What is your return on time? A lesson on building personal leverage

Before we dive in:

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If not, you should be!

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They will tell you exactly how to optimize your Google and Meta ads at no cost to you.

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There are two questions you should be asking about any opportunity you are considering going after:

  • What is the return, in dollars, for an hour of my time today, a year from now, and 10 years from now?
  • If I stop working, do I stop getting paid or will I keep getting paid?

That’s it. The answers to those questions will tell you all you need to know about the choices you’re making. Here is a simple example:

If I go to McDonalds and trade my time for $15 an hour flipping burgers, what is the return on that time? It is $15.

A year from now it will be $16.25. Ten years from now it will be about $25 per hour if you become a manager.

What happens if I stop giving my time to McDonalds? I stop getting paid. No more of my time, no money.

Now let’s keep going.

What if I were a franchisee and I owned a McDonalds that I staffed with local employees to run for that same $15/hr?

If I didn’t go to work that day or week, would I still be making money? Of course I would.

In fact, I’d be making a lot more than just $15/hour. The average McDonald’s franchisee makes around $150K/year per location. That number will likely be higher a year from now and a lot higher 10 years from now.

Let’s imagine another scenario. If I start today to build a business, and I trade my time for money, what is the return on that time?

It is the hourly wage you charge for your work, whether that’s solar panel installation, boat cleaning, home appliance repair, photo booth rental, or any number of other boring businesses.

And if I spend 5-10 years building a business, hire employees, and turn over operations to a great CEO, and then I stop, what is my return on time?

It could be millions of dollars a year for the rest of my life. I could end up with a business that runs without my energy and time and makes me money while I sleep.

If your goal is wealth and doing what you want to do when you want to do it, you need to consider if your current career path lends itself to getting paid even if you’re not working at some point in the future.

If your answer is no, then it’s time to stop doing what you’re doing and start building the leverage you need to change that.

What I’ve learned is that the amount of money you earn is not correlated to how hard you work—it is correlated to how hard you are to replace and thus how much leverage you have.

If you are easy to replace, then you have low leverage and a capped earning potential. But if you are impossible to replace, you have high leverage and unlimited earning potential.

So your goal should be to start a business (or businesses) and get to a point where people need you more than you need them. But it doesn’t happen overnight.

I’ve had this conversation hundreds of times, so I know what you’re thinking:

Nick, I don’t have any leverage. How do I get some? What is my plan?

Ask yourself, does this career or what I’m doing today have the potential to create passive income and thus leverage for me in the future? If it does, keep going. If it doesn’t, it’s time to step back and reevaluate.

Here’s why: at some point in the future, if you have money coming in the door that you don’t have to work for, that creates leverage.

Though it might seem far-fetched now, if you have $50,000 a month coming in from three sources you control, and you spend $20,000 per month on your life, you have all the leverage you need.

There won’t be a single human being who can control your life enough to mess it all up if you don’t do what they say.

Unfortunately many of the high status professions we’ve been guided toward aren’t all they’re cracked up to be.

Med school = zero leverage.

A doctor, unless they invest saved capital into other things, has no ability to stop working and continue to get paid. It is very hard for them to separate their time from money and start working 10 hours a week in their 40s with enough income to do whatever they want.

Actually, 99% of professions have almost zero leverage. There are a few like wealth management, insurance, and sales that create passive income into the future long after the work is done, and I love those careers.

But for the most part, if you work a W2 job, you will forever be trading your time for money.

So what is your first goal? How do you get started?

You start small. You get $2,000 per month coming in from something you own (either a side hustle or a small business or a piece of real estate).

Then keep doing that thing to turn that $2,000 into $5,000 over the course of a few years. Then $10,000. Then $20,000 and suddenly you can tell your boss to go shove it next time he or she tells you to do something you don’t want to do.

And then you have the leverage and a much higher return on your time.

A few tweets from this week:

Last week I hired 3 overseas team members into my business. 80% savings over US equivalents.

I interviewed a few candidates that were amazing but I don’t have space for right now:

Respond to this email if you’d like an introduction and $1k off the recruiting fee.

Lastly, here’s a great thread from Nathan Barry (Founder of ConvertKit.com — Soon to be Kit.com) with talent you can hire today:

Onward and upward,

Nick Huber

Don't know where to start?
About Me

I started the Sweaty Startup in December of 2018 because I believe the Shark Tank and Tech Crunch culture is ruining the real spirit of low-risk entrepreneurship.