Entrepreneurs' Essential Equation—and 4 Ways It Can Improve Your Life
Most things can be distilled WAY down if you try.
It seems complicated and difficult by its nature (and that's part of the glamour).
But boil it down and it's not so scary.
For instance, the word entrepreneur (which is already more pretentious-sounding for being French) translates, more or less, to one who undertakes projects. Since "entrepreneur" is considered an occupation, it's implied that you make your living from your enterprises, whatever they may be.
But therefore, in simplified terms...
Entrepreneur = person who makes their income by doing projects
See? Not so complicated.
But still useful—a definition like this highlights the key difference for entrepreneurs. They make an income because of their work, not because of their job.
Having said what an entrepreneur is, let's get to the real meat of this article: how entrepreneurship boils down to a single, simple equation.
Once you understand the equation better, you might find completely new ways to...
- Get more done every day
- Increase your earnings
- Decrease your daily stress
... whether you're in business for yourself OR employed in more traditional fashion.
So here's the equation:
Time = Money
That's right. Time is money. You've heard it before. Written out as a sentence, it's practically a cliché. But turn it into an equation and you can manipulate it in useful ways.
Think back to algebra class. Most of algebra revolves around one simple rule: whatever you do to one side of the equation, you must also do to the other.
So, for example:
2(Time) = 2(Money)
That would be a mathematical way of explaining that (for example) if you work twice as many shifts, you should expect double your usual income. Seems logical, right?
Just to keep you thinking this way: notice that most typical wages can be expressed in these sorts of algebraic terms. Like...
1 hour = $10.25
1 year = $60,000
If you have a job and know what to expect on each paycheck (or shift), you don't need to think about much else if you don't want to.
But entrepreneurs' income is variable—for the most part, they eat what they kill. They don't have perfectly predictable paychecks. So equations like Time = Money (and thinking algebraically) become all the more essential.
For the rest of this article, we'll walk you through 4 ways that Time = Money can be applied in your life and can help you earn BOTH things back.
1. Fast Around the House
Laundry, cleaning, cooking, and other household tasks don't take tons of time—but they take more time than most people expect.
Plus, most people prefer the "lazy Sunday" pace. But they could all be done much faster, and that's where you can earn back hours from single changes.
Take, for example, grocery shopping. Might take an hour a week, right? But when you count making a list, driving there, walking around the store, checking out, driving home, and putting everything away, it's probably double that, if not triple.
But I can't just not go to the grocery store, you think.
Ah — you must not have (discovered) Instacart. If it's available in your area, you should try it. You pay a bit of a premium—maybe 15% extra, give or take.
So instead of paying $100 to go get your groceries, you'd pay $115 to have them delivered. Might strike a nerve to you. But remember:
Time = Money
2-3 hours per week (grocery store) = $15 per week (Instacart)
Cost to buy back your own time = $5 to $7.50 per hour
Pretty cheap—considering what you could do (and/or earn back) with 2 or 3 hours of sudden free time.
2. Maximize (Truly) Valuable Time
Here's another nuance of the Time = Money equation: not all time is created equal. Some hours spent are more productive than others. The productive times might yield actual cash, but they can also be valuable without yielding a single dime right then.
Let's say, for example, you run a small store where you sell handmade goods. When you're not at store, you're keeping records, ordering supplies, and of course, making the products themselves.
Get as granular as you want—the point is that a business like this only makes money during their "selling hours." Yes, you have to make your goods before you sell them—so workshop time matters. But no one pays you directly for your hours in the workshop, and the distinction matters.
If a business like this wants to make more money, they should consider optimizing (and/or maximizing) their storefront hours — and of course, doing what they can online, where goods can be sold 24/7.
3. Eliminate Needless Motion
In ANY business, whether it's manufacturing or consulting, there's one kind of time that's almost always wasteful: time spent in motion.
Think about day-to-day transit. Most people drive. While they drive, they can't do much else. They can talk on the phone, maybe.
And in America, people drive a LOT. Think about going to the grocery store. How much time would you need door-to-door, both directions? A fair amount, probably, even for that one simple errand.
This kind of "waste" adds up fast. But get creative with one little rule and you can shed tons of needless time.
Here's the one little rule: eliminate needless motion. You'd be surprised how many goods and services can come to you—just Google it. Per the Instacart math, the extra cost is often justifiable.
If nothing else, start combining more errands while you're out. And for heaven's sake, don't be ashamed to get dinner delivered on a busy night.
By the Way
When you're doing the math, it's worth being nit-picky. There's a reason (profitable) manufacturing and shipping floors try to eliminate 4 steps (of walking) here and 2 steps there—because 4s and 2s are small savings for steps walked, but not when you multiply them by 500 cycles per day, 330 days per year, 50 workers at a time.
4. Economies of Scale
Anyone who's shopped at Costco or Sam's Club already understands economies of scale: the more money you can spend at a time, the further you can stretch each dollar you spend.
So the simple advice consider a Costco/Sam's Club membership belongs right here.
But there are also economies of scale for time. Most activities become more productive when we can do them for longer periods of time.
A simple example: doing all the laundry in your house might take a while, but it's much faster per garment than doing one small load at a time. (Doubly true when you combine multiple people's laundry.)
In terms of Time = Money, economies of scale means that...
Time = Output, but...
2(Time) = 3(Output)
So another round of simple advice: figure out how to "batch" whatever you can. Look for ways to save yourself time by working ahead!
Next week, we'll be back with more useful advice—and our pithy "Spark Notes" for an excellent book on productivity. Want to get twice the work done in half the time? Check back next Tuesday for a Code&Quill briefing on Scrum!
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