Peaceful Profits Podcast Ep. 7 - 5 to 1 Rule
Synopsis:
In this episode of the Peaceful Profits podcast, Mike Shreeve reveals the 5 to 1 Rule—a simple but powerful principle for scaling any business with less stress and more clarity. If you’ve ever felt stuck working on endless tasks that don’t actually grow your business, this rule will reframe your priorities.
The idea is simple: for every 1 hour spent on non-essential work, you (or your team) must invest 5 hours improving your most important KPIs (key performance indicators). Mike explains how this ratio transforms the 80/20 principle into a daily operating system, helping entrepreneurs avoid busywork and focus on the activities that really move revenue forward.
You’ll learn how to identify your top 3–5 KPIs, why strategy time often matters more than raw execution, and how to build a dashboard that keeps you oriented on what counts. Plus, Mike shares how this approach influences hiring decisions, streamlines team management, and restores peace of mind so you can run your company like a true CEO—not just an overworked freelancer.
Perfect for founders exploring Peaceful Profits coaching, Peaceful Profits case studies, and Mike Shreeve’s marketing strategies, this episode shows you how to apply the 5 to 1 Rule to simplify growth, improve margins, and make smarter decisions without the chaos.
Transcript:
5 to 1 Rule
[00:00:00] Hello my friends help you doing well. I wanna share with you a very powerful rule that we use in our business to help us truly live the 80 20 life. Now, what do we mean by 80 20? It's basically becoming as efficient as possible by understanding what is actually moving the needle, what is actually growing your business, and then doing only those things, or at least more of those things and less of the things that don't move your business right?
But the five to one rule is the 80 20 rule applied. In other words, it's [00:00:30] an actual compass that you can use to help guide your efforts and your team efforts by measuring the ratio of work that ought to be applied to very specific metrics which deliver very specific outcomes. What the heck am I talking about?
In any business, there are central key performance indicators. Okay. These are central numbers. There should be three to five of them in any business doing [00:01:00] less than, I would say, five to $10 million a year. When we help our clients, we help them get very clear about what those key indicators should be.
In fact, we help our clients to create a centralized dashboard so that as the CEO of your company, even if it's just you or you and a virtual assistant. By having that central dashboard where you literally wake up, you log in, you see those central key performance indicators. It helps you to know what to do next to constantly and consistently be taking the right actions as [00:01:30] you grow.
And what the five to one rule says is depending on what your KPIs are, 'cause everybody's KPIs are different based on where you're at in your business growth based off of your business model, based off of your own personal desires as how you design your business. But everyone has different KPIs that they're tracking in their central tracking dashboard.
The real big ones, the three to five, but the five to one rule says this. For every hour that is spent in your business on non KPI related activities, [00:02:00] you must devote five hours to KPI related activities. Okay? So think that through for a second. If you are constantly worrying about the support inbox for every hour.
That you are answering support emails, you need to have five hours dedicated to the improvement of those central KPIs. Let me give you an example and if you're feeling like, oh [00:02:30] my gosh, there's no way I'm doing that right now in my business, then. What might be happening is that we are discovering why your business is stagnant, why it's not growing as quickly as you had hoped it would be.
Anything we give time and attention to will grow. And so if you are not giving sufficient time and attention to the things you want to grow most, that might be why you aren't accelerating at the pace you had hoped to accelerate or. Another byproduct of not following the five to one rule is that you tend [00:03:00] to get a lot done, but none of it is moving you towards where you want to go because you're spending a lot of time on non KPI specific activities and outcomes, and then you end up spinning your wheels and not getting to where you want to go, and then you start second guessing yourself and you're wondering if this is even gonna be worth it, and what am I doing in my business and all this kind of stuff.
So as you, for every hour that you spend on non KPI related stuff, five hours dedicated to improving the KPIs. Now, there's a couple things we need to talk about here and we need to break 'em down. I'll give you some examples. Number one, [00:03:30] it's not you who has to spend the five hours improving the KPII am a huge component and believer in the business owner staying in what, some people might call it zone of genius.
I would just call it in the thing that you want to do, because owning a business is hard enough for you to then also have to do a bunch of stuff you don't wanna do. I just don't believe that. I think 20, 30, 40 years ago that may have been true that you have to do that, but we live in a world now that is, is globally interconnected.
