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The Lever #039 - The 5:1 Rule



To create leverage in your business you need to work on the right thing.

Here is how you determine what that is, and how much time you spend on it.

It's called the 5:1 Rule.

 

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Ever finish the day and wonder what happened?


You were busy the whole time but now that its over you can't remember any specific thing you accomplished. The whole day was spent down in the weeds and when you finally crawled out you realize that there has been a lot of effort but not a lot of results.


You were working on the wrong thing.


This happens when you don't have a system for managing your business priorities. And to do that you need to know your priorities in the first place.


That's what KPI's are for.

Key Performance Indicators

Every business needs a handful of well selected KPI's to help stay on track.


KPI's show the results that follow specific actions. The more actions you take, the better the results.


Some examples:

  • Conversion rate

  • Revenue growth

  • Customer satisfaction

By assessing your business you'll find that 3-5 carefully selected KPIs will tell the story of success or failure. These should be saved in a dashboard, tracked in real time, and looked at every single day.


Then you just need the discipline to work on them continuously.

The 5:1 Rule

In his bestselling book The 4-Hour Work Week, Tim Ferris brought the Pareto Principle into the mainstream.


You know, 80% of your results come from 20% of your actions.


Sounds great but how can you leverage this in your business?


This is where the 5:1 Rule comes in.


It is Pareto's Principle applied.

The 5:1 Rule states:

For every hour that you work on non-KPI impacting activities, you need to work 5 hours on KPI impacting activities.

This means that for every hour of low impact work you do, say sorting emails or administrative work, you need to spend 5 hours on something that improves your KPI's.

Improving your conversion rate. Growing revenue. Increasing customer satisfaction.


These are the things that will take your business to the next level and ensure you don't get bogged down in busy work.


While 5 hours might sound extreme you are in luck - there are two follow up rules to help you out.

Task Types

All of your time is spent doing one of three things:

  1. Planning for the future

  2. Problem solving

  3. Executing

While problems need to be dealt with when they arise, they can't be planned for. That's why they are problems.


This leaves planning and executing as the main focus for your time.

Planning > Execution

The first follow up to the 5:1 Rule is this:

An hour spent on planning is worth 5 hours of execution.

Yes you read that right.


"But isn't execution everything?" you wail.


It’s a big part, yes. But without a well thought out plan you can't be sure that you are executing on the right thing.


The work obviously needs to get done at some point. Which leads right into the second follow up.

Distribution of Labor

The second follow up to the 5:1 Rule is this:

You don't have to do the work yourself.

A leaders job is not to do all the work themselves. A leaders job is to make sure the work gets done.


Those 5 hours of execution can and should be done by your team. You can and should also build that team so that specific members are responsible for the health of specific KPI's.


If you are a solopreneur then some of this can be outsourced, either to freelancers or even technology.


Structuring your operation in this way is what creates leverage, and what allows You to focus directly within your zone of genius.

Putting It All Together

The catch to all this is that you need to be tracking your time. Try this:


For the next two weeks, track every single minute of your work day. Every little thing you do.


At the end, color code the activities that were spent working on your KPI's vs not. And the time spent planning vs executing.


The color for KPI-impacting activities should dominate the page.


This is How You CEO

Have you created a business for yourself, or a job?


How you spend your time tells the answer.


If you find yourself bogged down in mundane tasks and struggling to get traction its probably the latter.


But if you've identified the actual high impact activities, then focus relentlessly on those you stand a good chance of creating a successful business.


Use the 5:1 Rule to prioritize that high value work.

 

When you are ready, here are a few ways I can help:


1. Subscribe to the newsletter - The Lever


This covers a science-based productivity concept each week, in about five minutes. Try a free chapter of my new book when you subscribe. And if you like it...


2. Grab a copy of Peaceful Productivity


Peaceful Productivity outlines the time-management system I've created over the years as a ship's Captain and business executive. It will help you plan, prioritize, and get more of the right things done. Available on Amazon


3. Preregister for the Freedom Generator


This short course will teach you the fundamentals of a powerful timeblocking system to make sure you never miss an obligation and always show up prepared. Give yourself the space you need to create the life you deserve.




Smart systems to make you productive, prolific, and profitable | Find me on Twitter @SeanPHogue | Sign up here for the weekly newsletter, The Lever, and create some leverage in your life.


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