If you think by doing everything in your business yourself makes financial sense, then this episode was made just for you! Listen in and discover how you can step back from your business, buy back your time, and start enjoying the lifestyle you’ve always wanted, all while ensuring your business thrives and grows.
In this episode of Dadpreneurs Rising, Carl Taylor discusses the importance of your automation rate, how it’s calculated and the potential it could be having on your business. Carl also breaks down the formula to establish just how much you can afford to pay to buy back an hour of your time.
Carl emphasises that the mentality of “It’s too expensive to hire someone” is flawed and that being willing to invest in a team or technology at your calculated automation rate to free up your time. The key is determining what you can realistically afford to pay someone else to handle parts of your business operations.
Remember, if your automation rate is too low, it signals that you need to first increase your business revenues before hiring support makes financial sense. However, once you can afford to buy back your time at a viable rate, Carl stresses not to keep doing lower-level tasks yourself. Doing so prevents you from working on higher-value activities to grow your business and spending time on other important priorities, such as enjoying life with your family and pursuing personal growth.
IN THIS EPISODE, YOU’LL DISCOVER…
- Is hiring someone too expensive that you’re better off doing all tasks yourself? (00:35)
- What is an automation rate? (01:27)
- How do you determine your automation rate (03:40)
QUOTES
- “Your automation rate is effectively how much you can afford to spend to buy an hour of your time back.” – Carl Taylor
- “The bottom line is you get really clear on what can you afford to pay. And then find the person to do it … So you can start to buy your time back. Spend more time with the kids, the family, and on you as a man … finding what else lights you up and helping you grow.” – Carl Taylor
WHERE YOU CAN FIND CARL TAYLOR
Automation Agency
CarlTaylor.com.au
LinkedIn
Facebook
Twitter
Hiring someone is too expensive, I should just do it myself.
Hey, you’re listening to Dadpreneurs Rising. And I’m your host, Carl Taylor. And in today’s episode, we’re going to talk about just that. This was a conversation that came out from inside our Kings Council program. If you want to learn more about that you can check us out at dadpreneur.com. Reach out, have a conversation with myself or the team about what we do and whether it might be right for you. So if you’re a dad in business, check that out.
Now, this particular conversation came up on one of the coaching calls, and a particular king, a member of the program, he was struggling with this issue of there’s a key component of his business that was taking up a fair amount of time every week. But he had this thought process that he couldn’t get past that, you know, it seems too expensive to hire someone to fill this role. So he’s better off doing it himself. Well, I’m not going to share all the ins and outs of what I shared with him. But I want you to get the key takeaway. If you are in a similar position, or you’ve ever been in a similar position, this thinking is flawed. And it’s why we have a process that we do inside the program.
One of the first things anyone does when they first sign up is we figure out what your automation rate is. So what is your automation rate? Your automation rate is effectively how much you can afford to spend to buy an hour of your time back. Right. And so whether you use this money on, you know, technology tools, software subscriptions, or whether you’re employing someone part time, casually, full time doesn’t really matter. This helps you figure it out, at what dollar value can you afford to spend to buy an hour of your time back. And so I got him on the call to do this process. I was like, alright, well, you should have already gone through the training. But let’s, if you haven’t already, like, let’s go through it. And he figured out his automation rate. And I think from memory, it worked out around $65. And then I said, Great.
So if you could free up an hour for 65 bucks, how much do you think you’d have to pay someone to do a call like this? And instantly he started to go into the head of oh, Well, you know, actually, many of these calls don’t take an hour, they only take 15 minutes. So for that $65 I could probably get three calls put in there. And he’s right. But I said to him, Well look, you know, I guess you could try to load as many as you could into that one hour. But you’re not talking about a full time role. Here, you’re talking about someone who’s more part time, casual, on demand basis. So while that will be beneficial to you financially, it’s also going to be beneficial to them financially. Is this person going to want for $65, who have made three calls? And his answer was probably not. I was like, great. But you’re saying that often, even if you’re saying it doesn’t always take up an hour, if you didn’t have to know that, because let’s be honest, right, guys, if you have a 15 minute call, I know this is true in my life, if I have a 15 minute call in my calendar, realistically, that’s taken a whole hour chunk out of my day. Because there’s a bit of prep time for the call, there’s once you get off the call, maybe writing notes, or even just switching your brain into whatever other thing you are going to focus on knowing a call’s coming. Or when you’ve just finished a call, it takes time to get back into it.
