Meet Ed and Ben.
Both of them are salesmen of the same company. But, their income is different. Ed earns RM 5,000 a month. Ben makes RM 15,000 a month. Ed is a little pissed as he is a hustler. He puts in time, energy, and effort in his sales job. But still, his sales results are subpar as compared to Ben’s.
So, the question is, ‘Why?’
Is it because Ben is more charming, fortunate, and well-connected?
Well, while all these do play parts in Ben’s income, Ed failed to see this. His long hours of work are not as productive as Ben’s. Today, income is mostly earned by delivery of value, which is based on results and not on the quantity of time. The issue here is on the productivity of the hours spent at work and not the amount of hours spent at work.
Let me illustrate this with 4 simple points as follows:
#1: What is Your Hourly Rate?
Assuming, on average, Ed works 250 hours a month. In his case, Ed’s hourly rate works out to be RM 20 (RM 5,000 / 250 hours a month). Meanwhile, Ben works around 150 hours a month, some 40% less time than Ed. Thus, in Ben’s case, his hourly rate is RM 100 (RM 15,000 / 150 hours a month), which is 5x of Ed’s.
In other words, Ben is 5x more productive in his hour of work than Ed. Thus, for Ben, he could spend 40% less time and still earn 3x more as compared to Ed. As a result, Ben has more free time to himself, where he chooses to spend his time with his family, friends, hobbies, and charity.
This leads us to the next question: ‘What did Ben do in his hour of work?’. Thus, let’s move onto:
#2: The Concept of Low and High Value Work
Like most people, Ed has no knowledge of this concept. To Ed, work is work and thus, he sees all tasks within his job scope as of equal significance and value. So therefore, in a typical 10-hour work day, Ed would allocate his time as follows:
Guess which of his tasks are of high value?
The answer is client meetings for they bring in sales and hence, his commission. In Ed’s case, he spends 50 hours a month (20% x 250 hours) with his customers. In that 50 hours, Ed would meet about 20 customers and he would land himself 2 sales worth RM 1,000 each in commission every month.
Thus, in addition to RM 3,000 in basic salary, Ed earns RM 2,000 in commissions and thus, bringing his income to RM 5,000 a month.
Question: ‘What is the value of that 50 hours spent with his customers?’.
Answer: RM 40 per hour (RM 2,000 / 50 hours).
Question: ‘What is the value of his remaining 200 hours of work?’.
Answer: RM 15 per hour (RM 3,000 / 200 hours).
In a nutshell, Ed earns less as he spends 80% of his time on lower value work. In his case, Ed should find ways to reduce his time spent on these works and focus more time on high value work in order to raise his income. Here, if Ed makes his shift by having 50 more hours with his customers, he can potentially add 2 sales a month and thus, lifting his total commission to RM 4,000 a month.
With RM 3,000 in basic salary, Ed’s total income is raised to RM 7,000 a month.
#3: How to Save Time on Lower Value Work?
The following is simply just one of the many examples of time saving.
For instance, Ed could spend around 1 hour with a client. Typically in a workday, Ed can meet up to 3-4 clients a day if they are closely located to Ed’s office. So if Ed receives a sales call that is located some 50 km away from his office, needing a 2-hour to and fro trip to meet this one customer, won’t it be much practical in Ed’s case to co-broke with his colleague that is located closer to this customer?
By doing so, Ed may potentially free up time to meet up with 2 more customers which could lead to more sales.
Now, just a quick note. Ed could be creative and strategic on his time allocation, which can serve as an immediate boost to his current income. But, if Ed intends to 2x, 3x or 5x his income, he has to go beyond ‘time saving’ as all of us have 24 hours in a day. This would lead us to:
#4: Supercharge Your High Value Work
From above, Ed makes 2 sales from meeting 20 clients a month. This means, his conversion rate is 10%.
So, what if Ed could learn how to boost his conversion rate to 20%?
The 10% increase leads to 2 additional sales or RM 2,000 in extra commission a month. Hence, Ed could potentially raise his annual income by RM 24,000. Also, if Ed is able to 2x his time meeting clients, Ed could even raise his income to RM 48,000 a year. Thus, the question is, ‘If you are Ed, how much would you pay for this skill set?’.
Will you pay RM 1,000, RM 2,000 or RM 5,000 to acquire this skill?
Don’t worry. I have no relevant course to sell here. But, if you expect this skill to be offered to you for free, think again. Sure, Ed could save himself some money, not signing up for a sales training course. In that case, he could lose a chance to realize his true income potential. That could be a poor exchange.
If you want to supercharge your high value work, you need to invest in learning. These investments are to be made on a continuous basis.
Conclusion: How to Earn More by Working Less?
I believe it starts with a mindset to be more productive as a person. Everyone in business or in employment could apply this to realize our income potential. The key is to start with the 4 pointers illustrated above. Once again, they are:
1. Calculating your hourly rate.
2. Make a distinction between low value work and high value work.
3. Find ways to mitigate and reduce time spent on low value work.
4. Invest continuously to be better at producing higher value work.