You Are Worth More Than You Think: Overcoming The Key Reason Entrepreneurs Fail

If you have ever said, “I just don’t have enough time to do [an activity I love]”, this advice is for you. Be prepared: This post is designed to get you thinking differently about your business and your life. Your ego is guaranteed to raise objections to this type of thinking. As those objections surface, write them down, and consider how you can overcome them as you give this advice a try.

What’s the Problem?

A lot of personal finance blogs and books, including the otherwise excellent Your Money or Your Life, make a key assumption that is incorrect for entrepreneurs: that your job can be boiled down to a real hourly wage.

In fact, Your Money or Your Life devotes significant effort to helping you figure out what the real costs of your job are. In an example in the book, a person earning $11 per hour was actually earning $4 per hour when all costs – including commuting and “work clothes” — were factored in.

This works for salaried workers, but not for entrepreneurs. Why? As an entrepreneur, some hours of your work are amazingly productive. For instance, when I ran Simpli, I spent 3 hours over the course of one week focusing on getting my company to the first result in Google for certain web hosting-related search terms. Those 3 hours paid off, netting my business over $250,000 in annual revenue.

On the other hand, I spent many hours ordering office supplies, doing payroll, and answering easy support tickets — things that were a net negative on my time as CEO, because they could easily be outsourced for a low hourly rate.

What is my hourly wage as an entrepreneur, then? Somewhere between $10 and $83,333 ($250,000/3). How do we as entrepreneurs value our time so that we’re not stuck doing menial chores instead of advancing our businesses?

Solution: Set a “baseline” hourly rate for yourself, and outsource all work that falls below that hourly rate — either in your personal life or in business.

What Baseline Rate Should You Set?

Most people will probably pay you a fixed amount to do something at an hourly rate. For instance, my attorney father should be charging $300/hour for client work. Set your baseline hourly rate at half of what you believe you could get paid as a consultant. In other words, my father should not be doing any work that brings him less than $150/hour. That includes pro bono or “cheap favors” for friends.

For writers and those just starting out, I suggest setting a baseline rate of $40-50/hour. As entrepreneurs, we tend to wildly underestimate the amount of time we put into our businesses. If I gave you a formula like “Take the income you make per month and divide by the number of hours you work in a month,” you would easily forget all those hours you spent answering email, posting on forums, reading relevant books and blogs, and deleting spam. Don’t use a formula. Just set a baseline and adjust from there.

Are you are concerned you will alienate others by doing this? I suggest you tell them that for the next 30 days, you will not be doing any work that falls under this hourly rate. Do a 30-day trial and then adjust your rate as necessary after 30 days. After 30 days, you can consider taking on some work that is meaningful to you, but falls under this threshold.

Which Tasks Should You Outsource?

A key point of this method is that, since you are an entrepreneur, you must outsource in your personal life as well. Can cleaning your house, mowing your lawn, doing the laundry, making doctor’s appointments, answering email, answering phone calls, and dealing with insurance companies be outsourced? You betcha! Anything that is below your baseline hourly rate should be outsourced.

Right now, the typical parade of ego excuses should already be screaming in your head. “But doing my laundry/mowing my lawn gives me time to think.” “I just can’t afford to suddenly spend all that money on other people!” “I don’t know who I could hire.”

Let’s address these one at a time:

• “Doing menial labor gives me time to think.” What would you rather do: do laundry for the rest of your life, or get some time to think on [insert vacation here]? Remember, a vacation doesn’t have to involve lavish tropical getaways. Maybe driving out to a local park and sitting under a tree will also give you time to think.

  If you can’t think of anything else that will give you time to think, I suggest learning meditation. 15-20 minutes of meditation will give you plenty more time to think than doing menial labor — and your thoughts will not be cluttered by “oh, ****, I put the washer on the wrong setting again.” Give your mind time and space to come up with new ideas.

• “I just can’t afford to spend all that money…” Let’s be really clear on this. I am not suggesting you go out and hire a full-time assistant, a full-time nanny, and a personal chef today. Take it one step at a time.

  For instance, I recently decided to hire a personal assistant. She works about 8 hours a week for me at $16/hour. That costs me a little over $500/month, and in exchange, I’ve sold most of my clutter on craigslist, I never have to worry about laundry, she follows up with thank-you notes to people I appreciate, helps me shoot videos, and even does the dishes. I also hired a cleaning service at $70/cleaning, or $140/month.

  For just $640/month, I get almost 40 hours a month of additional time. If that is too much, I suggest a cleaning service once or twice a month as your first step. That should cost you $50-$100 and will immediately free up several hours of work. Once you start earning more money, you can raise your hourly baseline rate and begin to hire more people to help you.

• “I don’t know who to hire!” I found my assistant on craigslist. There are also many sites like eLance and Guru.com that will help you find people to outsource tasks to. If you can’t find what you’re looking for, make sure you have stated your request clearly. I wanted an assistant who could work 8 hours a week and come over twice a week. As soon as I got clear and visualized my request, as well as clearly explaining why it would help me, I found the right person. The clearer you are, the more likely you will be to find the right fit. If someone isn’t the right fit, fire them and move on. This is business — even when it’s a personal assistant or a housecleaning service!

The decision to set a baseline hourly rate, on your part, comes down to how much you value yourself. I believe that I can deliver much more value to the world by writing and interviewing successful people than I can by mowing the lawn and doing the dishes. Do you believe that you have a calling to help the world? Then you better get it in gear and utilize your true talents. By doing the same things you always have, you will miss new opportunities. Even going to the park instead of doing the laundry may result in a chance meeting or a new idea triggered by seeing something you wouldn’t have at home.

Try this for 30 days — and see how saying “No” to those who cheapen your time frees you up to live the life you dream of. Have the courage to say — if not to anyone else, to yourself — “I am worth more than this.” Some will value you enough that they will agree to pay you more instead of waiting out your 30-day trial. That is a win-win situation.

Are you ready to go on board with this idea for 30 days? Please leave your comments below, and I may interview you for a future followup post. In the followup, I will also explore how not following this advice may have already cost me over $1 million. Stay tuned, and don’t forget to subscribe to see the next post!

Recommended Reading:

• The 4-Hour Workweek by Tim Ferriss. “Learn to ask: If this is the only thing I accomplish today, will I be satisfied with my day?”
• How To Avoid One of the Most Common Mistakes Women Make When Starting a Business Women tend to think we have to “do it all”, and thus we build side businesses; while men hire out, outsource, and thus build empires.
• How Can You Have That Perfect Flow State More Often? My journey from being burned out and exhausted to finding a workable way to get to a flow state on a daily basis.
• Changing Your Perspective About Work: The 2-Hour Work Day If you only had 2 hours a day to get everything done that you needed to do, how quickly would you change your work life so that you could still meet all your goals?