In this article, former SUCCESS publisher Darren Hardy discusses how compounded choices, behaviors and habits can create seemingly magical results:
How often have you thought, I’m just too busy or I don’t have any time or there never seems to be enough time in the day to do what I want to do? First off, you know that’s BS. Even saying it makes you sound lame. Time is the great equalizer. We all have the same amount of it. Oprah has the same 24/7/365 you do. Jeff Bezos, Howard Schultz, Warren Buffett and those you see on the cover of SUCCESS have exactly the same amount of time you do. So why do they seem to have way more time than you do? It’s because they have developed the power to manufacture time, and I am going to show you how you can, too.
Here’s how to apply this magic to time, giving you supernatural powers to manufacture time seemingly out of thin air.
To introduce you to the strange but glorious math in compound interest, we can use the rule of 72: If you divide your rate of return or interest rate into 72, then you’ll know approximately how many years it will take to double your money.
72 ÷ interest rate = Number of years to double
For instance, if we use the average proclaimed return of the stock market of 12 percent, then it takes about six years to double whatever money you put in (72 ÷ 12 = 6). Put in a dollar, you’ll end up with almost two dollars in six years. Put in $100,000, and you’ll end up with close to $200,000 ($197,000 to be exact) in six years, seemingly by witchcraft. To make things even more magical, in 30 years your $100,000 would be $3.5 million. How is that possible? Twelve percent return is only $12,000/year; 30 years would amount to only $360,000, plus the initial $100,000, equaling only $460,000, but instead you have $3.5 million. Well, it’s magic! Or the magic of compounded returns.
This is why Einstein called compound interest the eighth wonder of the world, as if it has some mysterious power. Here are three ways to leverage this power to manufacture time in your life.
1. Invest some time now so that you can manufacture time in the future. I’ll give you a recent example. I wanted to attain Global Entry designation so that when I travel internationally I can skip right through the customs lines, saving hours each way… and it essentially guarantees security precheck in every airport with every airline. First they require me to fill out many tedious forms with personal information. Then I’d have to show up for an appointment at an inconvenient place at an inconvenient time.
Well, I never had time for that. With my full-throttle lifestyle, it never made the priority list. This went on for two years. Then, after sitting in one too many painfully long customs lines, I finally decided to stop what I was doing and tackle the Global Entry application hassle. In total, the whole shebang cost me five hours of my life. I know that doesn’t sound like a lot, but to me, five hours is a serious investment of time.
But here is the big lesson. That investment of five hours saves me at least 15 minutes per flight, and I can keep my shoes on! I take about 100 flights a year. That means the investment of those five hours is magically manufacturing 25 hours a year I didn’t have before—25 hours! Over five years, the return on investment will be 125 hours, or 15.5 working days. I can take a two-week vacation, costing me zero productivity, zero time, all because I made the five-hour investment up front.
There are a million little places where you can invest a bit of time today, and the time it will save will compound, manufacturing time that you wouldn’t have otherwise. Think about it. What investments of time can you make this week that will compound time in the future?
Maybe it’s finally doing the paperwork to set up auto-deposit with your bank or installing and learning the mobile app so you can deposit checks electronically, saving you dozens of trips to the bank. Maybe it’s setting up your desk and filing system on a weekend so you can fly faster through the workday. Maybe it’s setting up a travel system of dedicated toiletries, clothing, bags, etc., so the prep and pack time of every trip is cut in half. Maybe it’s creating an orientation manual or training video so the time spent hiring and onboarding new employees is cut in half, and their effectiveness is increased significantly. Trust me, I know stopping your universe-denting, rainmaking, save-the-world functions to write out procedure checklists sounds like a waste of time, and in the moment it might seem so. But once done, you will ignite the compound effect, which will start manufacturing time and improving your effectiveness by leaps and bounds.
2. Another way to manufacture time is to get help and delegate. You’ve heard this before, but let me help you understand the math and how it manufactures new time and money you wouldn’t have otherwise.
Let’s say your goal is to earn $250,000 this year. That means your time is worth $125 an hour.
Income goal ÷ 2,000 hours = Your hourly rate
If you monitor what you do all day, much of it, if not all, wouldn’t be worth $125 an hour. Much of your time might be spent filing, updating your social media status, filtering and sorting unimportant emails, running errands, taking unimportant phone calls, preparing for meetings, writing memos, sorting receipts and preparing expense reports, cleaning your office, arranging travel and other such activities. You wouldn’t pay $125 an hour for someone else to do any of those activities, but that is exactly what it is costing you when you do them.
Let’s assume all those activities must be done. Here’s how to manufacture time: If you can hire someone for $40 an hour to do those activities (which is about twice the going rate for most of them), you can stick to your $125-an-hour work. For every 1.5 hours they work, one complete hour is manufactured out of thin air for you. If they work 15 hours a week, that creates 10 hours you didn’t have before. That will total 520 hours throughout the year, or 65 days you didn’t have before.
Yes, you do have to stop or slow down to design the job function, and find, hire and train the help. That is the deposit you make into the compound effect account. But once made, that deposit compounds quickly and manufactures massive quantities of time you wouldn’t have had otherwise.
3. The last way to leverage the compound effect to manufacture time is through systems. Stopping to build the right systems can ultimately set you free. Countless business owners complain about lack of control or freedom yet in the same breath, discount the value of well-designed systems.
Even if you’re not a business owner or a CEO, you are the CEO of your life, particularly your productive life, so I’ll use the framework from the book The E-Myth by Michael Gerber to explain this.
There are three unique skill sets to run a business: the technician, the manager and the entrepreneur. The technician supplies the output, the manager supplies order and systems, and the entrepreneur supplies the vision and direction.
While we all start out as technicians, the failure of a business, as Gerber describes, comes from never advancing ourselves into the role of entrepreneur by installing the appropriate manager and technicians to run the business—so the business can effectively run without the labor of the entrepreneur.
When we start out, we are 10 percent entrepreneur, 20 percent manager and 70 percent technician. If you learn how to hire employees, delegate tasks to them and create a few systems, you can get to 33, 33 and 33 percent. You might even find some level of success here, but you will be running yourself ragged, becoming stressed out and vulnerable to failure. This is how most relatively successful people operate and live. To really thrive, you have to get to a minimum time allocation of 70 percent entrepreneur, 20 percent manager and 10 percent technician. Those whom you look up to as almost God-like in their productive output—people like Buffett, Bill Gates, Richard Branson and others—have figured out how to be nearly all entrepreneur, spending zero time managing or supplying the productive output. Branson has more than 400 companies that operate 100 percent without him.
You will manufacture more time by moving up the totem pole. While you’ll probably start out in most endeavors as a technician, supplying the majority of the productive output, you’ll want to quickly graduate into the manager role.
You want to systemize everything. For every hour you spend building a system, it will manufacture many hours you didn’t have before—day after day, month after month and year after year.
It is estimated that you and every person in your business spends at least 40 percent of each workday performing recurring tasks. If you build systems to perform many of those tasks, you can either eliminate direct involvement or at least cut the time demand on you by half. Almost everything you do can be turned into a system. How you write and publish a blog can become a system. How you create, edit, publish and promote a video can become a system. How you prepare for meetings, set up conference calls, process emails, manage social media—almost everything can be systemized. The more you do, the more time you manufacture.
This article appears in the August 2015 issue of SUCCESS magazine.