Build a Business That Runs WITHOUT You – Become Financially Free [Buy Back Your Time | Dan Martell]

Buy Back Your Time by Dan Martrell. Dan

is a serial entrepreneur with over 25

years of experience. He founded, scaled,

and successfully exited three technology

companies within 10 years. In 2012, he

was named Canada's top angel investor.

If you are a busy and burntout small

business owner who wants to free up

time, work less, and still grow your

business, this video is for you. Okay,

let's get started. Lesson number one,

the buyback principle. When the business

starts taking off, most entrepreneurs

immediately think about growing even

bigger. So, they create new positions

and hire new people. This is a mistake.

According to the buyback principle, the

first thing you need to do is free up

your time, not grow your business. In

other words, don't hire to grow the

business. hire to buy back your time.

Entrepreneurs who don't learn how to buy

back their time eventually burn out and

crash as the business grows. Look, I

know you have a get things done and work

hard mentality, but you are one person

with a finite amount of time. You have

company, family, and friends who are all

demanding your time. Most entrepreneurs

think that a profitable business comes

from hard work. That may be true at the

beginning, but a thriving business only

comes when the leader, you learns how to

buy back their time. Dan says, "The

littleknown secret to reaching the next

stage of your business is spending your

time on only the tasks that A you excel

at, B you truly enjoy, and C bring the

highest revenue to your business. Likely

two or three tasks fit that description.

I am sure you know the 80/20 rule, but

for entrepreneurs, the 955 rule applies.

In other words, 5% of what you do really

counts. 95% of your current work should

be done by somebody else. Yes, 95%.

This means if you worked for 10 hours

today, only 30 minutes of it really

contributes to the profit of your

company. What's even worse is when you

don't enjoy something, you're also not

as good at it. In other words, while you

think you're sacrificing for a worthy

cause by working hard at things that

challenge you, you're actually costing

your company. It's a lose-lose move.

Look, no one sets out to become an

overstressed workaholic business owner

with declining health and relationships.

But that's what's going to happen if you

ignore the buyback principle. The

buyback principle dictates that you

shouldn't be checking emails unless you

want to. When you're choosing what to do

today, you should be selecting the

highest value tasks. You should

continually use every resource to buy

back your time. Then fill that time with

activities that light you up with energy

and make you more money. Before you

probably thought that the more I work,

the more productive my business will be.

On the surface, this makes sense. But

then you get trapped in the hamster

wheel because you are busy working on

the low impact task or a high impact

task that someone else can do better

than you. If you don't learn to work

less and reinvest your energy into high

impact tasks, you will feel trapped as

the business grows. This is because you

will come up against what Dan calls the

pain line, which I will explain in the

next lesson. Lesson number two, hitting

the pain line. The pain line is the

point at which growth becomes

impossible. The more you grow, the more

pain you experience. This work hard, no

one can do it like mentality works until

it doesn't. You can sustain growth only

up to a point, but then the emails, the

to-dos, the low-v valueue tasks you hate

doing continue sucking your energy. It

all creates a wall of pain. When you hit

the wall of pain, you will do one of

these three things. One, sell. When an

entrepreneur is experiencing so much

pain in their business, they just want

out at all costs. Two, sabotage. When

they hit their pain line, they might be

making bad decisions that sabotage the

company's growth. It's a tricky one to

see at first. Here are the kind of

stupid decisions they make. Keep

replacing key team players for small

mistakes. Create a new website or just

any other decisions that don't help the

growth of the company. They don't

realize they're actually sabotaging

their own company. Three, stall. If you

decide not to grow, in other words,

stall, that's equal to a decision to

slowly die. Marketpl have to evolve

because human nature forces them to.

Susan will always want a faster bicycle.

Kevin will always want a better iPhone.

Even if you're a small business in a

local market, if you don't evolve, your

customers will leave for a better

option. Now, ask yourself, is there

anything you do in your business right

now that gives you pain? Pain often

provides a choice here. You can either

continue as usual, busy, busy, busy, or

use audit, transfer, fill to start

working less and achieve more. What is

audit, transfer, fill, you might ask?

That I will explain in the next lesson.

Lesson number three, the buyback loop.

Audit, transfer, fill. A buyback loop

occurs as you continually audit your

time to determine the low-v valueue

tasks that are sucking your energy. Then

you transfer those low-V value tasks to

someone who's better at them and enjoys

them. Lastly, you fill your time with

higher value tasks that light you up and

make you more money. So, audit,

transfer, fill. Here's how to apply it.

