The Leverage Equation Page 9

Conduct meetings online. Skype, Zoom, and other virtual conference rooms are almost free compared to the huge cost and time required to drive or fly out to meet someone in person.

  Use webinar software to deliver an on-demand seminar or program. You present it once, and then thousands of people see it without any additional work on your part.

  These are just six examples of the many potential time leverage strategies included in my free, downloadable list that shows you more than 100 ways to get faster, greater results by increasing the leverage in your wealth plan. You can get instant access to this regularly updated and constantly growing list here: https://financialmentor.com/free-stuff/leverage-book.

  HOW TO PRIORITIZE YOUR TIME FOR MAXIMUM LEVERAGE

  The way you break the time-for-money boundaries is by advancing from linear to leveraged productivity. It’s how you get more work done and create more profit without working more… or maybe even working less.

  The steps to progressively increase the value of your time through leverage are:

  Increase the proportion of truly productive time in your day. You want to recover those marginal hours that will literally double and triple your total productivity.

  Delegate projects so you can multiply the amount of time working toward your goals, thus accelerating your progress.

  Increase your time leverage from linear project leverage to the more valuable process leverage by systematizing all functions in your business, and then isolating those functions that don’t need your active involvement and delegating them.

  Further increase leverage by replacing human time from the production equation with scalable business system automation.

  The goal is to progressively advance your time leverage skills, first by increasing productive time and then further leveraging that productive time from linear project leverage to geometric system leverage.

  Time spent developing systems is some of the most highly leveraged because it’s not about working smarter. It’s about building a system to replace yourself within your own business or job, and that brings you closer to freedom, which is the real goal.

  IN SUMMARY

  Time is a limited commodity. Every man and woman is allotted the same 24 hours per day. Only by leveraging automation and the time of others can you truly accomplish your financial goals. Whether you delegate, hire, automate, or drop unneeded tasks from your to-do list, the benefit of freeing that bandwidth is exponential. You can use that time to create and build the next step in your wealth plan, and ultimately reach the financial freedom you desire.

  EXERCISE: CALCULATE THE VALUE OF YOUR TIME.

  Step 1: What is your annual income goal?

  Step 2: Calculate the number of hours you want to work by multiplying the number of hours per day that you want to work by the days you want to work per week by the number of weeks you want to work per year. This product will give you the total hours you want to work to achieve that income level.

  Step 3: Divide the total hours into the income goal to get your hourly rate.

  Step 4: Divide 60 into your hourly rate to get the value of every minute in your day.

  Now that you have that number, what are you going to do with that time? Are you going to play video games, watch network television, or surf the internet? Is it worth your time?

  What’s the most important thing you can do with your time to maximize your fulfillment?

  3 – TECHNOLOGY & SYSTEMS LEVERAGE

  If you can’t describe what you’re doing as a process, you don’t know what you’re doing.

  – Edward Deming

  Your goal with systems leverage is to convert all activities required to run your business into standardized processes so they automatically deliver your business’s value proposition without any input from you. The result is a scalable, efficient, profitable business that also gives you time freedom.

  Systems leverage is interconnected with time leverage because you pay the price of time upfront to create the system, but the system does the work down the road without requiring your time.

  I define a system as a set of procedures that produces consistent results for the business regardless of the contractor, employee, or technology using it. Think of it like the recipe you’d use to bake a cake, describing the exact steps to follow and the exact ingredients to use for each step in the process.

  There are two primary benefits to systemizing:

  Systems take the unknowns out of the business process by standardizing it into a work flow that produces a reliable output. For example, you may not like McDonald’s restaurant food, but you always know exactly what you’ll get regardless of which location you go to, because the business systems standardize every detail. Similarly, banks systemize every aspect of depositing and withdrawing funds, or accessing your safe deposit box, because they have a responsibility to assure the secure management of people’s money.

  Systems leverage your knowledge into a scalable, efficient process that reduces cost and, most importantly, gives you time freedom.

  Systems leverage is the difference between building a business asset that you own versus having a business that owns you. The goal is to design your business so the work gets done without your input by systemizing it in every possible way.

  THE 3 STAGES OF SYSTEMS LEVERAGE THAT EVERY BUSINESS MUST GO THROUGH

  You should expect to progress through three stages of increasing sophistication as you implement systems leverage:

  Process map repetitive tasks into standard operating procedures so that reliable, high-quality, efficient results are produced every time with a minimum of mistakes.

  Integrate technology leverage so that you start replacing human labor with machine labor, further reducing costs and improving results.

  Design audit controls with checks and balances into your systems so they’re self-correcting.

