Freedom of Time August 2017 • 4 minutes

People want things. A particularly trendy thing to want currently is entrepreneurship. Most people do not want to work longer hours or risk their personal finances. Most people actually want freedom of time. Entrepreneurship in practice allows you to work any 60 hours a week you want. Which is appealing to a certain kind of person that values freedom of time.

A job is basically work that does not give you freedom of time. You trade your time for money. The issue is that most people look at work as necessary for immediate survival (cash flow for survival expenses) and freedom of time in the future (retirement). There are various issues with this but the main one is the part that involves deferring freedom of time.

In order to get to a point where you can attain freedom of time with a job, you have to save money in addition to survival expenses. So you need to earn enough to cover your existing expenses, and then you need to earn some money on top of that to save up for freedom of time. The issue is that saving that money is hard, because your employer retains the surplus value of your earnings.

In addition, it can be burnout inducing to work for decades in order to attain freedom of time. Freedom of time when you have limited mobility or creativity seems like a waste. It seems like people end up too tired to work or do much else that is interesting. That is not a good deal relative to all the work you do to the benefit of other parties, mainly your employer.

I would argue that entrepreneurship is a better path because you immediately get freedom of time. Assuming you want active income (passive income is a different issue), you have to work for it either way. When you start a company, you retain surplus earnings (ie. profit) and you have freedom of time. What you do not have is the cash flow smoothing effects of having a job.

The difference is that when you have a company, you do not really need to save money. You can reinvest earnings back into the company in order to retain more earnings in the future. As a result, you only really need to meet your cash flow obligations in order to enjoy perpetual freedom of time. That is a better deal than having a job, where you trade freedom of time and retained earnings for smooth cash flow.

The chief skill and art therefore in entrepreneurship is managing cash flow. I think if you ask real entrepreneurs that own the majority of their business, they would say that cash flow is their hardest problem. Not in a sense that getting revenue is that hard, more in a sense that smoothing it out can be extremely hard and you risk going to zero. That is still worth it if you can manage to achieve freedom of time though, since that is the ultimate goal of savings in the first place.

The main problem with this idealistic way of thinking is that you cannot just start a business with zero cash. The zero cash date would be tomorrow, you would run out of money and starve (in theory). You have to somehow escape the cycle of earning for survival, and put yourself in a position when your cash on hand exceeds the amount of time it would take to get to neutral survival cash flow.

Since there is no utility in saving money when you own a business that can retain earnings for you, you only need to get your business to survival income to achieve freedom of time. Again, freedom of time means control over your work, not zero work. Zero work is not a good goal, people who don’t work are less satisfied in retirement or otherwise. The goal should be work hard, but do not compromise freedom of time (ie. time with family, friends, learning, sleep) for anything. That is hard to achieve with a job because a job not only has to pay for survival, it also has to compensate for future freedom of time.

Most people could achieve freedom of time decades sooner if they saved what they earn from their job more aggressively, and quit their job to start a business as soon as their zero cash date (the number of days at current expenses that your bank account hits $0) was after the date they could reasonably get to cash flow neutrality with a business. Once that happens you have freedom of time, and you have traded smooth cash flow for it. This seems worth it.