One, audit. What tasks do I hate doing

that are easy and inexpensive to offer

someone else? Two, transfer. Who do I

have on my team or who can I hire even

part-time to take these over? Three,

fill. What tasks should I focus on that

I love doing that can immediately bring

more money to my company? Sounds easy,

right? But when you start to implement,

you will be confused about what kind of

work should I let someone else do and

what kind of work do I need to focus on?

And that will be answered in the next

lesson. Lesson number four, the drip

matrix.

Drip stands for delegation, replacement,

investment, and production. The drip

matrix allows you to see how valuable a

task is in terms of money and energy.

You first need to determine the value of

a task and the energy it takes you to do

it before you give it to somebody else.

Let's go one by one in detail. One,

delegation. Delegation is the task that

makes you little money and it drains

your energy. Tasks in the delegation

quadrant are small tasks that are

sucking your energy. Think about

administrative work, billing, invoicing,

etc. These tasks should be quickly

removed from you. Two, replacement.

Tasks in replacement make you money, but

it drains your energy. Here you'll find

highly important tasks like selling,

marketing, and managing your team. These

tasks are high value, but they might not

light you up the way they once did.

Three, investment. Tasks in this

quadrant bring you little money now, but

they have big future potential. Plus,

they give you so much energy. This might

be networking, writing a book, speaking

at conferences, being interviewed on a

podcast, or going to lunch with peers in

your industry. This quadrant also

includes hobbies and time spent with

your family and friends. Four,

production tasks here make you lots of

money and also light you up. This is

where you want to spend as much time as

possible. When most of your tasks are in

this quadrant, you're making lots of

money and your energy is high. If you

only spend your time working on this

quadrant, you're living in true freedom.

The goal of the buyback principle is to

help you to spend the majority of your

time in the production quadrant with

some deposits into the investment

quadrant. In general, you need to remove

tasks in your delegation quadrant as

quickly as possible. While removing

tasks in the replacement quadrant takes

more time, it is definitely possible. We

will explain this in detail in coming

lessons. Tasks in the production

quadrant shouldn't be removed. You

should be focused here. But this is

where most people go wrong. Let me

explain this with an example. Imagine

you're a baker who loves making cookies.

At first, it's a side hustle, but then

it becomes a serious business. Your

business keeps growing. You can't handle

it alone anymore. So, you hire a couple

of college kids who love baking. And

then the business keeps growing even

more. While those college kids are

baking, you're able to do the ordering,

run to the store to pick up supplies or

throw up some pictures on social media.

Eventually, you're not baking at all.

You're doing payroll, ordering supplies,

and managing customers. You have become

the administrator of your business. And

when you think about going to work on

Monday, you're already dreading it

because you're doing everything except

what you love about your business, which

is baking. That's what a ton of

entrepreneurs do. Hiring is absolutely

how you grow, but you must hire to save

your time. Otherwise, you're putting

yourself back into the delegation

quadrant. Remember the buyback

principle. Don't hire to grow your

business. Hire to buy back your time.

The reason you're hiring is because you

want to stay focused on the production

quadrant, not be stuck in the delegation

quadrant like the bakery example. Now,

you might be excited to start hiring

right away, but I know that you are

worried about these two things. First,

no one does it right. Second, I can't

afford it. We'll talk about this in the

next lesson, which is lesson number

five, buyback rate calculation.

Before we go to buyback rate

calculation, let's go back to your first

objection. No one does it right. Yep,

you're right. No one can do it better

than you because it's your business. So,

what's the solution?

Lower your expectations.

Don't aim for 100% perfection. Instead,

aim for 80%. Because 80% done by someone

else is 100% freaking awesome. You're

not having to work on the weekend is

100% awesome. Dan suggests using 10 8010

rule. You do the initial 10%, let the

other person do the other 80%, and you

do the final 10% to tidy up the whole

process. In this case, you can be sure

that the work is still up to your

standard, but at the same time, 80% of

the work is being handled by somebody

else, which could give you more freedom

for the things that matter. All right,

let's go to your second objection. I

can't afford it. Here's where the

buyback rate calculation will help.