  Examples of the types of systems you’ll use to better manage your business and real estate assets include:

  A marketing system that delivers a continuous flow of qualified prospects.

  A lead generation system that builds a database of prospects for your business.

  A conversion system that nurtures all prospect relationships until they’re ready to buy.

  A sales system that converts prospects into customers by collecting payment.

  An onboarding system that welcomes each new customer.

  A product delivery system that delivers the value to the customer.

  A training system for employees and contractors.

  An accountability system that monitors all the other systems and shows you when any system breaks down, similar to how a warning light on your car dashboard tells you to repair minor failures.

  In short, you want to create a system for every repetitive activity in your business, which just happens to include most of the activities that occur in the business.

  PROCESS MAPPING TODAY TO FREE YOUR TIME TOMORROW

  The best way to begin systemizing is through process mapping.

  You start by documenting every business activity that repeats so you can map it into a standard operating procedure or business system. This leverages your knowledge into a repeatable system, or way of doing things, that can be used by contractors and employees.

  Process mapping works by breaking each repetitive work process down to its essential elements and connecting those elements with arrows or lines in a visual, intuitive design to show the most efficient flow of activity. Each process has a…

  Beginning

  Action

  Decision

  Action

  Ending

  Notice the simplicity. Because the beginning and end of the process only occur once, you’re actually left with only two elements to every process: decisions and actions. This framework reduces task completion down to its essential elements, so it’s easy to optimize how you complete each work flow by standardizing decisions and eliminating unnecessary actions.

  This improves efficiency
because the first time you do anything is the most difficult. You have to figure it out and fumble through mistakes and missteps. The next time you do something you’ll be more efficient, but your learning curve will still be steep. That’s the best time to begin fleshing out the Standard Operating Procedure (or SOP) for that process, because you still have beginner’s eyes that will help you explain every detail of every action and decision required – so a beginner with no experience can complete the same task efficiently and without error.

  As you continue to implement the procedure, you’ll refine your knowledge with nuances, allowing you to continue improving the SOP until it’s sufficiently detailed that an employee can operate it from day one without training. At this point, all the knowledge required to complete the task is built into the system, so that anyone with the right qualifications can produce the same quality result.

  The final step in converting the SOP into a permanent business asset is to transfer responsibility for maintaining and improving the SOP to the employee operating it, so it’s always kept up to date. In other words, working from the SOP and keeping it up to date becomes a primary employee responsibility defined right in their job description.

  You may have to navigate employee resistance toward standard operating procedures because some employees may initially believe that creating or maintaining SOPs will mean less job security. But that’s not the case. You have to educate employees so they understand that SOPs help make the company more successful, which in turn increases their job security (assuming they perform their job well). The more they contribute to the company, the more they’ll get back and the greater their job security.

  It also helps when you build SOPs into the employee review process. If employees are told they are expected to maintain a SOP, they’ll be more likely to stick with it and update it.

  The goal of a SOP is to never reinvent the wheel because reinvention wastes valuable resources. Instead, you want to include all the knowledge required to complete every repetitive task in a standard operating procedure – so that knowledge is never lost and mistakes are never repeated.

  This is critically important for three reasons:

  Your business will waste valuable resources and operate at less than peak efficiency if you have flawed processes.

  Standard operating procedures are what make a business run efficiently to produce reliable, high-quality results every time. Systems convert complexity into efficient order by transferring the knowledge of the owner and key employees into procedures that operate without dependence on any key individual.

  You can never gain freedom from your business unless it’s operated by systems so effective they don’t require your input. You want to treat every task that crosses your desk as a failure of your business systems. The amount of your involvement in daily business operations is a measure of the quality of your systems.

  PROCESS MAPPING TOOLS TO MAKE YOUR LIFE EASIER

  While I like the process map diagram to explain how to design business systems, the truth is I’m a big fan of keeping things as simple as possible. That’s why my favorite alternative tool for mapping workflows is to simply outline them in word processing software like MS-Word or a Google Doc.

  The reasons I prefer word processing software are:

  Accessibility and ease of editing the workflow in a document format.

  Ability to add instructional notes to each decision and action in the process. The result is a complete, stand-alone training document that can easily be adapted to a checklist format by the employee.

  Outline formatting using numbered bullet points because it creates an intuitive, sequential flow to the process.

  You can get two free sample SOP’s that we use at Financial Mentor at https://financialmentor.com/free-stuff/leverage-book. They will give you tangible examples and a template for preparing your own SOP. Just follow the instructions on the page and the system will send the files to you instantly.

