5 Ways to Eliminate Time Bandits

By Erin Duckhorn

Time is just another word for life.

—Michael Gerber

Time management is a skill that a lot of us struggle with. Even with the best intentions and the latest technological gadget that is supposed to streamline your work and improve efficiency, how often have you left work planning all the things you need to do in the morning because you didn’t get to them today? Busy business owners are just that: busy!

What kind of work is keeping you busy?

At E-Myth, we make a very clear distinction between the strategic and tactical work. Strategic work is the work you do to define the results you are there to produce. Tactical work is the work you do to produce the results strategic work has defined. When you think about your day, what percentage of your time do you spend in each area? Where is the greater value for your business?

Even if you know that you need to focus on strategy, how do you carve out time in your day for strategic work when you’re just trying to stay on top of the technical work you have to do? It’s a question we hear all the time from our clients. It doesn’t matter if you’re a retail store owner, a doctor, an IT professional or a contractor; everybody, it seems, is fighting the clock.

That’s why we dedicate a whole process in our Mastery Impact! coaching program solely on time management. With the intention of freeing yourself from the technical work, in this process we take a look at how you’re spending your time to accurately determine how much of your time is spent on productive activities that directly contribute to the results you want, and how much of your time is spent unproductively. This is a revealing process, and we usually identify areas for improvement very quickly.

Another thing we explore in our Time Management process is what we call “Time Bandits.” You know, those pesky "time stealers" and distractions that take attention away from strategic work—email, a talkative vendor, the telephone, your mother-in-law, broken office equipment… The list goes on.

Finding the discipline to eliminate Time Bandits is an important part of getting to the strategic work you need to do. Below are five Time Bandit Busters (there are 25 more in our process) that might instigate a change in how you approach time management.

5 Time Bandit Busting Tips

1. Prioritize and Stay Focused Evaluate your daily tasks and prioritize. If nothing else gets done today, what are the one or two items that absolutely must be done? The most successful CEOs of Fortune 500 companies only focus on one or two priorities for a given day.
2. Delegate as much as you can. Let go of the idea that nobody can do what you do the way that you do it! With the right systems in place, you can properly delegate the tactical work that keeps you from working on your business. There is critical distinction however, between delegating and abdicating, and you can read more about that here.
3. Set and meet deadlines for yourself and your employees. Set reasonable deadlines for all jobs and stick to them. Hold yourself accountable just as you would an employee. It’s true; work expands to fill the available time so set expectations.
4. Don’t postpone unpleasant tasks. Those “bitter pills” that you put off can come back to haunt you in so many ways. A situation may become more acute with time, not to mention the fact that it will be sitting in the back of your mind (or somebody else’s mind) becoming a distraction. It’s best to take care of important matters that are unpleasant immediately. Resolution is so much better than wasting precious time wondering “what if…”
5. Learn to say “No.” Beware of over commitment! You are the only one who can truly protect your time. Learn the art of saying “no” politely. If this seems daunting, try this: when confronted with an opportunity, don't commit immediately. Take a moment to listen to your intuition and refer to your schedule; you may find that declining is the reasonable answer. People know you're busy, it's okay to set boundaries.

Building a successful business requires the ability to see the big picture while immersed in the details, the hundreds of decisions and activities that command your attention from minute to minute, day to day. Imagine the impact it will have if you can effectively establish priorities and focus your attention so your everyday decision-making becomes aligned with your big-picture vision. Eliminate the Time Bandits that take your focus away from the strategic work of the business and you will begin to work on your business rather than in it.

The Vision-Based Business Plan

The idea of a business plan is very comforting. It makes people feel safe and secure to know that there is a plan guiding business activities in the “right” way.

But why is it that business plans almost never come to life? Why do almost all of them, once written, sit on a shelf and gather dust, while the futures they describe never see the light of day, and the businesses they describe wobble their way into their uncertain futures?

From the E-Myth perspective, a business plan is flawed right from the start unless it’s based on the right intention. In order for a business plan to work—to truly be useful—it must be based on your business vision.

