The Business Freedom Index: Are You Getting A Big Enough Return On Your TIME?

Foreign welcome back to Real Estate Team Builders Podcast. This is Lars Hedinburg, the founder, Real Estate B School. On the last podcast episode, I had the privilege and honor to talk with Curtis Fenn, the president of Red X. I've been using Red X man, for over a decade and I just love companies that geek out on one thing to make our lives easier. And that's what Red X does at a very, very high level. We got into a conversation around return on time versus return on investment and that's what I want to focus this follow up episode on. You know, when I think about the journey of making more money in less time with less stress, that's what I've obsessed over personally in my business growth journey and with our members. And our most successful members have gone from, you know, doubling, tripling their business, but also cutting their hours and cutting their stress in the process. And what does it look like and what is return on time and what is return on investment? And you know, if you're not where you want to be in terms of your financial snapshot, your net worth or your residual income, or you're working out of bounds, meaning you're working too many hours right now in your real estate business, or maybe the money's good, but you're working too many hours and you're stressed out and there's collateral damage for that stress, right? When I'm stressed, I tend to overeat, I tend to numb out in front of the tv. We have all these ways that we sedate ourselves when we're not working a normal amount of hours. And traditional success in our industry most often, I mean, like 99% of the time, if you're crushing it in real estate, you're probably not crushing it in terms of the hours you work, the stress you endure, and the areas of your life that matter more, like taking care of our physical bodies or, you know, being present with your spouse or your children, or being close to your creator or having hobbies and enjoying the ride. Right. We forget these things and many of us don't have a lot of money to show for our efforts. So let's unpack this return on time versus return on investment. So you can either. The cool thing about real estate in one sense, and Curtis covered this, you can put time into your business and as a result of putting time in, you can get commission checks out. So you could, for a very small investment, you can use a tool like Red X and you can basically have conversations with expired or FSBOs and do a good job of Keeping a follow up system and text and video drips and all the follow up sequences to get them to move through the pipeline. Real estate, a pipeline. Only 10% of the folks that you talk to are probably ready to transact in the next three months. And so you could do that, right? That's return on time or you can buy your way. And he talked about like, you know, a lot of the bigger agents are spending a lot of money on mass media or billboards or, you know, and these newer agents, look at these agents that are, you know, 10 years in the business and, and they're, they're thinking that they can just buy their way to success. And that conversation and the whole return on time versus return on investment brings up a bigger conversation. And it's something that we gave a name to at real estate B school. This was probably three, four years ago. And it's the Business Freedom Index. And I want to spend the rest of my time explaining what that metric is and how to use it to help you decide where you need to focus your time so you can have a maximum return on your time. So I'm going to dig real deep into this return on time rot metric that Curtis spoke about. So what's the Business Freedom Index? This is how it got started. And I actually swiped the concept from a book I read in 2007. Maybe it was a book called no BS Time Management for Entrepreneurs by Dan Kennedy. It was the second edition. I think there's a third edition out. I don't even know what the book was about at this point so many years ago, but I remember this simple concept that the money you take home versus the hours you work, that's your return on time. So let's say you make $250,000 a year AGI adjusted gross income on your tax returns. That's the metric that I use. And you work 50 hours a week on average, and you work 50 weeks. So 50 weeks times 50 hours a week is 2,500 hours. A, let's say you make $250,000. $250,000 divided by 2,500 hours is $100 per hour. That is your Business Freedom Index. So now there's two things that you must do at the end of this podcast. You must calculate to the best of your abilities where you are now. So when I went through this exercise, it must have been 2008 that I read the book, because I remember looking back at 2007 I started in real estate. March 5th, I think was my last corporate day of 2007. So roughly I had about 10 months in real estate. And I remember calculating in 2008 I had done my tax return and I netted my AGI on my tax return from the real estate activities was $37,000. And I calculated in those first 10 months that part year 2007, I was in the business, I worked 2,000 hours. So when I read this chapter of the book, no BS time management, I took 37,000 and I divided it by 2,000. If you haven't pulled out your calculator already, that's $18.50 an hour. The corporate job that I left, I made a couple hundred grand or so with stock options and I worked a 40 hour workweek. It was a pretty cush corporate job. It's a great job. I did acquisitions and strategy for an aerospace company, probably with travel. I worked more than 40 hours, but the travel was awesome. It was on expense and first class and it was just really, really amazing experience. So let's say 200,000 divided by 2000 hours is $100 an hour. I went from $100 an hour in my kush corporate job to get into real estate. Everyone