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Work Smart to Earn More While Working Less

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“Efficiency is intelligent laziness” – David Dunham

Conventional wisdom says that to make more, you need to work more.  In professions such as law and accounting this wisdom usually prevails.  But the opposite is true among many of our business owner clients.  The most successful entrepreneurs--those earning $300,000 or more annually—typically work 1/3 fewer hours than, and take twice as many vacation days as, those earning under $100,000. 

How do they do it? By working smarter, not harder.  In our experience, small business owners can significantly increase their earnings and simultaneously reduce their hours worked by executing on four critical tasks (see summary).

Few business owners have accurate and detailed data on the factors that drive their profitability.  You should understand your profitability by market/ geographic segment, customer/job size and class, vendor, product/ product line, sales rep and/or project manager, time period(s), price point, etc.  Gross profit should be measured as well as net profit after overhead allocated based on resource usage.

This data can yield powerful insights.  One of our construction clients earned $100,000 net annually, yet discovered through a job profit analysis that it was actually making $150,000 in two types of projects, and losing $50,000 on all others.  Restaurant and fast food outlets often make virtually all their profits on drinks and/or side dishes, while breaking even on main courses (ever wonder why McDonalds promotes its “value meals” so aggressively?)

Entrepreneurs need to understand precisely how they, and their key people, are spending their time.  This should be measured across not only the dimensions listed above for profitability analysis, but also across functional disciplines and against required skill sets, to identify opportunities for delegation and streamlining.  Successful entrepreneurs monitor return on time invested (ROTI) as closely as ROI.

Business owners’ “gut feel” about how they spend their time is usually way off.  Actual data shows they spend most of their time on low value, repetitive, administrative “urgent” tasks, and not nearly enough on strategic planning, relationship-building, recruiting/ training, and other non urgent activities that drive long term profitability.   This time allocation adds stress, wastes opportunities and is unsatisfying.  

The solution? Reengineer your business processes, systems/procedures, recruiting/ training, technology, and management approach to reduce the time you spend on “low value” and unpleasant tasks by 70-80%.  Only by slashing this work can you free you up time for higher value activities, work you love and time off. 

This streamlining is not easy but can be done.  An activities industry client eliminated much of her busy work by moving her reservation and vendor communication systems online.   A photography entrepreneur outsourced his entire marketing programs to an ad agency, who has generated better results and freed him up to expand his business on the mainland.  A construction firm owner cut the time he spent going on jobsites 70% by recruiting and training a key project manager.  He was reluctant to add to his payroll, but with time saved he has brought in more than a million dollars in new business and is enjoying his business for the first time in years.

By refocusing on work you enjoy you will earn more. Shakespeare observed more than 400 years ago: “No profit grows where is no pleasure ta'en.”