Margin Without Mission
Margin Without Mission
Those of us who are passionate about hospice work often shy away from discussing the economics of the business. Because it is such a mission based field, often it feels distasteful to openly talk about how these companies, which provide this important service, operate. Who wants to mull over dollars and cents when we are dealing with end of life care? Yet, administrators nationwide have realized that financially independent businesses last longer than those that are not. The rallying cry thus becomes: in order to have mission, you must have margin. We can’t do all these wonderful things, provide all these wonderful services, if we don’t have enough money to keep the doors open. Conversely, I believe we in the financial independence community make the mistake of striving for margin without mission.
We have become experts of the how of FI, and pay little heed to the why.
Margin
Definition Margin: In a general business context, the margin is the difference between a product or service’s selling price and the cost of production.
For the purpose of financial independence, margin is many things. It is the gap between money earned and money spent. It is the goal post of 25X or the plan to safely withdraw 4%. This term could describe the sum total of the economic tools we use to extricate ourselves from the W2 hegemony and live a life of freedom.
When we say we are striving towards FI, we are committing to improve margin. We will use wages, side hustles, investments, and whatever mechanisms it takes to get to our goal.
When we read all these blogs and listen to podcasts about frugal tips, college hacking, and investment in the work place, we are talking about margin without mission. We are discussing the cold hard economic facts of survival.
Mission
Mission, however, is something completely different. This is the why of FI. Financial independence is great and all, but it is not an end unto itself. The plan for freedom holds little water if there is nothing out there to be free to explore.
Like I have said before, travel, downtime, and alcohol can fill only so much of one’s time. At some point there needs to be a game plan to create, explore, or give back to the world. A plan to find your life’s purpose.
Margin without mission will basically turn into some sort of treadmill or another. Maybe not hedonic, but achievement or bank account building for no other reason than to reach a level higher than one is currently at.
The Money Mind Meld
Margin without mission leads to one thing and one thing only. The money mind meld. I know you have heard this from me before. But it bears repeating. Money and even the goal of financial independence can be such big audacious goals that they can outshine just about everything else. They can outshine mission.
The end of the financial independence journey will only bring sadness, depression, and vertigo to those blinded by the dollar signs.
Final Thoughts
In hospice we say that there can’t be any mission without margin. In financial independence, I like to say that there can’t be margin without mission.
I think it is wise for all of us in the FIRE community to make sure we have a good grasp of our mission. Make sure we truly understand our personal why of FI.
Otherwise we end up reaching our goal only to find that we are lost.
Unsure what to do next.
Great post Doc, it is kind of squirmy to think of a hospice place having to make money, but that’s the reality I guess. I think I’ll have lots of missions in retirement, and my semi-retirement is giving methe space to test, try,and explore.
Yep. Hospices have to make money too!
I just read a study of Swedish lotto winners. Winners were happier than non winners and those that won hundreds of thousands were happier than those who won tens of thousands. Of course it’s likely 70% was confiscated by the government. It didn’t say anything about hundreds of millions winners and happiness. My guess and experience is once security is accounted for, money becomes an independent (non correlated) measure of happiness.
Yes. The hard part is deciding what is enough.
Typically in house hospices lose money but act as a loss leader for the associated home hospice care which is always a much larger operation. Also in house hospices that were built over ten years ago are generally twice the size needed to match the home hospice care patient load. The ratio of home care to in house hospice care has dropped in half over that time period. At least that’s the case with the hospice I help manage as a volunteer and the others we have researched.
The economics can be tricky.