How to use Parkinson's Law in your business
Have you heard of Parkinson’s Law?
This is the idea that “work expands so as to fill the time available for its completion.” Basically, if you have a week to finish something, it will take you a week. But if suddenly you get an extra week to work on it, it will take the full two weeks.
This can also be applied to money!
Think of it this way:
Expenses you have, either personal or in your business, will expand to meet the amount of income available.
Have you ever had a job that paid you a certain amount and you were living off that amount? Maybe you were living paycheck to paycheck, but you were making it. And then you got a raise and somehow you were still living paycheck to paycheck?
As we gain more money, we incur more expenses.
Basically, we are really good at finding a way to use all the extra money and time we have so that we no longer have extra money or time.
With Parkinson’s Law in mind, it’s easy to understand the importance of creating a budget and sticking to it.
Here’s what you can do with this new knowledge:
Determine what you need to run your business.
As your income increases, create accounts for any additional money flow into.
For example, create an account for emergency expenses. Designate a certain amount to go to that fund each month, and determine how that budget item will increase as you make more money.
Manage your money so that as your business grows and you make more money, you aren’t spending more and more, left wondering where it all went!