The "time is money" quote is so ubiquitous that we don?t really reflect upon its meaning ? or whether it?s true or not. Mathematically, we can see this quote as the simple equation T = $, where T denotes time and $ denotes money. But something is obviously missing: the units. How much time equals how much money?

When time is money is right

In theory, the quote, which refers to opportunity cost, is absolutely right. If you spend time on something, you could probably have made money by using this time in another way. But let?s have a look at the flipside. Instead of buying something, you can achieve its benefits in other ways. For example, you can design your website by yourself instead of paying a professional web designer. Or you can take the bus instead of calling a taxi. In theory, you can do (almost) everything by yourself, provided that you have enough time. In other words, every service or benefit from a product can ultimately be replaced by time. Whether it refers to opportunity cost or cost saving, "time is money" remains true.

When time is money is wrong

As you probably guessed, there?s something seriously wrong about this quote. Indeed, it assumes that time is a resource that is readily available. In the real world, time is a luxury, not a commodity. Whereas we can eventually earn (or loose) money, our time is intrinsically limited. The quote would be true in a static world where we are immortal. But in the real world, we evolve, and our environment changes constantly. In particular, almost everything we do has to be achieved within a window of opportunity.

The limitation of the "time is money" quote becomes obvious when we look at (IMHO) the most damaging of all entrepreneur pitfalls: trying to do everything by yourself. Successful ventures rely on many different skill sets. This is why successful entrepreneurs surround themselves with the right team. Applying bluntly "time is money" to save money will lead the entrepreneur to try doing everything by himself. As you know, even small projects require many components and skills. The project would take ages for one person to complete. Trust me, I?ve been there! At first it may seem a good idea to design your own business cards to avoid spending $200, to design your startup website to save another $800, and so on. Before you have time to take a breath, months have gone by, you don?t have a single customer, the market changed... and your business card sucks!

When I need some service and think I can do it by myself (and achieve the desired quality), I set the value for my time. This value depends on the opportunity cost and other factors such as the risk of delaying the project. As a rule of thumb, it should be at least the hourly rate of a badly paid contract that I can quickly get as a freelance worker. Suddenly, what appeared at first as a good idea to save money looks like a time-and-money sucking black-hole.

Consequently, the real question is: what is your conversion rate?

And the equation becomes: T = x$

Why would an investor want to control a startup he invested in? I mean, if you don't trust the startup founders to make right decisions, why would you throw money at them?

Y Combinator is a seed capital investor - typically no more than $20,000 but plenty of support and advice - that understands this principle and is quite successful. I just hope other investors will learn.

From Y Combinator website:

We realize that independence is one of the reasons people want to start startups in the first place. And frankly, it's also one of the reasons startups succeed. Investors who try to control the companies they fund often end up destroying them.

Most entrepreneurs do not understand that the business plan has a different purpose depending on the target audience. Although the traditional sections of the business plan will always be present, their importance and content will vary greatly according to who you're talking to.

I can think of 4 main types of investors. Each will focus on one of more aspects of the project to pursue its own goal.

Yourself and your associates

- Goal: Analyze with sufficient detail to be comfortable to go forward
- Focus: Competitive advantage, resources, profitability

Banks

- Goal: Make sure the entrepreneur will pay back the loan
- Focus: Financials, personal reliability

VCs and business angels

- Goal: Exit the venture with wild profits and low-to-moderate risk
- Focus: Management team, competitive advantage, exit strategy

Government institutions

- Goal: Make sure that the project contributes to the local economy by creating jobs, intellectual property, core competencies, etc.
- Focus: Organizational structure, operations

Why would you spend months to write, submit and defend a business plan for an entrepreneurship contest such as Arista or Quebec Entrepreneurship Contest with the hope of cutting through the competition and snatching a grand $10,000 prize?

Yes, it provides some visibility and some cash, but just imagine what is the cost of opportunity, i.e. what could you have achieved with this time. My point is that most companies do not bother participating in entrepreneurship contests, they just do business. The real contest is in the real world, not in some regulated environment presided by a panel of judges. While you are busy fine-tuning your business plan and your presentation according to the contest's criteria, your competitors are busy developing their products and selling them to your customers. The money that can be made (if you are lucky) in a contest will likely not make any difference to your success or failure, nor will the (usually very) limited visibility gained through the contest.

Look at success stories. Few successful companies ever participated in such contests. They developed attractive offerings and won some key clients, and then they went to real investors with real money to finance their growth.

My parents used to tell me that it takes all kinds of individuals to make a world. The same is true for businesses, with three (stereo)types immediately coming to my mind.

The thinker
Pros:

• Able to strategize at high-level
• Capable of visualizing how to achieve the strategy
• Book-smart, able to digest lots of information

Cons:

• Tends to over-analyze, leading to procrastination of the execution
• May not come up with realistic solutions
• May be poor at communicating the strategic vision because over-using abstract concepts

The talker
Pros:

• Excellent communicator
• Good listening and interpersonal skills
• Actively contributes to motivation and general atmosphere

Cons:

• Tends to focus on one day at a time and lacks long term vision
• May be over-positive and promise things that cannot be delivered
• May unwillingly make it about himself and not about the organization he represents

The do-er
Pros:

• Gets the job done
• High-energy, long-distance runner
• Brings logic and real-world know-how to the organization

Cons:

• Easy to get bogged down in details and loose track of the strategic objectives
• Task-oriented, lacks people skills and/or orientation
• May unwillingly retain critical information because he postpones communication tasks

Success stories of entrepreneurs usually stage people who combine these characteristics in a productive manner. Look at Google's Sergei Brin and Larry Page, at Microsoft's Bill Gates and Steve Ballmer, or at Apple's Steve Jobs and Steve Wozniak. Although these roles are always important, their relative importance can vary according to the situation of the organization. This is why some of these persons stepped down or were replaced at times. Organizations life cycles goes through start-up, and then a number of growth, transition, turn-around, and other phases that each relies essentially on some traits of some of these stereotypical roles.