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Work smarter, not harder!!!

"Hard work never killed anybody, but why take a chance?"
--Ronald Regan

I was helping a small business last week. This entrepreneur had a gross profit margin of 20% and operating expenses were 35% of sales. Clearly, having a gross margin of 20% will not cover operating expenses of 35%. This entrepreneur was concerned, and rightly so, that he had lost $120,000 last year.

He told me that he was going to make up for this loss by working longer hours this year. Most entrepreneurs define working harder as working longer. This entrepreneur was already putting in 16-hour days and could not remember the last time that he had a vacation. I told him that he needed 'to work smarter and not harder'. I explained to him that raising his gross margin and reducing his operating expenses was the direction that he needed to go. In fact, I told him he was working way too hard and he needed to concentrate on profitability rather than sales.

Another owner of an accounting firm is also working 16 hours a day to service his customers. I also told this small business owner that he needed to work smarter by hiring more staff to do the routine type of things that accountants do.

Another entrepreneur wanted to expand sales by opening an office in Mobile (he would have to travel back and forth many times a week). I asked him what his time was worth and he was quick to figure out that this idea was not smart, as it would cause him to work much harder.

A general rule of thumb: if you or any of your employees are working more than 50 hours a week, then you not working smart. It is a natural reaction to want to work harder if things are not going well. However, this almost never, never works. Sure you need to be a hard worker, but putting in hours is not the answer. Your time is the most valuable thing you have and you have to figure out how to work within a time constraint.

By working harder it takes a big toll on your family, your emotional well being and your health.

My recommendation to most entrepreneurs who are in these situations is to hire some additional staff. Even if they cannot completely cover this cost, I encourage them to do this, as it will take a huge burden off their shoulders.

One small business owner had a staff of about 15 associates with no office manager (or personal assistant). I had to bang on his head for six months before he hired an office manager. He was exhausted (not from my head banging) and could not give all the elements in the business the attention they needed. He kept on saying the office manager position would not pay for itself. I responded that the pay was not the critical thing. What was critical was the ability to free up his time to do other things, more important than writing payroll checks.

This entrepreneur kept on resisting this concept until I found him a person for this position and now he says that this was the best decision he ever made. He is happier and much more excited about his business.

With observation and awareness you can learn to work smarter, not harder.