First, you need to know how much you

make per hour. According to Dan, your

time is worth how much your business

pays you divided by 2,000 hours. Pays

you means all the profits from your

current business. And 2,000 hours is a

normal work year. If your company pays

you $100,000 a year, divide that by

2,000, then you make $50 per hour. If

your company pays you $24,000 a year,

that means you make $12 per hour. Now,

how much can you afford to pay someone

else? Take how much you make per hour

and divide that number by four. Why

divide it by four? Dan says, "My rule of

thumb is that no one should be

performing tasks that they could

outsource for 1/4 25% of their current

hourly rate." For example, let's take

Tina, a small business owner. Assume she

makes $200,000 a year. So, how much does

she make per hour? first divided by

2,000 hours. $200,000 divided by 2,000

equals 100. So her business is paying

her $100 per hour. Now what's her

buyback rate? Take 1/4 or 25%. 25% of

100 is $25 per hour. So her buyback rate

is $25 per hour. If Tina can pay someone

else to do a simple task like invoicing,

video editing, or any other activities

for $25 an hour, but she's still doing

it herself, that means she's not fully

utilizing her time for higher value

activities that could bring in more

money. From now on, there's no task you

should be doing that you don't enjoy,

which costs less than your buyback rate.

So, before you start hiring, start with

calculating your buyback rate.

Lesson number six, the only three trades

that matter. There are three trades.

Level one is employee. Level two is

entrepreneur. Level three is empire

builder. Let's go one by one. Level one,

employee. An employee trades their time

for more money. If you're still trading

your time for more money, even though

you own a business, that means you're an

employee. Level two, entrepreneur. An

entrepreneur trades their time for more

time. When you become a real

entrepreneur, you stop thinking that

working more hours means making more

money. Instead, you've embraced a better

mindset that through delegation and

replacement, money can buy you more time

to spend on building the company. This

is the essence of the buyback principle.

Level three is empire builder. An empire

builder trades their money for more

money. And here's the deal. You'll never

become a level three trader without

going through levels one and two first.

At this level, your personal life gets

really exciting. You have ample time for

your kids soccer game or sipping

espresso or eating lunch in your garden.

Other people run the dayto-day of your

business and you have all the time you

want for new investments and

opportunities. Your head space is clear

and your energy is so high. Now, the

question is, how do we get to level

three? Besides all the things we

discussed before, one of the important

things you need to do is do a time and

energy audit. I will explain this in the

next lesson. Lesson number seven, time

and energy audit. To understand it

better, let me tell you a story from the

book about Dan's friend. Dan asked his

friend to hire an assistant so he could

stop checking his emails. His friend

couldn't do it. He refused to let go of

his emails. But then one day, he finally

let that go. And the question here is

what finally got him to transfer his

inbox to an assistant. Well, Dan's

friend finally agreed because he started

to look at how much energy each task

takes, not the time. A task might take

you 10 minutes, but it can drain your

energy so much that it would negatively

impact your whole day and all the other

tasks. For example, for me, dealing with

accounting tasks takes one hour per

month. But every time I do it, I feel

like I need a vacation. So don't look at

your tasks just in terms of time, but

also how much energy they take.

Protecting your energy and keeping it

high is probably the most important

thing in life. Here's how you can do a

time and energy audit. First, audit your

time for a few days and write the tasks

that you're doing every 15 minutes in a

table format. By the way, I always

ignored this advice thinking that I

don't waste time, but ohoo boy was I

wrong. I found out that I'm actually

quite good at wasting time on low-v

valueue tasks and then selling it back

to myself as a high value task. Once you

audited your time, assign dollar amounts

to each task using one to four dollar

signs. One is for lower value tasks and

four is for highest value tasks.

Highlight everything in red or green.

Red is for everything that sucked your

energy, everything that made you want to

procrastinate or made you feel anxious.

Green is for everything that gave you

energy. With a time and energy audit,

you will have a picture in your hand.

First, delete unnecessary work. If you

can't delete it, delegate it to the

current team members. If no one in the

team can do it, use your buyback rate to

find someone else to do the work. Lesson

number eight, the replacement ladder.

The replacement ladder is a tool Dan

made to help you figure out who to hire

first in your company and who last.

Think of it like climbing a ladder.

Ladders are administration, delivery,

marketing, sales, and leadership. If you

hire according to this ladder, you will

avoid getting stuck in the replacement

quadrant as most entrepreneurs do. Let's

go one by one in detail. One,

administration.

