Posted on June 28, 2012 @ 12:26:00 PM by Paul Meagher
What objectives are you trying to maximize in becoming an entrepreneur?
Do you want to maximize your wealth, your leisure time, your freedom to do as you please, time with family, or some other aspect of your life?
In mathematics, if you want to optimize a system, you need to define what the objectives of that system are and rank those objectives in order of importance. Only then can you start to optimize the system.
So how do you determine what are the most important objectives in your life? One way to figure this out might be to do a thought experiment in which you ask yourself how much satisfaction or "utility" you might gain if you were to double the current level of some factor related to one of your possible objectives. For example, if you doubled your monthly income would you derive more satisfaction/utility from that relative to if you doubled the amount of leisure time you had per month, or the number of hours with family, or the number of hours you could dedicate to self-directed projects? Under this doubling regime, ask yourself what objective would produce the biggest gain in net satisfaction and then weight that objective accordingly in optimizing your life.
Once you have a main objective that you want to maximize, the next step is to determine what variables influence that outcome the most. You should also distinguish between the variables that are under your control (e.g., number of cattle, number of planted acres, etc...) from the variables that are not under your control (e.g., weather, government policy, etc..). Decision making is mostly about optimizing the level of the variables that you can control.
Usually when we are taught optimization techniques such a linear programming we are given examples that involve figuring out the price and quantity of widgets to produce in order to maximize revenue. I would argue that you might want to consider using these techniques to optimize at a higher level, the level of your overall life satisfaction.