We always hear about return on investment (ROI) and yield. The problem with this type of talk is that it assumes money is the only thing we can get a return on.
Turns out there are two things we can invest. Time or money. And when we haven’t got a lot of money to invest, we must invest our time. Which is what our education is about.
For bootstrapping startups our key investment is time.
The hope is that our time invested will give us a financial return. Which we can then invest in addition to our time. So the question we should ask ourselves as we track our new startup is this:
What is my return on effort?
I view the return on effort as progress.
Effort on a startup is like training to go for a run. It’s really hard at first, but after a while fitness improves and it becomes easier to go further with the same effort. In good form it’s possible to pump up the effort and go a long way, but the cost is exhaustion… but the payback is health, progress and a sense of achievement.
It’s all about toughening up, valuing progress and keeping on keeping on.
Sam,
@samotage
Well said Steve!
Too true!
Although as someone who’s now gone for 6 months on no pay, time also has a value in opportunity cost (what I might otherwise of earned if I’d kept my duh-ay job).
So I think ROI and ROE are largely the same thing. The point is that your investments (time or cash) should be returning.
That return could be many things, including satisfaction, money, networks, friendships, learning, experience.
The question remains for me “am I getting an ROI”. The challenge is to re-think the meaning of “Return” because people do start-ups in all sorts of different ways and for different reasons.
A monetary fail doesn’t always mean no ROI IMO (for the record, in my specific case, a monetary ROI is one of many motivators and remains an important one – just in case any of my VC buddies I’m meeting with read this đŸ˜‰ )
Cheers,
Tim
If you account for your time in a financial sense (eg my hour is worth $150) then you can move between the two…. the trick is to find a realistic hourly rate and ensure that it’s consistent. If the best you can hope for is stacking shelves at the supermarket, then your hourly rate is $18. If in one hour you can sell $2,000 worth of advertising but the next nine hours you sell nothing, then your hourly rate is $200.
I totally agree as well. Most of the small business entrepreneurs I see in my practice do what they do because they like it and they are sick being shackled to the way of doing things under an old regime. They want to do it their way, and if this is what suits you, this is a fantastic step to take. I think if you do what you love the money will eventually flow.