This is the basis. As we discussed in

the previous lesson, once we do a time

and energy audit, the first thing we do

is start delegating low-v valueue tasks

to someone else who enjoys it. Two,

delivery. Delivery is the product or

service you deliver to the customer. If

you have a coffee shop, it's the

cappuccino you're selling. If you're a

business coach, it's your business

coaching. For many entrepreneurs, their

company's core product or service is

emotionally difficult to outsource

because they're good at it. They enjoy

every aspect of it. If this is the case

with you, then use the 108010 rule. As I

have explained before, you do the

initial 10%, then someone else does the

80%, then you sail back in and finalize

the last 10%.

Marketing is the third step on the

ladder after administration and

delivery. Here's an example to help

explain. In the first quarter of your

business, you're doing a great job with

marketing. You're getting referrals,

forming new partnerships, and running

ads to attract more customers. In the

second quarter, you shift your focus to

the delivery ladder, concentrating on

your core product or service because

it's hard to let go of. Then in your

third quarter, you return to your

marketing efforts to reach your goals

again. This cycle, marketing in the

first quarter, focusing on delivery in

the second, marketing again in the

third, and slowing down in the fourth,

prevents your business from growing.

Instead, you should delegate marketing

to someone else so that every month and

every quarter, new customers keep coming

in consistently.

Four, sales. Once you've got the

administration, the delivery, and the

marketing people, now it's time to

onboard the salespeople. Dan saves this

ladder for the second to last because he

knows most entrepreneurs are the best

salespeople. No one in the company can

do sales better than you, but this

doesn't mean that you should keep doing

it. Remember, 80% done by someone else

is 100% awesome. Five, leadership. Once

you get to this leadership ladder, you

can reach a level of freedom. This is

where you hire leaders for delivery,

marketing, and sales that we discussed

earlier. When you reach this ladder,

other capable people are running your

business. It makes money without your

day-to-day involvement. Now you

understand the replacement ladder. Let's

talk about how to hire correctly. Hiring

the wrong person can be extremely costly

in terms of time, money, and energy. Not

to mention the negative impacts of the

wrong person on the other team members.

Lesson number nine, test first. Seth

Goden once said, "I can't work with you

until I work with you." Here's Dan's

three rules. One, I give them a project

that is representative of the actual

work we will do together. Two, I always

pay them. Three, I don't give many

instructions. Dan says, "Notice that I

don't give many instructions. I want to

understand how my potential candidate

uses resources and how independently

they'll work. I'm allowing them to bring

their own creativity and I'm also

teasing out whether this candidate will

save me time by figuring things out on

their own or cost me time by stalling

and refusing to make their own decisions

after hiring. Here comes the best part.

How do you train this person so that

they can perform the task as well as you

or even better? I'll cover this in

lesson number 10. How to clone yourself.

Here are four-step processes to create a

how-to manual so that even a new hire

can clearly understand and do what you

do. Step one, record yourself during the

task. I like to use Loom since it

captures both the screen and my face. If

your business has nothing to do with

laptops, for example, you own a coffee

shop, you can have someone take a

smartphone, record you on how you make

the coffee, so that next time your staff

can make the coffee exactly like you do.

And here are two important tips about

this training video. One, talking is

key. If you explain what you're doing

and why you're doing it, it will help

your staff to understand you better.

Explain why you did what you did and

what the thought process is behind it.

Remember, you might be doing this so

long that most of the things come to you

naturally and automatically. So, you

need to put yourself into the beginner's

shoes and explain everything in detail

while you do the task. Two, make three

recordings. Of course, every time you're

performing a task, it changes just a

little. Every time you do it, it's

probably just slightly different. Dan

found that three is the magic number. If

you record yourself three times doing

the same task, you'll have captured

nearly every possible change. Step two,

let's go to the next part of creating

your how-to manual, which is jotting

down the highle steps. Here you create a

bulleted list of the highle steps. Let's

say you're creating the steps for the

task opening the coffee shop. Here's how

the steps may look. Turn on the espresso

machine. Start the coffee pot. Write the

coffee of the day on the chalkboard.

Wait 10 minutes. Turn on the open sign.

Notice these steps are not too detailed.

They simply capture the highle steps

involved. After you have all the

training videos and the highle steps for

every task listed out, the next thing

you need to do is create a section in

your how-to manual called frequency.

Step three, frequency. How often should

these tasks be completed? Is it monthly,

weekly, or daily? In a simple manual,

the frequency section may not be

necessary because some tasks don't

repeat. Step four, the checklist. The

checklist is the high-level items that

must be completed every time. Having a

checklist ensures that all the important

steps that need to be done are actually

done. All of these four steps may take

you some time. But here's the shortcut.