Your vision is your dream for the future of the business and the path you will take to make it a reality. No matter what stage of the business development cycle your business is in (infancy, adolescence, or maturity), as the leader of the organization, your vision should be absolutely clear, it should describe where you are going and what the destination will be like.

A business without a vision is directionless. It lacks purpose and heart. It lacks the essential idea from which commitment, growth and the sense of personal achievement arise and flourish.

The same holds true for a business plan created without vision. Your business plan is the link between the work of your business and the vision that work is intended to produce.

Your business plan needs your vision to make it come alive, to make it a reality. And similarly, your vision needs the form, direction, and clarity of a business plan to give it relevance to the day-to-day operation of your business.

The Traditional Business Plan

Writing a traditional business plan is usually precipitated by one of two thoughts: either 1) we’d better write a business plan because “that’s what successful businesses do,” or 2) we need to write a business plan if we want to go out and borrow some money.

Most business plans, therefore, are developed from a head-centered place. In other words, they’re analytical and they’re dry. They’re full of charts and graphs and cerebral motivation which don’t appeal to emotions at all. A plan that starts in the head, based purely on logic and reason, lacks passion, excitement and purpose.

As we all know, humans make choices based on emotions. That’s why we always advise, when attracting and converting new customers, to appeal to their emotional mind rather than their rational mind. It’s the emotional part of the mind that makes the buying decisions. Doesn’t it then make sense that your business plan should inspire that same kind of emotional “buy in” with your employees, lenders, investors etc.?

The Vision-Based Plan

In contrast, a business plan that’s based on your business vision is propelled forward because you want it to work, as the expression says, with all your heart. In fact, you can also think of it as a heart-centered plan.

Your vision-based business plan is a statement of your vision and a current description of the main strategies and tactics you’ll use to make your vision come true. From the strategies and tactics discussed in your plan, each department and position will be able to develop the additional strategies, tactics, and systems to achieve their results and, ultimately, the strategic objective of the company.

Here are some “productive points of view” about planning that will make it a truly worthwhile endeavor:

• Start with what’s important to you. A mediocre plan that you (and others) feel passionately about will serve you better than a technically superior plan that you don’t feel strongly about.
• Approach planning as more of an art than a science. Professionally-formatted plans with tons of quantification and data can give a false impression of certainty and precision. Use your best thinking when you plan, but don’t forget that even the best thinking involves educated guesswork.
• Create a planning framework that accommodates change. Don’t think of your plan as a rigid, “final product” with every detail pinned down. Think of it more as a series of guideposts of key topics to focus attention on and targets to aim for.
• Treat the plan as a living, growing document. Review it, evaluate it, and revise it. Keep questioning your assumptions. Stay flexible and open to change.

A traditional business plan simply won’t give you the results you want or need because nobody’s committed to working it. The business plan that always works may look a lot like the traditional business plan; you could put them side by side and not notice any difference. But their appearance is where the similarity ends. A business plan based on vision, enthusiasm and purpose will trump your traditional business plan every time.

By: Erin Duckhorn

5 Acronyms You Should Know

No, those aren’t text messages from your teenager. And they aren’t computer parts, or government agencies either.

If you look at these five abbreviations and have no idea what they are, or don’t understand the role they play in your business’ finances: read on. While we spend a great deal of time going through these topics with our coaching clients, we'll skim the surface here so that at the very least, you can familiarize yourself with some of this terminology and how important it is to the financial health of your business.

P&L – Profit and Loss Statement

Your Profit and Loss Statement (or income statement) describes your company’s overall performance. The P&L tells how much money you’re making in your business and how you’re making it. It measures revenues received and costs incurred over a certain period of time. It tells you if you’re making money or not, and how much you’re making or losing.

E-Myth Business Coach Tip: Go over each line item, and compare it with the previous month’s P&L. If you don’t understand what a line item represents, find out. The numbers should make sense to YOU, not to your accountant. And if you haven’t already, organize the line items so that similar items are closer together. The default setting in most financial software usually lists the expenses alphabetically. For example, it makes sense to see “Product Packaging Materials” next to “Merchandise Purchased for Resale.” Feel free to combine line items to make your P&L more concise, and/or break apart line items to show you more details so you can make some sound business decisions based on what the numbers are telling you.