So really, even if it’s a 15 minute call, it’s taken up an hour of your mental capacity to deliver that call. So I said if you paid 65 bucks, and you got that time back, would that be okay? He said yes. And so I’m going to ask the same thing to you. I want you to figure out your automation rate. If you want to know how to do that in great detail, we have a whole training on that. You can reach out to us, you can buy just that training. Or if you want to join the whole community and get access to all our resources, it’s one of the resources but let me give you the high level. You want to take how much you make from your business in a year. And when I’m talking about how much you make, I’m talking about the cash you take out of the business, plus any extra things. So if you’re Australian, superannuation, you might not get that cash in hand. But that’s money that business is effectively paying you for your future. For the Americans listing that’s a four, effectively like a 401 K, forced from the government out of our businesses.
So if you’re paying yourself super, you take the money that you’re paying yourself. Plus, there’s, if you’re like most small business owners, you got stuff personally going through the business, right? You might have mobile phones or internet providers, cars, various things through the business. So you want to put all of that together and figure out what is your package that you take away from the business. And then you’re going to divide that dollar amount by two numbers. You’re going to put brackets around to figure it out. So you’ve kind of got your dollar amount. Now here’s another formula you need to figure out is how many hours do you work in a week on average? And how many weeks do you work in a year? So for example, most guys inside King’s Council, when they come to us, at least, are working more than 40 hours a week. Many of them are 50, 60 or more. But if 40 hours a week, let’s let’s go conservative, let’s say you put in 40 hours a week in your business right now. And most guys are probably doing 45 to 50 weeks a year, many of them are doing 50 weeks, you know, they’re lucky to even take the two weeks off in a year. So if you take like two weeks off over Christmas, you’re doing 50 weeks in a year.
Personally, I do around 40 weeks a year, and I definitely not doing 40 hour weeks, I can tell you that much. So you figure out that number, how many hours you’re working per week times by the number of weeks you work per year, that’s gonna give you a number, whatever that number is, is that what you’re gonna divide your dollar figure by, so effectively taking the amount you earn in a year divided by the amount that you, the hours that you work in a year. And that’s gonna give you your owner’s hourly rate, how much money you as the owner take out of your business, your owner’s hourly rate. Once you get your owners hourly rate to find your automation rate, you need to divide it by a multiple because we don’t want to just like if I make what’s for simple numbers fact. So like, say, let’s say I make $100 an hour as an owner. I don’t want to pay someone $100 to get my time back because then I’m not ahead, right, I’m just swapping. Like, yeah, I got some time back, but I didn’t make any money. If I’m making $100 an hour, I’d happily pay someone $25. Right. If I pay someone $25, that means I’m still making 75 bucks, and I got my hour back, that’s a win. So that’s what we’re looking at, what we’re looking for between 75 to $50. In that scenario, if you’re making 100 bucks, you want to be making 50 to $75 and get your time back. And so you’re going to divide it either by two or by four, I got a few different rules around that. If your hourly rate is over, if your owner’s hourly rate is over $50, then divide by four, if your owner’s hourly rate is under $50 then divided by two, because if you’re making $50 an hour or less, to divide it by four, it’s not going to be a realistic number. So if you can get at least a two times return, that’s good. But once you start getting into the bigger, bigger numbers, you want to be trying to get a four times return. But if the four times return doesn’t allow you to do what you want, you can always at least look at what if it was a two times return? And are you willing to pay that?
The bottom line is you get really clear on what can you afford to pay. And then find the person to do it. Ask them, ask yourself, can you realistically do it. If your number is too small, then it means you’ve got some work to do in your business to get your owner’s hourly rate up before we can start investing in getting your time down and buying that time back. If not, like if you’re like this guy who’s in the King’s Council, who’s just got the mentality of Oh, it’s too expensive, I should do it myself. Then it’s time to start investing in team and technology to get you out of the weeds of the business.
So you can start to buy your time back. Spend more time with the kids, the family and on you as a man, you know finding what else lights you up and helping you grow. So, hope that’s been helpful. Until next time, keep up the journey.