Just record yourself and then have your

staff watch it and recreate the whole

process. This way, you'll know whether

they understand it or not. Lesson number

11. Two time hacks when working with

others. Number one, the 131 rule. To

avoid upward delegation, where staff

dump their problems to you or leaders

dump their problems to the CEO, use the

131 rule. Before staff come to ask for

help, ask them to prepare one problem

that needs to be solved. Offer three

viable solutions to that problem. And

they need to make one suggestion from

those solutions. Number two, definition

of done. DoD. While replacing yourself

with staff, you might think no one ever

does it right or no one can do it better

than you. To solve this, give them the

definition of done. For example, when

Dan asked his admin staff to purchase a

whiteboard, he gave them a DOD, which is

the task is done when the whiteboard is

hanging on the wall in my office. There

are four colored markers, red, green,

blue, and black, and there's a dry erase

marker handy. If you don't give your

staff your definition of done, they

might be doing it according to their own

style and you will get frustrated. No

one does it right because you don't tell

them how to make it right. Just like the

way you do it. Next time you ask your

staff to do something, include a DoD.

Any task like preparing a financial

report, marketing report, or just any

other task. Lesson number 12,

transactional management versus

transformational management. In

transactional management, you're

micromanaging every decision. In

transformational leadership, you're

helping your teammates make better

decisions in the long run. Don't tell

people how to do things. Tell them what

to do and let them surprise you with

their results. As Steve Jobs said, it

doesn't make sense to hire smart people

and tell them what to do. We hire smart

people so they can tell us what to do.

With transformational leadership, you

stop leading by telling someone how to

do something and instead tell them what

needs to get done. So what's the

difference in instruction for

transactional management versus

transformational leadership? Here's an

example. For transactional management,

the instruction will be, "James, you

need to make more sales calls." But for

transformational leadership, your

instruction sounds clearer. James, you

need to hit $100,000 in sales by the end

of the quarter. How can James get this

done? Well, that's up to James. When the

solution is up to your staff, they're

more likely to be excited about it and

champion the decision. Forcing employees

to get creative and think of their own

solutions often leads to increased

efficiency and better outcomes. They

begin offering their energy, not just

their skills. They start asking

themselves, "Is there a better way?"

Lesson number 13, plan your perfect

week. One, be proactive. If you don't

plan and prioritize, you'll end up

working on somebody else's priorities.

Two, plan around your energy. Some

people notice they have high energy in

the early morning. You have to plan your

task according to your energy. If you're

best at coding early in the morning,

then you should organize your time slot

where early mornings are blocked for

coding. Three, task batching. When you

batch similar tasks together, you're

able to get in a flow state and get more

done. Four, say no often. When you

design your week ahead of time, you'll

understand exactly what you must say no

to in order to say yes to the things

that matter. And now, let's go to the

last lesson, which is lesson 14. Create

a clear 10 times vision. In the book,

Dan reminds us to create a clear 10 time

vision for these four elements: team,

one business, empire, lifestyle. Number

one, team. To accomplish your dream,

visualize who's in your team, who will

be there in the room with you, who will

join your team to execute your brilliant

ideas. Two, one business. Some people

brag about having two, three, four

businesses, but you need to become world

class in one area. For example, Steve

Jobs had Apple, Bill Gates had

Microsoft. What is the one thing you

want to be known for? Three, empire.

After you've imagined that one business,

then consider your empire. This should

come from your core highle skills in

your production quadrant. What products

do you have? Are you in multiple

industries? Are you an investor in some

companies and a CEO in others? Is there

a company to connect all these or are

they all from multiple interests? Four,

lifestyle. Imagine yourself 10 years

into the future of your dream life. What

are you doing? Living in Paris, multiple

vacations. Who will you be with? What

hobbies will you have? The whole idea in

buying back your time is to spend more

time doing what you love and also the

ones that bring in more money. That's

how to build your life where you don't

need a vacation. As Dan says, the

buyback principle isn't an activity you

do once then quit. It's a philosophy,

one that requires you to constantly

audit how you're spending your time.

Consider how to transfer time-

conssuming low-v valueue tasks. Then

importantly, fill your new time with

what lights you up and makes you money.

If you're watching this video, then I

assume you have a business. I have

already summarized several business

books for entrepreneurs to improve their

personal and business life. I will put

them as a playlist on the screen. If

interested, check it out. Thanks a lot

for watching and hope this video helped

you just a little bit.