As a business owner, you will be required to do a lot of things. One of the most important things you will have to do is manage your time.
You will have to manage your own time, as well as the time of your employees and the time it takes to complete tasks. This can be difficult when you are juggling a lot of things.
One way to improve this skill is to recognize that there are different types of time and that they all take different lengths of time to pass. For example, there is chronological time, psychological time, and physiological time.
Chronological time is simply the actual length of time that passes. For example, one day passes from midnight to midnight. Psychological time is the way we perceive the passing of time. For example, one day may feel like it passes faster than other days. Physiological time is how our bodies perceive the passing of time due to bodily functions like sleeping and eating.
The time it takes to adjust production facilities
When production facilities need to be adjusted, it takes time to do so. This is especially true when new equipment needs to be purchased and installed.
Companies that produce products in mass quantities need lots of machinery and labor to do so. It would take a long time to adjust these factors, which is why it is important to have enough raw materials stockpiled.
The more efficient companies are at producing their product, the better off they will be in the long run. When there is a drop in demand, they will not have to lay off as many workers or cut back hours because they are already producing at full capacity.
In the case of a trade war, companies that are able to adjust their production facilities quickly will fare better than those that cannot. They will be able to shift production from one country or region to another depending on the cost of labor and materials.
The time it takes to adjust labor
The second factor is the time it takes to adjust labor. This one is a little more complex, and ties into the first factor mentioned above.
As mentioned before, in today’s global economy, production decisions are made independently across firms and countries. Therefore, whatever the prevailing wage rate is in a country, it does not matter- everyone is paying that amount.
What does matter is how quickly firms can adjust the number of workers they employ to produce a given level of output. The quicker firms can do this, the less difference there will be between the short run and the long run wages.
If it takes a firm several months to adjust its labor force, then in the short run there will be fewer workers employed than in the long run. This is because firms will not anticipate changes in demand very quickly.
Time is subjective
The first thing to understand about time is that it is subjective. We each experience time differently based on our needs, wants, goals, and priorities.
For example, you may have a colleague who spends two hours every evening working on their business. They may feel like they are making good progress, but in reality, they are barely making any headway because they’re spending two hours each night.
However, their priorities might be to spend quality time with their family before going to sleep, which is a totally reasonable priority. They are probably feeling as though they’re making good progress because of this priority.
The point is that there is no such thing as ‘enough’ time when it comes to building your business—it all depends on the individual and their personal needs and priorities.
Immediate demand affects time
When a company needs to manufacture a product, it must do so in time for the demand to exist. For example, if a company needs to manufacture smartphones, it must do so before the next version is released.
If the company waits until the next version is released to manufacture its phones, it will have no customers since people will be waiting for the new version.
The same goes for if it waits too long to manufacture its phones; no one will buy them because they are outdated. The same can be said for any other product—if a company waits too long to produce its products, they will not sell.
Production must be synchronized across all firms or there will be no demand for their products. This fact also applies to exports—if an export producer waits too long to ship their product, then the buyer will not receive it in time.
Losses affect time
A second factor that affects how quickly a firm can learn is the amount of time it takes for the firm to recognize losses.
Firms may need to make several attempts before they find success. This means that the time it takes to recognize losses is embedded in the time it takes to make changes.
If firms could recognize losses more quickly, they could avoid wasting time and resources on unsuccessful strategies.
In our study, we found that the average length of time it took firms to recognize losses was about two years. That’s quite a long time!
We also found that the average length of time between the short run and the long run was about one year. This suggests that, on average, the amount of time separating these two runs is the same for every firm.
Profits affect time
A second reason that time separates the short run from the long run is because of profits. When a firm has higher profits, it can invest in more expensive assets to produce more units per hour, or it can hire more workers to produce more units per hour.
In both cases, this would result in less efficient production due to less experience and skill. Less experienced workers will take longer to complete a unit, and less efficient production costs the firm money.
Thus, when production is slower due to lack of experience and skill, production costs increase due to longer working hours for each unit produced.
Profits also determine how long it takes a firm to reach its maximum output capacity. If a firm cannot adequately prepare its resources for maximum output capacity, then it will take longer to reach that point.
Capital affects time
A second factor that can affect the short-long run relationship is capital. Capital is a firm’s assets in the form of money or other valuable assets it uses to produce and market its products.
Capital can be physical, such as machines or factories, or intangible, such as knowledge or expertise. The more capital a firm has, the more it can produce and the higher the quality of its product it can produce.
A firm with less capital will take longer to reach a certain level of production or productivity than a similarly sized firm with more capital. This is because the less capitalized firm must take time to acquire enough assets to produce and function at a higher level.
The length of time it takes to acquire enough capital to increase production levels can affect the short-long run relationship. A shorter time between acquiring enough capital to increase production levels will have a shorter long run.
Time and costs in the short run and long run differ by firm
It takes time and money to train a workforce, set up infrastructure, and design and produce products. All of these take time to develop before a business can start making money.
Some companies have their products ready to sell, while others need to develop their product before they can start selling it. For example, Apple needs to prepare all of its components and software for the phones it will sell when it launches a new model. That takes time!
Some companies may also need to build up their workforce or upgrade equipment before production can start. For example, some companies may need to hire more workers or upgrade machinery before producing higher quantities of goods. This takes time as well!
Once production starts, the firm will have costs associated with maintaining production at current levels. These include things like materials, logistics, maintenance, etc.