I arrived back from a week long vacation in Turkey on Wednesday. As per usual, my time away from my business was hugely inspiring and although I had an awesome time, I couldn’t wait to get back and start putting my new plans into action.
The causes of my inspiration this time around were two books: The 80/20 Principle and The 4-Hour Workweek. Reading those books led me to formulate a new plan for my ongoing business interests centred around three principles.
In this post I will name those three principles, explore how they have completely changed the way I think about my business, and reflect upon how I feel my business may develop in the coming months as a result.
The Three Principles That May Revolutionize My Business
Although I am delighted with what I have managed to achieve in the last two years or so, there has remained a nagging feeling at the back of my mind that I could be achieving so much more. A voice in my head tells me that the success I have experienced so far only represents a scratching of the surface of what is truly possible.
During my vacation the reading I did revealed what I believe to be three principles that clearly demonstrate that the voice in my head is right. Having spent a lot of time thinking about how I have been running my business in the past week or so, I believe that a huge shift in my approach could lead to a far greater income in the relative short term (three to six months).
That shift will be led by three principles. Let’s take a look at each in turn.
Conventional wisdom is not to put all your eggs in one basket. 80/20 wisdom is to choose a basket carefully, load all your eggs into it, and then watch it like a hawk. ~ Richard Koch (tweet this)
The word “optimize” is used in a lot of contexts, but for the purposes of this post I intend for its literal definition to be used:
To make the best or most effective use of (a situation or resource)
The 80/20 Principle has shown me that I am not making the best or most effective use of my situation and resources — not even close. Furthermore, it has demonstrated to me that I have not leveraged the most obvious potential sources of income in order to build my business further.
Consider for example the contrasting success of my freelance writing guide and my authority site. Since the guide launched in November 2012 it has made me over $10,000 in net income. As a first foray into information products I consider it a success. On the other hand, I have poured countless hours into my authority site since September 2012 and have nothing to show for it.
So here’s the blindingly obvious question that I have managed to avoid asking myself for the past eight months or so: with my first information product having been such a success, why haven’t I been working on another one? Why have I chosen to ignore developing what has to date been the most profitable passive income stream I have been able to produce?
Then there is my freelance writing business. I have never had a problem finding clients — since I landed my first two through online job boards, they have all come to me. For the past several months I have been hovering at capacity with my freelance work and have even turned prospective clients away. Anyone with half a brain should spot an opportunity there, and yet I have refused to entertain the idea of building my freelance business on the basis that it would be too much hassle. I had dismissed the prospect out of hand and continued to focus on other projects that don’t show nearly as much promise.
In terms of optimization, I have been spending way too much time making no money on untested projects when the potential to make thousands of extra dollars per month has sat on the sidelines. That has to change.
The height of cultivation always runs to simplicity ~ Bruce Lee (tweet this)
This is a concept straight out of The 4-Hour Workweek. I should say first of all that I had actually read this book before, around two years ago. It turns out that I had a lot more to gain from reading it second time around.
The principle of elimination as described by Tim Ferriss is simple: be effective, not efficient (or to put it another way, focus more on what you do, not how you do it). He says you should forget “time management” and focus instead on eliminating all tasks that do not lead to the greatest possible opportunities.
Ferriss’ wisdom came to me at a perfect time as I had tracked all the time I spent on my business in June. This was the outcome:
Do you know what I see? A hell of a lot of wasted time, and even more time that could have been better spent.
Here are some areas in which I can look to eliminate at least part of my time commitment (i.e. areas that offer little to no return):
- Emails (17 hours)
- My authority site (19 hours)
- Admin (3 hours)
- Social Media (3 hours)
- P90X Journal (4 hours)
- Non-billable client work (4 hours)
- Miscellaneous (3 hours)
That’s fifty-three hours in June (or nearly fifty percent of my total working hours) that could benefit from elimination. And here’s the clincher: the less time spent on tasks that offer little to no return, the more time I can spent on building a more successful business.
But it’s not just about elimination. Once I have done that I can transition into the third principle.
I not only use all the brains that I have, but all that I can borrow ~ Woodrow Wilson (tweet this)
This is Ferriss at work again, with a simple piece of advice: if you can outsource something for a fraction of what it costs you, there is no reason why you shouldn’t.
