Tim: There definitely are. Now the principles in the book can be applied to any business and at the very least, you will be able to eliminate unpaid overtime, meaning work during evenings, weekend, etc.
The ability for someone to get a 4-hour workweek requires some difficult and emotional decisions and doing what is unpopular. The extent to which you can do that depends on a number of factors. But for example, it’s infinitely easier to create, in my opinion, a scalable business model that requires minimal management, if you have a product versus a service.
Service businesses are more challenging to scale because it involves management and more personnel. And there is a host of variables that come along with that. They require actual human supervision and that is a very taxing resource. So, can it be done? It certainly can and you can do it all in a franchise model and there are multiple ways that you can work on your business, instead of in your business, as Michael Gerber would put it.
But products are much better suited. If you are a one-person operation and the choice is between, let’s say, consulting where you are limited to a per-hour model, which means you have to work more to make more, or capitalizing on that expertise and somehow monetizing it in product form, I would recommend investing the additional time up-front to pursue the latter. But there are multiple ways to do it.
One other point I want to make is that the extent to which you have to scale your business is entirely dependent, in this book, on what’s called the TMI, target monthly income. So if you want to have a Lamborghini Gallardo race car, you want to go to Fiji, or you want to take two trips throughout the domestic U.S. per month and you define what you want to do, what you want to have and then calculate the average monthly cost, that’s your TMI and it’s surprisingly low.
For example, if you’ve always wanted to take a long trip to Thailand and stay there for a month, you can do that for less than $1500. In my case, for example, I went to Panama and lived for a week on a Smithsonian research island with fishermen who took me on the boat, caught all my food, cooked it for me, took me to the best dive spots in Panama, and it cost me $250.
When you actually create time, the question of what to do becomes much more interesting and much more important than what you have and it’s surprisingly less expensive than people realize. But most people never calculated it.
I have a good friend, my roommate at Princeton, who works for an investment bank in New York City and he went to business school also in New York City and told me he decided to return to investment banking after his school. I asked him why because he had told me that he hated working in this particular investment bank.
And his answer was, “Well, I hate coming home at midnight. It sucks, it’s true. But if I worked for a few additional years, I could become Managing Director and pull in three to ten million a year.”
And in a world where you have been making, you could easily make $200,000 for a reasonable 40-hour workweek, I asked him, “What the hell are you going to do with three million dollars a year?”
He thought about it for a minute and he said, “I would take a long trip to Thailand.”
And this is symptomatic of this epidemic of the deferred life plan. When you really sit down and calculate it, there is no reason to put these things off. And there is every reason not to. It also makes it very clear that some fantasies are only interesting for three to seven days.
And so sitting on a beach in the Caribbean, for example, gets boring very quickly. It’s nice. Once you recover, though, it’s extremely boring and you need an alternate activity. And if that’s only interesting for a few days and your retirement life for last thirty years, that leaves a lot of thinking to be done and I encourage people to do that now as opposed to when they retire.
Scott: Right. I’d like to refer to a couple of articles on my website that are particularly relevant to this. One of them that I want to talk about on passive income. It also talks about leveraged income which is how people can do this who want to get into services. Leveraged income is the ability to provide the service on a mass scale, even though the effort it takes doesn’t scale according to the number of people you are delivering it to.
So, for example, if you are offering teleclasses, or web seminars, or something like that, there is not really any significantly higher time effort once you have the technology infrastructure in place to give a web seminar to 1,000 people than 100. And so, if you are giving your web seminar to 1,000 people at $20 each, as opposed to 20 people at $25-$30 each, then you start talking about being able to make that kind of large amount of money.
Professional speakers have the same kind of thing. If you work your way up in the speaking business, you can get to the point that you are earning $5,000-$10,000 per speaking engagement. Do one of those a month and that’s a decent living. And basically all you’re doing is that plus whatever it takes you to keep booking one or two a month.
Another example is consultants who find a niche specialty or attorneys are a perfect example too. There are attorneys who work for $50 an hour and file papers and there are attorneys who are able to litigate multi-million dollar cases. They take their 35% and one case can actually set them for life.
Tim: Absolutely. And I agree on everything.