The 4-Hour Workweek
Author: Tim Ferriss
I think this book would be a tremendous asset to anyone’s library. This is the first book that I read by Tim Ferriss and it is the reason why I continue to purchase his literature. Some of you may remember that I already reviewed his newest book, Tools of Titans, a little over a month ago. In this book, he lays out clear ways on how someone can get started in business online. He also goes over everything one needs to run an online business properly…how to get traffic to the website, hire assistants, find fulfillment warehouses, and so on. That’s not all, though. Aside from business, Ferriss talks about the best ways to travel and how to do it for very cheap, as well as learning new languages, helping people, having a positive mindset, and much more. Without a doubt, this book is in my top 10 must-reads for any entrepreneur.
The 80/20 Principle
What gets measured, gets managed. This is one of the very first topics Ferriss goes over. The 80/20 principle was conceived by an economist named Vilfredo Pareto. It was initially introduced to explain wealth distribution in society, where 80% of wealth and income is produced and possessed by 20% of the population. (Sound familiar?) Not long after, Pareto showed that the principle could be applied almost anywhere; 80% of outputs result(ed) from 20% of inputs.
Examples used in the book:
- 80% of consequences stem from 20% of the causes.
- 80% of results come from 20% of total effort and time.
- 80% of company profits come from 20% of the products and customers.
- 80% of all stock market gains are realized by 20% of the investors and 20% of an individual portfolio.
The list goes on. Sometimes the ratio may be a little off (like 90/10 or 95/5,) but the idea remains the same. Ferriss then explains how he uses this principle in his business and personal life by asking two questions.
- Which 20% of sources are causing 80% of my problems and unhappiness?
- Which 20% of sources are resulting in 80% of my desired outcomes and happiness?
One area of business for which Ferriss uses this principle in the book is in advertising. He looked at his advertising budget and pinpointed which ads were generating 80% or more of his revenue and dropped the rest. I did this exact same thing just this week. I have been advertising Hummy’s World on different websites and social media platforms for just over two months now. A few days ago, I looked at all of the advertisements I had been using, saw which ones were driving 80% or more of the traffic to my blog, then dropped the rest. I am going to be using the money I was using for the ads I dropped to increase audience range and time frame for the ads I kept. Hopefully, this will result in a jump in traffic to the blog! I guess only time will tell.
This is something I have yet to do, but will hopefully be able to do within the next few months: hire a virtual assistant. There are all kinds of reasons why this is helpful for any entrepreneur. One of these reasons is that it helps you learn how to manage people, which will be important if you ever want a business (or businesses) to grow from just you to ten, twenty, or even hundreds of employees. Another reason is that if you ever want to buy your time back, then you need to be able to replace yourself. You can’t be the person doing all of the work all of the time, forever. Well, you can, but would you want to? I doubt it. I know that’s not my end game. Some of the tasks Ferriss highlights as key tasks for assistants to handle are…
- Scheduling interviews and meetings
- Online purchases
- Website maintenance
- Proofreading and editing
- Document creation
- Business plans
- Market research
…and much more. Human assistants could also be hired do these same tasks, but the cost would skyrocket. Virtual assistants are fairly inexpensive and Ferriss gives a few websites in the book to help people find them. Building on the 80/20 principle and replacing yourself, Ferriss includes a flow chart that you should put every task on your to-do list through. This chart will help you rid yourself of anything in that 20% that’s causing you stress or anxiety and also help you with replacing yourself. I have the chart on a piece of printer paper hanging on my “dream board” and I refer to it often.
Scaling Your Business
Building on “replacing yourself,” if you want to create a huge business, then you need to build something scalable. This means that the business needs to be able to ship thousands of orders per week just as easily as it ships ten orders per week. You’ll want to minimize your decision-making responsibility by having a system in place that requires very little of you. You can do this by hiring call centers, fulfillment companies, and virtual assistants. Having a scalable system in place allows the business to continue to grow without your work hours going up. This is the system Ferriss explains in the book on how and when to add to your team:
Phase 1: 0-50 Total Units of Product Shipped
Do everything yourself. Have your personal contact info on your website for customers to call with any issues. You can use the customer calls you get to help with setting up your future FAQ on your website.
Phase 2: >10 Units Shipper Per Week
Add the FAQ you have built to your website while continuing to add to it as needed. Find fulfillment companies to begin shipping your customer orders for you. There are a lot of them, and they are all priced differently. Ferriss explains how to find the right one for you, as well as negotiating price, in the book. Once you select a company, you can then have your manufacturer ship all of the product to them and they will then ship to your customer.
Phase 3: >20 Units Shipped Per Week
You should now have enough cash flow to be able to afford an end-to-end fulfillment house. Find one that handles everything including order status, returns, etc. You also need to set up an account with a credit card processor, which requires a merchant account (you can get one from most banks.)
Here is another chart from the book that I found very useful to help illustrate this concept:
9 Habits to Stop Right Now
- Do not answer calls from unrecognized phone numbers. Let it go to voicemail and use that to decide if it deserves a return call. This can save you a lot of time.
- Do not check your e-mail first thing in the morning or right before bed. First thing in the morning can mess with your priorities for the day and the latter can cause anxiety and insomnia.
- Do not agree to meetings or calls with no clear agenda or end time. This pertains to business. Again, this is so you don’t waste too much of your time.
- Do not let people ramble.
- Do not check your email constantly. Stay on top of your to-do’s and check only 2-3 times per day.
- Do not over-communicate with low-profit, high maintenance customers. Refer to the 80/20 principle.
- Do not work more to fix overwhelmingness – prioritize. If you don’t, then everything seems urgent and/or important. I still somewhat struggle with this.
- Do not carry a cell phone 24/7. This one I can’t stress enough. If you’ve read my review on How To Live A Good Life or Deep Work then you already know how I feel about our cell phone addiction. Put the thing down for a little while and go live life.
- Do not expect work to fill a void that non-work relationships and activities should.
I just touched the surface of what Ferriss explains in this book and only covered some of the things that stood out and/or helped me the most. This is also one of the two books I have on my desk at all times to reference when I’m working on my blog. It’s filled with different colored sticky notes and the pages are covered in highlighter. I’m hoping he comes out with some kind of sequel soon, as I love his wisdom, writing style, and everything he has to offer.
Have you read this book or any others from Ferriss? What have you thought about his advice and wisdom? Let me know!