Why You Can’t Just Work “In” Your Business

In his book The E-Myth, Michael Gerber taught us about the power of working “on” our business rather than “in” it. But the sad reality is most small business owners are stuck working in their business, leaving little or no time to market and grow the business.

I started my primary company, HearandPlay.com, at 17 years old and it took me at least 4 years to figure this out. Sure, I had managed to create a 6-figure business by age 19 selling books and dvds on playing the piano by ear, but was unfortunately stuck answering customer service e-mails, taking calls, duplicating dvds, printing books, fulfilling orders, packing and shipping, waiting in line at the post office — only to wake up and wash, rinse, and repeat the next morning.

I didn’t know what I didn’t know. I figured the “busyness” came with the territory.

It Didn’t Have To

Luckily, I had done at least one thing right. All my products were in written and multimedia form (books, cds, dvds, software) so at least I wasn’t stuck personally delivering my product or service each and every time. I had leverage in that I could theoretically sell as many as I wanted to (assuming I could keep up with the fulfillment) without any real constraints or capacity issues. Even on unusually busy days, I could recruit family and college buddies to help out. This advantage would be key to me turning this “small project” into a 7-figure empire.

Many small business owners are stuck delivering their products or services. Accountants are busy crunching numbers and preparing financial statements. Consultants are busy consulting. Gardeners are busy mowing lawns. Ebay’ers are busy fulfilling and shipping products. This is what Gerber called “working in your business.”

Sure, I sold books and dvds, but I might as well have taught private lessons because I used my precious time worrying about day-to-day operations rather than focusing on growing the business. My success had created a dilemma.

The Visit From My Mentor, Corey Rudl

Even after hiring staff (mom and girlfriend), we were still wasting a lot of time working “in” the business. We had a mail room full of boxes of every size, tape of every color, styrofoam peanuts, sophisticated shelving I was proud of… the whole 9 yards. We were getting so many orders, I could no longer keep up with them on my own.

I remember bringing my mentor Corey Rudl, one of the biggest internet marketers of the time (2003), to my office and as soon as he saw what we were doing with our time, he pulled me aside and said, “man, you guys can’t afford to spend half the day fulfilling products. Outsource this and start working on the things that really matter.”

That’s all it took. In less than 3 weeks, I had located a fulfillment service just 20 miles away and we haven’t assembled a box, taped a package, or licked a stamp since. And I put the sophisticated shelving system on ebay! 🙂

(Corey died in a car accident in 2005 but his memory and marketing genius lives on forever).

Pareto’s 80/20 Principle

I would later learn why Corey shared this crucial advice with me. The revelation would come through the discovery of a concept known as the “Pareto Principle.”

In 1897, an Italian Economist named Vilfredo Pareto wanted to study the distribution of wealth in Switzerland and discovered that 20% of a population usually controlled 80% of the wealth. He then sought to study other Countries and found this phenomenon to be true everywhere he looked!

What he wasn’t prepared for was the widespread application of his discovery in other areas of life outside of wealth distribution. It later became known as the “80/20 Rule” and essentially describes the disproportionate relationship between cause and effect.

Put another way, you may find that just 20% of your customers are responsible for 80% of your profits. Or that only 20% of your daily tasks are responsible for 80% of your success. Or 20% of your staff are producing 80% of the results.

Granted, the relationship obviously isn’t always 80-20. But the concept of a few causes being responsible for majority of effects is undoubtedly true. That simply means not all tasks are created equal.

• Fulfilling an order that has already come in — not created equal.
• No matter how much you love your customers, answering the phones — not created equal.
• Waiting in line at the post office to send letters — not created equal.
• Answering your customer support e-mails — not created equal.

Working on a new marketing piece that will bring in X new clients — now we’re talking!

Working on a product or service that can be offered or upsold to existing clients — talk to me!

[box style=”rounded” border=”full”]The problem is, we’re too stuck doing the first group — the 80% of tasks only responsible for 20% of the results we want — that we don’t have enough time or energy to focus on what I call “the vital few.”[/box]

According to Investopedia, the definition of “Opportunity Cost” is:

[quote]The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.[/quote]

And that is the reason you can’t afford to keep working IN your business.