Are You Sweating Your Assets?

ARE YOU SWEATING YOUR ASSETS

You have heard the business slang term “Sweating Your Assets“.  I love it. Sweat Your Assets is my call to action in life and business.

No wonder I have named my platform after it. But what does it mean, and how can you benefit from sweating your assets? Let me share a definition and some practical examples.

The Definition of Sweating Your Assets

Sweating Your Assets refers to the practice of optimising or maximising the use and value of existing resources or assets (physical, financial or intellectual).

In a business context, sweating your assets involves increasing the productivity or efficiency of underutilised equipment, facilities or employees before investing in new ones.

The idea behind the catchy slogan is to:

1) take full stock of what your have

2) avoid waste of resources and assets

3) make the most of what you already have, rather than constantly seeking out new resources or acquisitions, which can be costly and time-consuming.

Practical Examples of Sweating Your Assets (the Pros): 

1) Sweating Your…Equipment means putting your equipment to the test by using it to its maximum capabilities (peak performance). For instance, achieving and maintaining peak performance of your engine (in vehicles, ships, aeroplanes, etc.) will result in many benefits such as high fuel efficiency, reduced maintenance expenses, reduced downtime and extended life.

2) Sweating your…facilities: a hotel owner might invest in marketing to secure the total occupancy rate of its rooms. Keeping a low occupancy rate does not make sense: the owner still has fixed overhead costs. It is much better to fully book all rooms and secure enough staff based on booking arrangements.

3) sweating your…employees: a software development company that wants to launch a new product quickly could assign specific tasks and responsibilities to each employee based on their expertise and skillset. To sweat their employees’ skills and expertise, the company could also offer incentives and rewards to motivate employees and recognise their contributions. By leveraging its employees’ skills and expertise, the company can develop and launch the new product within the desired timeline while providing a challenging and rewarding work environment for its employees.

4) sweating your…fixed costs. In 1972 a McDonald’s franchise pointed out to Chairman Ray Croc that they had buildings and staff causing operating costs all day. In contrast, their overwhelming use came twice daily at lunch and dinner. To better cover fixed costs and optimise opportunities, McDonald’s Breakfast and its Egg McMuffin were born.  In 1977, the company introduced a full breakfast menu that included pancakes, sausage, hash browns, and more. Within 20 years, McDonald’s made $5 billion a year on breakfast alone. They had found how to sweat their assets to good effect.

5) sweating your… unused space. In 2008 three San Francisco entrepreneurs found a way to use the extra space in people’s homes by constructing a site that would allow visitors to rent it, usually on a short-term basis, especially for holiday visits. Airbnb was born, and people could afford far less costly accommodations than that proved by hotels. That spare domestic space asset was sweated. 

6) sweating your…financial assets: typically means maximizing the return on your investments or financial resources. An example of this could be an investor who wants to generate high returns on their portfolio while minimizing risk. To sweat their financial assets, investors might invest in a mix of stocks, bonds, and other financial instruments to diversify their portfolio and balance risk and return. The point is to make your money work hard for you, not keep it idle or uninvested.

7) sweating your… “talents”: It is based on the bible’s parable of the talents. While in Matthew’s gospel, a talent is “money”, the analogy commonly refers to your life: make the best out of it, make it valuable. How can you best use your unique skills, experiences and passions?

8) sweating your…time. Time is the most valuable of your assets. It must be protected and allocated with great care and intentionality. How, when, where and with whom you “spend your time” is paramount. You cannot buy more time, but you can use it wisely. Don’t waste it. William Penn shared a striking reminder. “Time is what we want most, but what we use worst.”

8) sweating…OPT, OPM, OPA. If you become a pro, you will be asked to manage other people’s time (OPT), other people’s money (OPM), and other people’s assets (OPA), because you produce better results. It is a big responsibility, but it is where you reach great results and impact because you LEVERAGE unlimited external resources.

The dark side of Sweating Your Assets (the Cons) 

While “sweating your assets” can be a strategy to optimize the use of resources and generate more revenue, there can be negative consequences if taken too far or used inappropriately: Don’t kill the goose that produces your golden eggs! 

Here are some potential negative effects coming of Over-Sweating Your Assets:

Increased risk of asset failure: When equipment, facilities, or other assets are used to their maximum capacity for prolonged periods, they are more likely to break down or wear out faster. This can lead to increased maintenance and repair costs, as well as downtime and lost productivity.

Increase the risk of investments: investing involves risk, and returns are not guaranteed. Investors should carefully consider their risk tolerance, investment objectives, and financial situation before making investment decisions. Even more, if an investor seeks to adjust its asset allocation, try to increase returns by overlooking underlying behavioural and market risks.

Employee burnout: If employees are pushed to their limits and expected to work long hours or take on excessive workloads, it can lead to burnout, stress, and decreased job satisfaction. This can lead to increased turnover, lower morale, and reduced productivity.

Reduced quality: If equipment or facilities are used beyond their intended capacity, it can result in reduced quality of output or service. This can lead to customer dissatisfaction, decreased revenue, and damage to the company’s reputation.

Regulatory compliance issues: Depending on the industry and the assets involved, regulations or safety standards may limit the extent to which assets can be used. Ignoring these regulations can result in fines, legal penalties, or even reputational damage.

Bottom line

Should you sweat your assets hard? As with everything in life, virtue stands in the middle.

We can refer to the Latin wise phrase: in medio stat virtus, or to the well-known story about a sitar player (in some versions, it’s a lute player) who was discouraged with his meditation practice and went to the Buddha to ask for instruction. The story goes like this:

“What happens when you tune your instrument too tightly?” the Buddha asked.

“The strings break,” the musician replied.

“And what happens when you string it too loosely?”

“When it’s too loose, no sound comes out,” the musician answered. “The string that produces a tuneful sound is not too tight and not too loose.”

“That,” said the Buddha, “is how to practice: not too tight and not too loose.”

Sweating your assets can be an effective strategy to optimise resource utilisation and generate net positive outputs and outcomes for you, your associates and the community. Still, it is important to be mindful of the potential negative consequences and balance the use of assets by relying on a sustainable long-term approach.

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