COGS - Cost of Goods Sold

Also referred to as the “cost of sales,” COGS are the direct costs attributable to the production of goods sold. This includes material cost and production (labor) costs but does not include indirect cost like advertising or R&D. COGS will show up on your P&L Statements.

E-Myth Business Coach Tip: Watch the percentages, not the actual dollar amounts from one month to the next. The percentage should stay pretty much the same with regards to revenues.

EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization

This is the most complicated of the acronyms we’re discussing today, but essentially EBITDA measures the core income that your company earns before your cover your debt payments and income taxes. It’s an indicator of operating performance and profitability, but it’s not a good measure of cash because it doesn’t include changes in working capital.

EBITDA will be important if you want to sell your business; it allows buyers or investors to evaluate your operating profitability and profit trends without the unique variables that might distract from bottom line performance.

E-Myth Business Coach Tip: EBITDA is a good way to measure your profitability, but be forewarned: even businesses with a great EBITDA can go out of business due to cash flow. EBITDA leaves out the cash needed to fund working capital and the replacement of old equipment. Profits are great, but if you have no cash, your business will “bleed out” pretty quickly.

BEP – Break-Even Point

This is one of those numbers you want to know by heart and just like it says, this important indicator tells you at what point your business “breaks even.” It is the dollar amount of revenues that exactly covers all your operating expenses (variable and fixed costs), with nothing left over for profit. It’s an important indicator of risk because it shows you how close your business is to the “no profit” line. For instance, if your business is currently producing revenues at the level of $100,000 per month, and your break-even point is $60,000 per month, you are comfortably above your no profit line.

You want your BEP swimming in your head at all times. It’s your minimum target for slow months, and it’s where you begin all of your budgeting and forecasting. At a minimum, your revenues (sales) should be at least as high as your BEP. The goal, of course, is to increase this number over time so that revenues (sales) are above the BEP.

E-Myth Business Coach Tip: If you don’t know what your BEP is, you need to find out. Now. And how many customers does it take to hit your BEP this month? Per week? Per day? How many leads do you need to get that many customers? Also: if you want to lower the breakeven sales number, reduce your cost of goods sold or your operating expenses.

CR and QR: Current Ratio and Quick Ratio

Current Ratio = [Current Assets ÷ Current Liabilities]

The current ratio measures your ability to meet short-term obligations by determining if you have enough current assets to cover current liabilities. Ideally, your current ratio should be near 2.00, meaning your current assets are two times, or 200%, of your current liabilities. If your current ratio is below 2.00, your short-term debt-paying ability is reduced. This is an unstable financial position, and you should examine your finances to see where improvements can be made. If your current ratio is above 2.00, you have above average debt-paying ability; however, if it is too high, it may mean that you are not utilizing your assets effectively. If it’s below a 1, then you’ve got an emergency on your hands.

Quick Ratio = [(Current Assets - Inventory) ÷ Current Liabilities]

Like the current ratio, the quick ratio measures short-term debt-paying ability. It is calculated without inventory because inventory is not as easy to turn into cash as your other current assets. Thus, the quick ratio examines assets that can be turned into cash in the least amount of time. Businesses that carry a lot of inventory need this important planning tool. Ideally, your quick ratio should be at 1.00 or higher. If it is lower than 1.00, you may have trouble meeting your current obligations. Below 0.5 is an emergency. Note that if you don't carry inventory, your current ratio and quick ratio will be the same.

Money doesn’t have to be elusive, complicated, or difficult to control!

All it really takes is a commitment to two things: (1) understanding the relationship between money and your business activities and (2) creating and implementing—on a regular, ongoing basis—a few straightforward money management tools and strategies. When you understand how money flows in your business and you can control your money systems, you will make informed decisions about prioritization, management and investments.

You don’t have to be a finance expert; you just have to understand enough to make the decisions that matter.