There's more opportunity [00:04:00] than ever. There's international audiences, which by the way, I think is an absolutely untapped opportunity. There's plenty of money overseas. There's plenty of money in. You wouldn't consider the quote unquote big four that people always target on Facebook. There's more opportunity and ability and flexibility and reach and exposure for you to do what you want to do.
You don't need to grind through bad customers and bad clients and bad offers, not in today's world. Okay? So I'm a huge proponent in people staying in their zone of genius. If you're a zone of genius if you what you want to do [00:04:30] has nothing to do with KPIs, that's fine. That's what a team is for. Now what you cannot have is a business where you stay in your zone of genius for an hour and no one is addressing the five hours that need to be dedicated to improving KPIs.
That is a fantasy ruined by reality, which is to say, we can desire something, but unless we put in place the [00:05:00] things that are required to operate in the real world, we won't have real world outcomes. So you don't have to be the one to actually execute all five hours. I personally don't in my business most of the five hour stuff, most of the focus on executing the KPIs is done with the team.
On occasion, I will assist. For example, I'm making this podcast episode. This podcast episode is a marketing asset. This marketing asset is [00:05:30] used directly to improve one of our central KPIs, which is actually to turn our front end customers into booked calls for our backend office. One of the core things that we track but.
Even then, it could be argued. I love teaching, so this is still within my zone of genius. So sometimes it overlaps, but the point is, it's not about you having to get it all done. It's that the company, the business itself must get done on a five to one ratio, focus on centralized KPIs compared to any other thing.
Now, what do we mean by five [00:06:00] hours of work? There's two types of work. One is. Ideation, brainstorming, planning, and coming up with better strategies. So there's strategic work and then there is actually execution. So when we break down the five hours, there's another concept, which is one hour of strategy is worth five hours of execution.
So for example, if I spend an hour turn the computer off. [00:06:30] Turn the distractions off. Go for a walk or sit in my office or whatever it is that I'm feeling in the mood to just let the ideas come and I sit and I just think about my KPIs. Or if I have a team meeting and we brainstorm and strategize and we are just thinking about these core KPIs, how can we improve these central core measurements that, that have the most direct impact on our outcomes and we just spend an hour strategizing that is worth five hours of.[00:07:00]
Now, of course, the big mistake and why so many start a business online. Gurus say execute, and take action. Take action is because a lot of people will strategize and then not do anything about it. I'm assuming if you're listening to this audio, you've gotten past that part, right?
That's a very like business 1 0 1. In the very beginning of your business, entrepreneurial life, you have to learn how to take action over time. It just develops into a habit. What I'm suggesting here is that with what the five to one rule tells you. Is that for every hour you're doing something else, you need to have at least five hours dedicated to improving your [00:07:30] KPIs.
But one hour of strategizing towards KPIs is equivalent to five hours of execution. Which is to say, which is to say. Okay. One of the first ways to improve a business before you hire a big team or whether you have a team before you, start hitting those higher numbers in business. If you're just trying to get yourself unstuck, if you're trying to find the way forward, is to simply spend as much time thinking about and designing appropriate strategies.[00:08:00]
Based off of your limitations, based off of your resources, based off of the business model you're running based. There's so many factors that go into an appropriate strategy that if you spend at least a one-to-one ratio for every hour, I'm in the supporting box, I need to be spending at least an hour strategizing how to improve the business.
For every hour I'm serving a client, I need to spend at least an hour thinking about how to improve the central KPIs. That, that just, that in and of itself. Would radically change the nature of your [00:08:30] business if you kept it that simple and you actually tracked your time. Now, the last thing I'll say about the time breakdown is that, is it really one hour to five hours?
Is it really one hour to, and it has to be 60 minutes to 60 minutes, and if it's 60 minutes to 59 minutes, your business is gonna fail. No, of course not. These are general concepts. If I were to, and this is what we do with our clients all the time. If I go into your business, I say, okay, for the next two weeks, I want you to track [00:09:00] every minute.
And you're going through and you're tracking every single minute, and you're tracking everything that you're supposed to be doing, and you're figuring out, at nine 15 to 10 27, I did this. At 10 28 to 1201, I did this. And you track that for two weeks. And then I come into your business. I take that sheet.
Let's say you put it on a spreadsheet and I start color coding everything, and I start saying, okay we're calling this support work. We're calling this client work. We're calling this strategic work. We're calling this execution on the KPIs, and I start color coding everything. What you [00:09:30] want to see is whatever the color is for the five to one ratio, meaning working on KPIs, whether it's strategizing or whether it's executing, that color should make up most.
