Leveraging People to Your Advantage

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Work smarter, not harder. We've all heard that line before, but what does it really mean?

To have a better understanding of how that applies to our wealth-building endeavors, let us talk about how to leverage other people's time and answer the question, "Should you be mowing your own lawn?"

The first thing we want to talk about when we're talking about leveraging other people's time is first looking at your own time, or how many hours you're willing to work. In our example, I just made it simple. I'm going to say on average, we're going to spend a third of our day sleeping, a third of our day doing personal stuff, like personal hygiene, eating, hanging out with family, stuff like that, and then a third of the day, we will be working 8 hours a day at an average of six days a week.

I'm assuming that you work a little more than average. In our example, at six days a week, eight hours a day, the max work hours that we're willing to do in a single week is going to be 48 hours.

However, before we start thinking about working smarter, are we working hard enough to meet that 48 hours of work?

Are we actually doing 48 hours of productive work? If yes, then we can go ahead and try to figure out how to work smarter by leveraging other people's time. If not, then find more work and try to meet the 48 hours, or whatever you set. If it's only 40 hours, so be it. Personally, I'm closer to about 60 hours a week on average.

Now that you have worked hard enough, it's time to figure out how you can work smarter. And the thing I like to ask people when we're going through this is, should you be mowing your own lawn? That's what I like to ask.

Let us say, your salary is $25 an hour gross, and you can pay a landscaper to cut your grass $25 and it takes him about an hour to do it.

Simple, right? If that's the only two pieces of information, it doesn't really matter if you pay him or not. You can pay him and you'll make out.

But, you have to keep in mind that what you pay him is actually after-tax dollars. Your salary after tax in this example is $20 an hour. If that's the case, then it may be more beneficial for you to cut the grass yourself and save the $5, but is that really the answer?

I'm going to argue, no, because there's actually a few pieces of information that we're missing. Let’s dive in a little deeper on our example.

Say, you’re going to mow the lawn. We're going to start by counting labor costs. What does the labor involve? It actually involves getting off your sofa, going to the shed, grabbing the lawnmower, bringing it out, starting it up, mowing the lawn, putting it away, cleaning it up, then trimming, edging, then cleaning everything up afterward.

With all those considerations, I think it's going to take me about two hours to mow the lawn from start to finish. The one thing I didn't put in here, which is important, is that most of the time after I do mow the lawn, I smell like fuel and there are tons of grass trimmings all over me, so I usually need to grab a shower, which takes about 30 minutes. So in reality, the amount of time I spend mowing the lawn is actually about two and a half hours. To keep it simple, we're going to say two hours of labor to mow my lawn.

The other thing that you need to consider is the cost of materials when doing the task. Each time I mow my lawn, I use about a third of a gallon of fuel to fill up the lawnmower, the weed wacker, the blower, and the edger. And I'm going to budget about $1.50 per mow in regards to fuel.

Also, when I add any kind of fuel into the smaller equipment, they need motor oil mixed in, and then the lawnmower itself needs motor oil as well, so I'm budgeting $1 per mow. When you're trimming the edges, the weed wacker, the wire that you put in there, it feels like it is always disappearing. I'm only budgeting about 50 cents per mow for that.

Then, it feels like every three years or so, I'm replacing all my equipment. It breaks down one way or another, and either I'm repairing it, or I'm replacing it. In where I live, the lawn mowing season usually goes from April to October, which is about seven months. I mow once a week. That's 28 times a year.

Over three years, I get about 84 uses out of every piece of equipment. If the four pieces of equipment are going to cost me about $700.00 and get about 84 uses, then every this is costing me about $8.33 per use.

Every time I mow the lawn, it costs me $11.33 in materials and equipment replacement. So with that information, are we really saving money by doing it ourselves?

Let's see.

If we’re going to mow the lawn ourselves and the materials cost $11.33, we're actually only saving $13.67 per mow, and on top of that, we're spending two hours to mow it. Whereas, the landscaper's only spending one at $25.00/hour.

Take $13.67 divided by two, and we're looking at saving of about $6.84 per hour that we're out there mowing the lawn. Compare that to the $20 an hour that you're making after taxes, you're actually losing $13.16 per hour. That's your opportunity cost.

Every hour that you're out there mowing the lawn, you're losing money. You're actually not saving money, because if you can get paid $20 an hour, you should be doing that instead of mowing the lawn when you're only saving $6.84 per hour.

That is basically it. That's really all you need.

Moreover, as a business owner, another way I'd like to look at it is what if I was running a landscaping business and these were the numbers that I had to work with? If we take the $25 that the landscaper's charging per mow, and then our cost per goods, like cost per mow is 11.33, our gross profit per mow is $13.67. It's the same as the savings, right?

But the one other thing that we have to account for is the salary that you're paying yourself as an employee.

We're going to use the after-tax amount of $20 per hour. It takes us two hours to do it, which brings us to a total labor cost of $40 per mow. Our net loss, in this case, is $26.33, which means that we're losing money.

In conclusion, if these numbers are accurate, you should definitely hire this task out. Work hard first until you can reach a productive number of hours of work per week. And then once you can max out the number of hours that you're willing to work, then figure out ways to work smarter.

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