Mike Andes argues that business owners should measure profitability by calculating how much it would cost to replace themselves. Long founder work hours (e.g., 14-hour days) effectively supply unpaid labor capacity; if prolonged after several years without profit, the business model is likely unprofitable and needs changes (pricing, recurring revenue, efficiency).
If you were to pay someone to do your job in the business, how much would the business actually make in profit? If you're working 14 hour days, it's two full time employees working for the business for free. Which means if you have four employees and you're out here hustling 1716 hour days, you're working equivalent of two more people. So yes, you're increasing your labor capacity by 50%. To really determine if your business is profitable, assign how much you would have to pay to replace yourself. Take that off of the profit and loss statement and then determine whether or not you're profitable. Now keep in mind, if you don't have a lot of cash and and you're just getting started, you don't have a lot of experience, 14 hour days are required because you're paying down the ignorance tax that you don't have to know what to do in the business correctly. Just know if you've been in business for 5, 10, 15 years and you're still working 14 hour work days and you're not profitable, the business is fundamentally unprofitable and not a good business model. It doesn't mean you need to throw it away. Adjustments need to be made in terms of recurring revenue, price increases, profitability and efficiency to make sure that if you don't work 14 hour work days, the business is still profitable.