Of what at a glance when looking at your schedule, that is how you be a CEO. Okay, so I know many of you who are listening to this are trying to grow a business, not just be a freelancer who has a job that they own, which is [00:10:00] very risky. Yeah, it might pay well, but it's pretty, pretty risky. You don't get the traditional benefits of a job if you're trying to be a CEO, an actual business owner.
If you're trying to ever get to the point where you can take, big vacations, you can have a team to help you. It doesn't have to be a big team. It can be a small team. It doesn't have to be employees. It can be all freelancers, it can be all vendors. There's all sorts of different. Machinations and designs for team and maybe it's half software even, who knows?
But if you're ever trying to actually own a business, become a business investor, even more than just a CEO, even more than just a [00:10:30] business owner, it's not going to happen until you have successfully habitualize the five to one ratio until when we look at your calendar, it is just mostly focused in on whatever the color would be.
For measuring your five to one ratio, the time you are spending on improving KPIs. Now let me give you an example, okay? Because if you haven't sat down and set your KPIs, this might be difficult for you to understand in terms of you, you may not [00:11:00] believe how powerful this is, but lemme give you some of our central KPIs and then we will hopefully this will illustrate the power of rethinking this process.
Okay? So if I were to look at my schedule. There are. So we have three to five, I'll give you three KPIs that I'm constantly looking at. In fact, in my business, in the business of my clients we set up with what we call just the central tracking dashboard. It's a dashboard, it's a spreadsheet. It's very simple, and it simply pulls in all the data from the [00:11:30] business as it correlates to the three to five numbers that matter to me as the CEO.
So for us, three of our numbers, not all of 'em, but three of them are how many new customers do we get? How many of those customers booked a call and how many of those calls, or we also measure calls or chats. So many of those customers booked a call or had a chat, and then how many of those calls or chats turn into a client?
Those are the three things. Now, those metrics are good for us because that's our strategy. Our strategy is create small courses. Send [00:12:00] those courses out into the market. They're, 27, 47, $50, a hundred dollars, very low ticket, easy to consume courses. They get results in advance. We send those out to the market.
We spend tons of money on ads because we actually spend nothing on ads. So for every dollar that we spend on advertising, we make back more than a dollar selling these low ticket courses. And then what we're doing is we're building big email lists full of customers. Which, by the way, customers are way better than freebie seekers.
I highly recommend if you haven't made the switch yet to replacing all of your lead magnets, all of your freebie content with what [00:12:30] we call acquisition funnels or acquisition campaigns, it'll drastically change the nature of your business. It'll change who's getting on the phone. It'll, we'll do a different podcast episode on why acquisition funnels are awesome, but that's important to us.
So we need to know that the higher that number is, the more customers we get, the more customers we get, the more of them are gonna book a call. The more than they book a call, the more of them are gonna sell. So when I'm looking at. Orchestrating the team. When I'm looking at what should I spend my day doing today when I'm looking at what actually is either [00:13:00] broken in the business or doing well in the business, and how can I tell and da, these are the numbers I'm looking at.
If we're getting good customers every day, if we're getting a good percentage of those customers booking calls, and if a good percentage of those book calls are turning into sales, then the business is doing great and. If all of a sudden customers are down, then I know that no matter how much I tweak branding, no matter how much I put out a fire with a client, no matter how much I [00:13:30] do any of the other things in my business, the business won't improve until the number of customers that we're getting every day goes up again until that number is improved and I know that we will be working towards improvement if and only if I follow the five to one ratio.
So as you can see, the five to one ratio is really a prioritization tool. It's a real time prioritization tool based off the 80 20 principle, which essentially tells you how much effort ought to [00:14:00] be going into which specific tasks. So in order for you to execute the five to one tool, you need to obviously have a couple things.
One. You need to know what your core KPIs are for your specific business model. If you don't know what they are, you may fall into the trap of measuring everything, which doesn't actually help you to improve. You need to 80 20, your KPIs. There's a hundred things to measure in the modern business. Open rates and click through rates and retention and there's a hundred different things that you can measure.
What's the cost per click? What's the ccp m, [00:14:30] what's the conversion rate on the sales page? So many different things. You need to drill it down to three to five. What are the three to five most critical and important numbers in your business? Create a centralized tracking dashboard so that you can measure those every single day so that before you even start your day, you can look at what's going on.
