You and your business: time is your scarcest resource
Being self-employed requires an entirely different ‘mindset’ to being an employee.
In our own experience, and in our observations of other business owners, a number of particular attitudes need to change if we are to succeed at – and enjoy! – running our own business.
The main change in attitude is to ‘let go’ of the relationship between time and reward. If you are an employee, you make a basic deal with your employer. You sell them your time. They use that time to get the work done. But if the work cannot be completed in the time allotted, the employee does not have to do it. Yes, if a conscientious employee will usually be happy to work extra time, or extra hard, to get the job done. But, if the work is too much to be completed in the time available, then some of it remains incomplete. The employee can go home.
This is not what happens in your own business! Pretty much everyone who starts or buys their own business works longer hours, at least in the early days. We are sorry if that is bad news – but the business that you can run working four hours a week is elusive (and it certainly will not be the first business that you run). Most businesses need active management, especially in the early days. So, if you are a new business owner, be prepared to work longer hours. No one is buying your time any more. You simply have to do what needs to be done.
The other major mental adjustment can sound a little contrary to this advice. As employees, we tend to learn to measure our output by the amount of time it took. So, if one week we find that we have worked 50 hours, not 40, we tend to think we must have done more work. And if we are being paid by the hour, that makes sense.
But in business, time is not the most important measure. Quality is much more important. A lot of new business owners spend a lot of time on things that don’t need to be done. They are still using time as an indicator of performance. This can be a real trap.
Let us give you an example. A common mistake business owners make – still! – is to do their banking manually. A common method is to allow customers to pay by cash or cheque, and then drive to the bank two or three times a week, stand in the queue, fill out the deposit slip and hand over the cheques.
That’s why direct debit was created! Using direct debit, or Paypal, or some other form of electronic payment, means you need merely to ‘log on’ to your internet banking site to confirm if customers have paid. Indeed, modern accounting software can basically do that for you, too.
Paying by direct debit is usually easier for customers too – they too can just log on to their banking site and, with a few clicks, no postage and no trip to the post office, pay their bills and create their own record of payment. That is why the Reserve Bank has just announced that paying electronically has become much more popular than using cash.
The point is that physically going to the bank does not change the quality of your money management process: the money still ends up in the same bank account.
Spending time doing anything that does not improve quality is a waste of time. If you run your own business, time is your scarcest resource. You need to manage it accordingly. So, measure your business effort by how much you get done, not by how long your spent doing it. That is the best way to make your business fly.