Scott H Young

Know Your Burn Rate, and Why it Sabotages You Before You Begin


A burn rate is a term used by new companies. It’s the amount of money that they must spend every month to keep operating. Once the money runs out, the company goes bankrupt. So, in many start-ups, the race is to start earning money before they run out of money.

I think the idea of a burn rate can be applied more generally to all sorts of goals. Basically, a burn rate measures how sustainable your current approach is. If you have a high burn rate, you’re under enormous pressure to perform. If you don’t succeed within that time limit, you’re done.

However, if you take on a strategy with a low (or even zero) burn rate, you can go on indefinitely. This is the classic example of the tortoise versus the hare, where slow and unfaltering beats quick and flashy.

What’s Your Mental Burn Rate

In a start-up environment, the burn rate is real. If you owe a few thousand dollars in wages, and have less than a hundred dollars in the bank, you’re sunk. But for most goals, the burn rate is mental. You stop when you’re too burnt out or beat up to continue.

For example, if you start a blog, posting once per day, when will that become unsustainable? When will you run out of ideas or energy to continue posting? When will your persistence fizzle out if you don’t taste any success?

If you’re on a diet, how long can you continue? When will your old eating habits reassert themselves? How long can you continue this eating pattern if you don’t see any change in your weight or body composition?

Inevitability

Motivate yourself with challenging deadlines. But prepare yourself for the long-haul. In learning French, I’m trying to achieve basic fluency before I go. That deadline forces me to work hard. But at the same time, I’m prepared for it to take longer.

A low burn rate increases your chances of success. If your current strategy is sustainable, then success becomes a matter of when, not if. You want to make your goals a matter of inevitability, not luck.

How to Lower Your Burn Rate

Instead of trying to motivate myself, I try to focus on how I can lower my burn rate as far as possible into the future without sabotaging my efforts. Some of these are strategic. Others are mental as you build into your process ways to sustain your patience over the months and years ahead.

Pick Sustainable Strategies

The biggest way you can reduce your burn rate is to only start strategies you can continue into the foreseeable future. Taking on a diet of only grapefruit isn’t sustainable. Eventually your body is going to require other nutrients and your diet will fail.

Before you decide on a new approach to your school, work or business, ask yourself whether you could continue it indefinitely. Sustainable strategies might not be as glamorous, but it forces you to think of your goals as continuous processes, not just single sprints.

Pick a Sustainable Work Volume

Ask yourself whether this level of work is sustainable indefinitely. To a certain extent you can increase your ability to work. So if you’re unable to write 1000 words a day now, you might be able to as your skills as a writer increase. However, I don’t know many people that would consider 10 or 12 hour workdays sustainable.

Look for the End of Your Current Lifestyle

When will debt, overwork or lack of growth end your current lifestyle? If you know this deadline, you can work on ways to help extend it.

For me, I’m aware that my current lifestyle will end when I graduate from university, and I either have enough income to support myself from this business or I don’t, and need to get a job. This allows me to help plan for how I can extend the work on this blog. For one, I can make sure this blog is still operational part-time so I can continue it, even if I need to take on work. Also, I can expand my freelancing connections so I can take on temporary writing work when my business income is lower.

Know the Worst Case

If you know your worst case, you can control it. And if you can control the worst case, the upside will often take care of itself. If your work and life are sustainable, and your burn rate is low, then success becomes a matter of inevitability.


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9 Responses to “Know Your Burn Rate, and Why it Sabotages You Before You Begin”

  1. Mike says:

    “Why Sabotages You Before You Begin”? Is that a typo?

  2. Maureen says:

    I am a little unclear. You are saying that in business, the burn rate is the rate in which you “burn” through cash. Therefore, keeping costs low especially in the early stages is key.

    However in learning a new hobby or activity, are you saying the burn rate is your effort? Further, are you saying moderate you effort and this will therefore lead to higher chances of success.

    Cleaver analogy I guess, I just want to understand missing piece.

    Or are you saying basically – lower your expectations of what you can achieve?

  3. jackmo says:

    Hi Scott,

    Well written. What do you think about celebrating victories or achievments also to refuel the motivation even if the burn rate remains the same?

  4. Victor says:

    Scott,

    I have been reading your blog on and off have always liked it. But lately what i found is something you should really think upon !!!

    Is it not an high time that you stop talking about examples which boils down to only three scenarios:

    1. Simulating with running a blog website
    2. Your exercise or work out plans
    3. Learning French

    I am sure you can post much better examples, looking at the overall depth, wisdom of anything that you write.

    The intention of above comment, is just to see a little more creative things, hope you would not mind the observation.

    Keep blogging, all the best

  5. David Safar says:

    You wrote, “How long can you continue this eating pattern if you don’t see any change in your weight or body composition?”

    How long SHOULD I continue this eating pattern if I don’t see any change in my weight or body composition? While sustained effort is important and you can’t expect to see noteworthy results in a day, a week, or maybe even a month, there comes a time when it’s necessary to admit that results are not forthcoming and a new strategy is necessary — no matter how low your burn rate.

  6. Scott Young says:

    Maureen,

    Definitely not about lowering your expectations. Simply being prepared for the worst. You can buy fire insurance for a house and not expect there to ever be a fire. You can plan your life to be sustainable ten years of extra effort, even if you believe your goals will only take 3 years to reach.

    My suggestions isn’t low effort, but exactly what I worded–sustainable effort.

    David,

    The point isn’t to stick to the same strategy blindly even when it doesn’t work. The point is to be able to stick to the same strategy, if results are slower than expected. I frequently change my strategy when I hit plateaus, but I keep working through them.

    Victor,

    I’m sorry if the examples are becoming tired, but the choice is deliberate.

    Although this blog isn’t a personal diary, it’s important to me that the ideas I’m expressing, people know I actually use and apply within my own life. I’d rather overuse personal examples of how an idea fits with my life, rather than take clichéd hypotheticals that I have zero experience with.

    However, I’ll try to dig deeper into other past goals to add some variety.

    -Scott

  7. Jake says:

    Hi Scott,

    I love what you’ve been writing and I find your examples excellent!

    I’ve especially enjoyed the last few posts because you talk about the reality of achieving long term goals and you have pointed out how long it realistically takes to become an expert in any endeavour. It’s actually encouraging to know that it doesn’t happen overnight for anyone.

    I applaud your honesty and willingness to share!

    Cheers! I hope you’re having fun!

  8. Sharon says:

    I like this post. Maybe people should consider this before deciding on a business/career choice as well as healthy lifestyle choices :o)

  9. [...] Before you decide on a new approach to your school, work or business, ask yourself whether you could continue it indefinitely. – Scott H. Young [...]

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