Let’s explore this principle in detail. My equivalent hourly freelancing rate in June was $161. As such, it is reasonable to say that my time, professionally speaking, is worth $161 per hour. Therefore, every hour that I spend on work that doesn’t make me $161 represents a loss on my highest possible earnings.
If I can outsource a relatively menial task for $20 and use that saved hour to earn an additional $161, my net profit is $141. That’s the simple math. The less time I spend on the less profitable aspects of running my business, the more time I have to spend working on the more profitable aspects.
This comes back to the 80/20 principle. In this context the theory would be that I only spend 20% of my time working on the tasks that create 80% of the benefit. Therefore, if I can outsource various tasks so that I am able to spend 80% of my time on the high-benefit work, the result could be a 400% increase in gross profits.
That is all theory of course, but compelling theory nonetheless. Let’s look at it a different way — I worked six hours per day on average in June. That’s as much as I would like to work (in fact, I’d ideally work less). If I can outsource three of those hours each day at a cost of $60 per hour on average, I can potentially make an additional $423 per day (net) by focusing on high-return tasks with the increased time that I have available. That’s an extra $9,000+ per month, or a 100%+ increase in net profit. Automation can be a real money spinner when employed correctly.
Putting It All Into Practice
I have already started putting the wheels in motion regarding my plans to optimize, eliminate and automate. However, I am going to be making big changes and will have to tread carefully. The last thing I want to do is unravel so much of the good work I have done to date.
There’s a lot to do on this front and I’m really excited about what it could mean for my business.
First of all there is the freelancing side of things. Finding writers for my authority site was a huge wakeup call as to the depth and breadth of writing talent out there. As such, I think I would be crazy not to consider scaling my writing business.
I am still in the preliminary stages of figuring out exactly how my new business will be structured, but the basic business model will be the subcontracting of vetted freelance writers to clients (along with editing services). I’ll be writing more about this on Leaving Work Behind very soon.
Then there’s my next information product. You may know that I am currently working on the Leaving Work Behind book, and the more I think about it, the more it makes sense for it to be a guide/course in the information product mould. This has been a gradual evolution of what was originally to be a manifesto. My most recent thoughts are to create a compressed version (say 5,000 words) of the guide as a freely downloadable manifesto and create an entirely separate and comprehensive premium guide. I am really excited about taking the book to a completely new level in terms of providing a step-by-step, highly actionable guide to leaving work behind.
Those two projects will be enough to keep me busy for the time being!
Elimination and Automation
This is where I could get into sticky ground. Consider for example the amount of time I spend responding to Leaving Work Behind emails and comments. These extremely time-consuming activities offer me no direct return and are prime candidates for elimination and/or automation. However, my propensity to respond to reader emails and comments are in part why I have been able to build what I consider to be a pretty well-liked brand over the past couple of years.
The last thing I want to do is alienate you guys (besides, I like talking to you!). It’s a tricky situation — ultimately my time is not scalable and I have to draw the line somewhere in terms of how much time I spend on interaction.
So I am in search of suitable compromises. For instance, I am considering the idea of not responding to all reader emails individually, but instead picking the best questions and presenting my answers in periodical posts published here on the blog. The best questions would get answers, those answers could benefit a wider audience, and I would get through them quicker by batching my responses.
Also, an idea I have for comments is to implement guidelines such as these and these. I could then outsource basic comments management to ensure that (a) only worthwhile comments remain on the blog and (b) I was sent a list by my virtual assistant of only the comments that require responses.
I’m already working on a bunch of less problematic methods of elimination and automation, including:
- Using TweetAdder
- Scheduling Facebook updates
- Managing blog comments for clients
- Research/planning/etc for freelance work
- Link building for my authority site
I’ll probably get into the specifics of my experiences with elimination, automation and outsourcing when I have fine-tuned my approach.
This has been a bold post — I have publicly declared my expectation that I will be making far more money within the next three to six months. If I fail in my endeavours then I will end up with egg on my face, but I am confident of my plans. I am hopeful that my new writing business in addition to the release of my Leaving Work Behind guide and manifesto will boost my income considerably.
Of course, only time will tell but I am extremely excited for my prospects through the second half of 2013. Although I was hardly dragging my feet before, I feel like I have a new lease on life and I can’t wait to see my new plans come to fruition!
I’d love to know what you think about any and all of the above, so please share your thoughts and questions with us in the comments section below!