When you end your day, look at what's going on so you can plan for the next day to appropriately manage the time, your own time, and the team's time in the five to one ratio [00:15:00] saying your job as the CEO. Is to ensure that the resources you have compiled, which is the team, it's your own time, it's the softwares, it's the customers, the clients, that you can orchestrate all of these resources appropriately so that they are being as efficient as possible, five hours for every one hour, doing something else dedicated to improving whatever those central key performance indicators are.
I can promise you that if you do this, that if you actually begin to implement this process, you don't even have to know the [00:15:30] answers yet, meaning you don't even have to know the specifics. Of how you're gonna spend that five hours. You don't even necessarily have to know the strategy yet that you're going to employ and deploy to improve those KPIs over five hours.
It's the simple act of beginning to observe and think about your business in this new way that will yield improvements. It will yield improvements. The first improvement you're going to experience is all of a sudden business gets [00:16:00] really simple. And when business is simple, it's scalable. What's not scalable is complexity.
It's just not in the first couple years of your business, not with the limited resources that you have, not with outside cash injection. There's a reason that startups have outside funding. It's because to scale complexity is unbelievably expensive. If you're a bootstrapper like I am and you're trying to scale pretty quick, and you only have your money and the money that your customers and clients are willing to give you, then you have to remain simple.
And this is probably one of the fastest ways to get simple from whatever you're doing now. Number two, you can [00:16:30] start to, if you don't already have a team or you have a team, but you're not pleased with what they're doing, or you are looking to expand your team, or you're starting to just make those team decisions, this is one of the best tools for figuring out what exactly is it that you need.
Who should you actually have on your team? What should they actually be able to do if you just hired someone and all they did was their full-time? Dedication to you was to just focus on and worry about one of your three to five KPIs, I promise you right now, your business. Would it, I think [00:17:00] saying that your business would double would be to undershoot the potential of what could happen.
Depending on what KPI you hired someone to focus on. So now you're hiring for outcomes, right? This is what hiring for outcomes is called. One of the things that I think a lot of people do is they say I'm gonna go hire someone to make me money. Yeah, technically that's an outcome, but a more measurable, realistic outcome is I'm gonna hire someone to manage this specific KPI to make sure that they're putting at least five hours into improving that for every hour that I'm doing something else.
So being able to manage a team, know what team to hire, et cetera, is an outcome. And then lastly, just [00:17:30] the internal piece, right? We're a company, we're called Peaceful Profits. Our goal is to create a business that's not hectic and frenetic and chaotic and you're constantly wondering, am I doing it right?
And what should I be doing? Having the compass. And confidence from having a good compass. I dunno if you've ever been in the woods before without one and you're totally lost and you're trying to find your way, the second you have a compass or a GPS probably is even more accurate here. That tells you exactly how to get back to where you're trying to get to.
There is a peace and a calm that comes even if you're in the middle of the woods. Even if you whip out the GPS and it turns out you're [00:18:00] 45 miles away from where you're supposed to do, and you're like, how the heck am I gonna get there? There still is a calm that comes from at least knowing your way. And it's when we're calm, okay?
This isn't a pipe dream, this is a necessity. It's when we have peace, when we are calm internally, that we're able to make appropriate strategic decisions to get us to where we want to go. If we're focused on the wrong things, if we're frenetic and all over the place. If worry and stress is the main mode of operation, our decision making capabilities are [00:18:30] drastically reduced.
They are impaired. It is difficult to be a good decision maker when you are. Not in the right mind to make good decisions. So that's one of one of many of the potential outcomes of just starting to think about your business in a five to one ratio, much less than executing and getting the tangible results.
Okay, my friends. That's it for today's episode. If you would like my team to help you with any. That you've heard in today's episode, please go to peacefulprofits.com/call or [00:19:00] hit reply to the email that got you to this podcast. We'd love to have a chat or a conversation via phone. We have so many different ways that we can help you.
We can help you to determine what your essential KPIs are. We can help you to determine who you should hire to fill those. We can help you to even replace what your current KPIs are with better KPIs. 'cause not every business model is equal. Some are significantly better, and so changing. What your central KPIs are can change the outcomes that you are capable of.
In other words, the potential of your business [00:19:30] changes by what KPIs you're measuring and et cetera. Our team is highly trained, highly qualified. We have lots of success stories. All you have to do is go to peacefulprofits.com/call or hit reply to the email, have a chat with us.
We'd love to help you in whatever way that we can, and we'll see in the next episode.