was scratching their head like you're going into real estate. Nobody really knows any great real estate agents. We're not really highly thought of from the outside world. Right. We think highly of ourselves. But most consumers don't think highly of real estate agents. And if you didn't know that, I'm sorry to be the one to break it to you. So I went from $100 an hour to $1850 cents an hour. That was my actual. This was early, well, probably April, May 2008 after I filed my tax returns. And then I made a declaration that if I was going to leave a cozy corporate job making $200,000 a year, I was going to commit to figuring out how to make $500,000 net as a real estate agent. Working 40 hours a week or times 50 weeks is roughly 2000 hours. So my aspirational BFI business freedom index was 500,000 divided by 2000 hours is $250 per hour. Way higher number than the $18.50 an hour. So I was at 1850 and that 1850 was on 27 transactions. So my gross was like 240. I overpaid my broker. I remember I took 170 and then the 170. I wasted a whole bunch of money, about 130 grand roughly to get down to the 37. So I made a lot of mistakes in all of that, but the net net was 37,000 working 2,000 hours in 10 months, 1850. So I declared. And I remember writing this number on index cards and just obsessing over this number. 500,000 divided by 2000 is $250 per hour. So I. The BFI Business Freedom Index essentially is your aspirational return on time. So we have a process that we go through in real estate B school, where we're actually honest with ourselves about where we spend our time. We go through time studies and then we do passion versus pay exercise. Like the activities we're passionate about. Are they paying us the kind of money that we want to make or if they're not right. There's high passion, low passion, high pay, low pay. And then we delegate to elevate. So we got to get the things off our plate that are low pay, even if we're passionate about them. And so that's the journey. That's the journey that I committed to and I obsessed over the 250. It took me about five years to figure out how to make $250 an hour. Maybe four to five years. It took me another. Of course, when I figured that out, I moved the bar to 500. One year I made $2800 an hour in my real estate business. It was awesome. It was 2014. So new to the business. In 2007-2014, I went from $18.50 an hour to $2,800 an hour in my real estate business. And how does that happen? Right? How does it happen if you missed. I did a four part series that lays out the entire process. It is probably a couple like four or five episodes ago. As you're listening to this podcast episode, the first episode, I forget what it was called. Let me see if I could pull it up real quick. Yes, the first episode was called episode439. Everyone has the same number of hours in a day. Here's how to use yours more impactfully. So it's a four part series and that'll really help you kind of go through and, and really break it down. Like, what's the. Once you make draw this line in the sand, you know where you're at in terms of your business freedom index. You know where you want to go. Like how do you get from $18.50 an hour to making 250 and then 500, then a thousand plus and then $2800 an hour? It's just a series of delegations and awarenesses around where you're spending your time. So that my friends is what I want to cover today. This concept of Business Freedom Index, really having an awareness about all day long for the most part. And we did a time study exercise too in that four part series and if you go back and listen to the episode, you will realize that I will share that with you. And many of you have reached out to get a copy of the Time Study exercise. So kudos on taking action on that. But then the question becomes like, how do you get from where you are now to where you want to go in the future? The game that I played in business is I want to make seven figure income and I want to work a thousand hours. I don't want to make a gazillion dollars a year, but I don't want to work a lot of hours either. So I just want to make $1,000 an hour consistently. You know, I can work 20 to 25 hours a week and make a seven figure income. That is my end game. That's the only game I've been playing, you know. And that game stayed true for the real estate team, for my coaching business and now my journey in EXP and building a global organization with EXP as well. So my friends are wondering how to kind of go down these different stages of growth. Go to realestatebusinessgrowth.com I wrote, I think it's a 17 page. I call it the Real Estate Business Growth Navigator. It's going to tell you exactly what's required, each of the six stages of growth. 0 to 100k GCI 100 to 500, 500 to a million you need to know. And then a million million, 5 million 500 to 22 to 3 million plus. Those are the six stages and you know the questions to ask yourself. The tools and systems to implement what your team will look like at each stage of those journeys. So go to realestatebusinessgrowth.com and we will talk to you soon. Be good. Thanks for listening. Would you please take a minute to share the show with other team leaders who may be struggling? And if you love the podcast, please leave us a five star review on Apple Podcast. If you want to learn step by step how to build a profitable real estate team that allows you to get out of the real estate grind and live the lifestyle you've been dreaming about, Visit us@joinrebs.com that's joinrebs.com Our coaching, training systems and support will help you get more high quality leads, increase your conversions and sales, improve your client experience and allow you to scale your real estate business, all while reducing the amount of hours you work and the stress you endure. Just go to joinrebs.com for more info now. See you on the next episode.