  However, just because I like using outline docs doesn’t mean you should do the same. Instead, use whichever tool works best for you and your team. Some people prefer mind-mapping; others like visual workflows; and I just happen to like the simplicity of a bullet point outline.

  There’s no right or wrong answer; however, keep it simple and choose a format that’s easy to edit because the process must adapt in real time as the work gets streamlined with new learning. If you can’t quickly edit the workflow, it will become dated and inaccurate, thus defeating the whole purpose.

  For example, at Financial Mentor, nearly every function of the business – from social media management to article posting to customer engagement – has a standard operating procedure. And every time we learn something new that results in a change, we immediately update that standard operating procedure. The overall result is an Operations Manual that governs how the entire business runs, so I can focus on creating the books, courses, and educational articles that drive the business forward.

  One measure of the quality of these procedures is how I’m able to take extended trips, up to two months at a time, while the business grows, problems get solved, and nearly all issues get handled with close to zero communication from me. Each team member acts independently, communicates with others, and copies me on emails when relevant. But because of the business systems, everything happens flawlessly while I’m out of reach or taking a family vacation. Your objectives should be similar if you want to maximize your freedom.

  MAKING MONEY SHOULD BE BORING

  Great systems convert making money into a boring routine…and that’s a good thing.

  Creativity occurs when you’re developing your business model, but profits occur when you convert it into a formula that repeats over and over. Standardize and systemize. Your goal is to detail every function of the business to the point that it bores you, so then your only remaining task is to do creative work that takes the business to the next level.

  For example, when I ran an immensely profitable hedge fund, every aspect of the business got systemized. All investment management decisions were determined by mathematical and statistical risk management systems. No human interpretation or emotions were ever allowed to enter the investment decision process. It was 100% formula driven.

  All investment management and accounting systems were updated following a strict data management process with error-tracking routines. All accounting followed a pre-prescribed monthly process with a structured pattern for completing every task. Even the monthly newsletter to investors was standardized.

  Because all the business admin functions were automated with rigorous discipline, I was able to run the entire company working less than two hours per day, except on the first day of each new month when the accounting had to be done and the investor newsletter had to be written. That day required a full eight hours of work. It was a wonderfully simple business model until the partners grew apart and decided to sell the business to pursue other dreams.

  However, if every function of the business hadn’t been standardized, the result would have been complexity and problems. For example, the monthly accounting used to take days to complete before I built the systems. Worse yet, weeks were spent every year trying to solve errors and manually correct problems – before we created a system that caught and corrected them in real time. Similarly, investment management would have been all but impossible without the mathematically disciplined risk management systems because human emotion would have invaded the decision process causing damaging errors.

  The key to making automation this efficient is ensuring that your business systems run the business, not you. The owner must lead the effort by referring all questions and new innovation to the standardized operating procedures, so employees and contractors get a clear, consistent message that the operations manual must operate the business.

  You want all procedures and practices determined by the operations manual – not the owner or key employee – because that’s what frees your business from your ti
me and knowledge. It allows you to train new people easily, outsource functions when needed, and continually improve performance.

  Everyone must know what processes they’re responsible for and how their responsibilities relate to the overall business. Nobody should wing it. A well-run business is synonymous with having an agreed-upon process for nearly everything.

  MAKING TECHNOLOGY WORK FOR YOU

  The next step in systems leverage after mastering standardized operating procedures is to add technology systems so that tasks are completed by machines instead of humans.

  Technology has a long, proven history of delivering speed and efficiency improvements. For example, technology has evolved transportation over the years from walking and riding horses to bicycles, then cars and boats, and more recently bullet trains and supersonic airplanes. Each generation of technology improves the speed and efficiency of transportation.

  You can see a similar trend in communication. It began with person-to-person conversation, then advanced to telephone and radio, which then developed into television, and has now progressed to email, texting, webinars, podcasts, live chat, and YouTube.

  Personal computers, smart phones, and the internet have combined with SaaS (or Software as a Service) vendors to provide affordable technology tools you can leverage as a small entrepreneur. A home-based business can now compete on equal footing with a Fortune 500 company because both the software and hardware are so powerful and affordable.

  For example, local musicians now produce studio quality recordings using nothing more than a laptop, a few microphones, cords, and editing software. Before this home technology existed, they were limited by the barriers of cost prohibitive studio time and expensive sound engineers only accessible through a big record label.

  A similar revolution has occurred in publishing. New York publishing houses can’t compete against the flood of quality books from self-published authors armed with nothing more than a laptop, an internet connection, and access to direct-to-consumer marketing channels like Amazon.