I am reasonably bad at math beyond the basics. I can add. I can multiply. I can figure out percentages really well. Beyond that, and I'm fairly useless. One, I dislike subtraction, especially in my bank account. Two, I think division keeps us away from the whole. And that whole "Please excuse my dear Aunt Sally" stuff? Forget it. (If you don't understand what I mean, you're probably bad at math, too.)
Luckily, entrepreneurs really like adding, multiplying, and percentages more than the rest of those other math parts anyhow.
First, a confession: I loathe the term "entrepreneur." Or rather, I think it's a term that's misused a lot. Most times, I'll hear someone tell me they're an entrepreneur when what they really mean is that they either don't want a job or they're not especially hirable. But, work with me here.
Math as a Map Waypoint
I use math as a map waypoint all the time. For instance, my July was a bit light in the earnings department (how was yours?). I decided that I needed more money in August. So, I put the number in front of me that I needed, another $20,000, and then I considered what I'd have to do to get to that point.
I decided that I could do one of several things: a professional speech at $22,000 (less the expenses) would get me there. Five streams of revenue worth $4,000 each would get me there (but I could only find two streams). Or, a mix of something in person plus something online might get me there. Thus, with $20,000 as my waypoint, I knew what kind of numbers I'd need.
Math as a Scorekeeper
I sometimes fall into the trap of thinking something I'm doing is really worthwhile, until I look at the number value of the things I'm doing. For instance, every time I fly somewhere, I effectively chew up 2-3 days. When I consider my earning potential for those three days, will it be better spent back at the office working on my projects, or will it be better spent in the field, drumming up new business and meeting new connections? The answer, obviously, is a mix. You have to do both to stay alive. But when I do the counting, I determine how many times away I'll need, and how much time in the office I need, and try to reconcile my hours accordingly. I aim for a high score in productivity, but sometimes err on the side of networking.
Math As Decision Maker
I had what I thought was a great idea. I told my team about it. I told my COO, Rob, about it. I got everyone excited and thinking that we had a winner. Then, one day while Rob and I were talking through how it would really work out, I started doing the math. In this case, it was percentages. I was going to take 20 percent of everything I brought in on this new business as my fee. The thing was, when I figured out how many hours of work it would take to staff this (not me, but employees), I saw that money chewed up quickly. I also saw that customer service (between clients and/or the people those clients would serve) would eat up several hours of time (more math) and several hours of potential problem resolution.
Smart as the business sounded in theory, especially with a 20 percent cut, it didn't add up. Because no money comes for free, you always have to talk through the storyline of that business, and you have to ask yourself where the heartaches and troubles will be. In this case, the math helped me decide not to shoot my foot with a time sink.
Math as Business Partner
Felix Dennis, founder of several magazines in the U.K. and the U.S., said in his book, How to Get Rich, that you should keep as much of your company as possible, as a business owner. His point was that it's all your suffering that goes into the business, and it's your butt on the line when you're doing all the work. He's not wrong. But should you feel you need partners in your business, and especially should you feel you want to take money in exchange for partial ownership, you need to do math.
How much is enough? For instance, if I own 100 percent, and I want to provide incentives to others to run my business, I need to remember that where I start isn't where I'll end, and that if I give away too much up front, that I'll have too little to share later on. If I take in money to grow my business, I'll have to give away some percentage of ownership, so it's important that I recognize just how much I need (and not to over-ask), and to recognize that if I have to ask a second time, that I'll be giving away even more ownership, thus reducing my own potential exit from a business. Math should always be your second business partner (after your heart).
I am a Simple Person
It sounds too trivial, too simple, when I say it all like this. But is that how you do your figuring? Do you look at your months of income and try to find what it'll take you to get to your number? Do you look at your time in terms of number values? Do you view your bigger decisions in terms of the numbers, as well as the human mechanics?
You might like complex math. You might be all about the algorithm. By all means, enjoy. My entrepreneur's math has done well by me over the last handful of years. I'll keep trying to make it add up.
Chris Brogan is the New York Times bestselling author of the NEW book, Social Media 101. He is president of New Marketing Labs, LLC, and blogs at chrisbrogan.com.