Displacement and how it relates to your business

This is probably the most important business concept that you have never heard of before.  It works like this: “Whatever you choose to do now is something else you won’t be able to do now.”

As a business owner, you only have a certain number of hours in each day. How you choose to spend these hours will determine the success of your business.  Every hour you spend on one thing is an hour you don’t have available to invest in something else.

To give you an example using my previous cake business: 

I had 5 hours a day available while the children were at school.  In those 5 hours I had to communicate with potential clients and do quotes for potential orders. New clients had to be invoiced and deposits reconciled. I had to plan, shop and prepare for the current week’s orders. Current orders had to be baked and decorated. I had to think about and do advertising and marketing. Invoices from suppliers had to be paid and accounts kept up to date.  Along with that I needed to research new trends and sometimes learn new skills. Paying my suppliers didn’t earn me any money, but it is something that needed to be done. The time spent posting to social media didn’t earn me a direct income, but it helped with exposure and in the long run brought in new clients.   Staying up to date with my bookkeeping didn’t generate any profit, but it was necessary otherwise I wouldn’t know how much I was actually earning.

The key as a business owner is to work out where your biggest ROI (return on investment) is. Your time is very valuable, and you need to work out where it is best spent.  If you can outsource your bookkeeping for $30 an hour and you charge $50 an hour to decorate a cake, then it would make sense to spend your time baking and decorating the cake and pay someone else to do the bookkeeping for you.   If you can charge $120 to present a 2-hour cupcake workshop, then it would make sense to pay a VA $35 an hour to keep your admin up to date so that you can spend that time presenting the workshop.

So where to start?

Think about all the roles in your business. What are all the elements of your business? What needs to happen for you to earn an income? What is everything else that happens behind the scenes that does not earn you a direct income, but needs to happen for your business to run smoothly? What can you outsource? What are the things that you need to be spending your time on to get the biggest return?  Choose to do these things and look at outsourcing the other things.  You will be a lot less pressed for time and this should also decrease your stress levels.

A displacement example in everyday life:

Imagine a very full coffee cup sitting on your dining room table. Now imagine dropping a gholf ball into the mug. The coffee being displaced by the gholf ball will spill over the sides of the mug and onto your table. The same will happen in your business if you try to fit everything into your day. As a person you have limited capacity, as a business owner – you only have a certain number of hours in your day. Strategically plan how you can best use these hours. This will also help avoid burnout and your family will thank you for it.

A friend of mine often quotes a wise man who said: “Whenever I say yes to one person, I inevitably say no to another person.” So displacement is not just important in your business, it is also important in your personal life. If you use your time spent in and on your business wisely, it will allow more time with your family as well.

coffee cups