Clichés

Clichés become so because they are phrases so often repeated they no longer invoke an emotional response.

It doesn’t mean they’re no longer true.

My favorite business cliché:

“Running a business feels like building a plane while flying it.”

It perfectly captures the trade-offs and tensions between the day-to-day activities (flying) and the work necessary (building) to evolve your business.

Ignore too many day-to-day activities and the plane will crash.

Delay too many foundational building projects and you’ll be stuck flying a run-down Cessna instead of a high performing 747.

Most owner anxiety ultimately arises from this tension.

I see it in my clients and I’ve experienced it personally.

How can you find time to build the systems and infrastructure to help your business grow when countless fires need extinguishing and your to-do list keeps growing?

How do you manage the personal and external demands on your time and energy?

Michael E. Gerber was one of the first to coin the distinction between working on versus working in your business in his bestselling book, The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It (originally published in 1986).

The E-Myth series has contributed meaningfully to how I run my own businesses and how I advise others.

Below is a simple guide to how I have applied it to my businesses.

Working On vs Working In Your Business

Let’s briefly align on the differences between working on versus working in your business.

Working in your business includes all activities involved in delivering what your business provides today, including:

Working In Your Business Tasks

• Product or Service (delivery and / or creation)

• Customer Service (addressing calls or requests)

• Marketing (creating assets/copy, etc.)

• Sales (fielding sales calls, etc.)

• Finance and Bookkeeping (paying bills, invoicing, etc.)

• Operations (processing inventory, IT, etc.)

• HR (payroll, hiring, etc.)

• Other Administrative

Working on your business includes activities related to strategic planning and improving the business for tomorrow:

Working On Your Business Tasks

• Developing or enhancing products and services

• Building automation or productivity systems

• Forecasting, financial and strategic planning

• Developing and testing marketing and sales strategies

• Fostering strategic alliances

• Personal development

Time Audit

Any fitness trainer worth their fee will tell you one of the best predictors of weight loss is food tracking. Why? Without it, we underestimate our calorie consumption by at least 20%.

The same is true for our time. We think we don’t have enough time but often it is poor time management. The cumulative hours per day spent scrolling social media is equivalent to the handful of chocolate chips (my downfall) consumed throughout the day that sabotage your diet. We often do both unaware.

For one week audit your time. Do NOT skip this step.

Let’s assume, similar to your diet, you’re misallocating time spent by 20%. That’s over twenty-two waking hours per week or half of a standard work week.

You could change your life with only FIVE extra hours per week.

I created a time tracking spreadsheet called The Week to help me plan and manage my time. The first time I used it many years ago I was blown away. I had WAY more time than I realized and it helped me stay mindful of where my time was going.

Click here for a copy of The Week you can use for yourself. Below is a short video explaining how it works and how I use it.

Identify Leverage Points

From your audit try to find one thing to:

• Eliminate - Does it really need to be done?

• Delegate - Can I delegate or outsource it to someone else?

• Automate - Are there tools or software I can purchase to automate the task?

Evaluate Trade-Offs

If you’re not eliminating tasks, deciding whether to delegate or automate the task comes down to evaluating the cost-benefit.

Making trade-offs is a difficult but incredibly valuable skill. Do it well and you can unlock tremendous value in business and life.

There are two primary trade-offs:

• Time for Money

• Time for Energy

Below are frameworks to analyze both.

Opportunity Costs

There are many formulas for evaluating opportunity costs in your business. I think the most effective is Return on Delegation (RoD). RoD is a simplified ROI (Return on Investment) to determine the cost-benefit of outsourcing.

Other formulas utilize a per hour cost for your time. Doing so grossly underestimates the potential value of outsourcing and delegating.

Freeing up the owners time isn’t about reducing a fixed cost. It’s about increasing the top line.

For example, assume a business brings in $300,000 in annual revenue and the founder spends 10-15 hours per month performing bookkeeping tasks.

If the founder spent 10-15 hours extra per month on marketing strategy could they increase sales by 5%? Seems reasonable.

The RoD on hiring a bookkeeper at $300 per month is 3.16 ($15,000-$3,600)/$3600.

Don’t believe the 5% increase is possible? Ask yourself what is the breakeven?

In this case, 1.2% growth ($3,600/$300,000) would pay for itself. If you can’t increase sales by 1.2% in a year by spending 120-180 more hours on marketing strategy, something is terribly wrong.

Obviously the Value of Time Freed is the fuzzier parameter of the two. The delegation investment is often clear and concrete. That is why I encourage calculating both an estimate and a breakeven.

Calculating a range provides a better sense of reality than a single point.

Also, I refer to the delegation cost as an investment for a reason. Mentally we view costs as expended and gone. Spending money to free up your time isn’t wasted but an investment in the truest sense.

From your time audit, what activities are you working on in your business and what is the potential RoD range for each?

Energy Costs

There are aspects of outsourcing or delegating that are missed by purely quantitative measures like RoD.

For example, I pay an accountant to do my taxes. There are numerous good reasons to hire an accountant when, like me, your tax return includes multiple businesses and other complexities.

Even if mine were straightforward I would hire an accountant. Why? Taxes drain me. The energy black hole they create affects everything else in my life.

How do we account for energy loss?

Time-Energy-Impact Matrix

The Time-Energy-Impact (TEI) matrix is simple. Score your activities across each dimension using high, medium low or another simple scale.

• How time consuming is it?

• How much does it drain my energy?

• What impact does it have on my businesses success?

This is more for awareness than quantification.

Obviously, items rated high in time and energy and low in impact are easily outsourced.

Not so obvious are items that score high in energy drain but could also be relatively high impact.

Such items deserve special consideration. If they are truly critical to the business then you should either:

• Do it

• Ask yourself if your low energy is jeopardizing its successful completion and outsource it.

The Next Step

Monitoring whether your working in or on your business shouldn’t be a one-time exercise.

Even when you have reclaimed time and resources for strategic initiatives, the pressures to “fly the plane” are constant.

The day-to-day of business and life easily lures us back into old and new to-dos.

Tasks that pull us away from creating the business we want, as we try to avoid losing the business we have.

It’s a constant battle but one that must be won to win the war.

My goal with The Leap is to provide you each Saturday with the knowledge, tools and lessons learned to help you get started and keep going toward building your future. 

Whether you are making the leap to startups, solo-entrepreneurship, freelancing, side hustles or other creative ventures, the tools and strategies to succeed in each are similar.