that role. If it doesn’t touch the customer, that’s another good filter. If it touches the customer, you want to hold on to that for a bit.”

It’s the secret to entrepreneurship that Michael Gerber and John C. Maxwell and dozens of others write about: moving from doing the job to owning the business. You don’t need to hire a full-time employee to free up time. You can move from role to role incrementally.

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Keep in mind:

  • You must replace yourself in each role completely. That means identifying the tasks to be done, codifying those tasks, setting a gold standard for each, and then evaluating success.
  • You must have a clear plan for the higher-value work you’ll do. Otherwise, you’ll be sucked back into minutiae.
  • Finally, even if you DON’T have a great idea right now, you need to be ready for the next one. A huge reason why my companies grow so fast is that I don’t have a permanent role in any of them. I can replace myself quickly when a new opportunity comes along.

Every business has a skill hierarchy. Some roles will simply require a different level of passion and expertise. Some, like a cleaner, are easy to shift to someone else. As you move up the hierarchy toward higher-skill roles, the time required to shift responsibility increases, but you’ll move closer to your perfect day by large leaps, not small steps.

So take the time to calculate your EHR. Do it now. The answer might be scary—it might even be tempting to go find a minimum-wage job instead of plugging away at your business—but you need to know this number so you can build on it and increase the value of your time.

For more advice on business ownership, you can find Founder, Farmer, Tinker, Thief on Amazon.

Header image courtesy of Evgenii Naumov ©

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