Sweat Equity, What Does it Mean?

Eliza Donavan

“Sweat Equity” has been a term used through the years to equate labor and contributed resources rather than monetary ones. Those wanting to support a particular project or charity fall into these categories:

1) The Working Professional:

This category works a lot, perhaps too much, and has money but no time. They might like to contribute their experience, but simply haven’t got the time to do so. Their time is worth money, and that time that they spend at their profession is translated into monetary resources. This category is very careful about how and where they contribute, as they are usually living pretty close to the edge of their finances, despite their working hours. Their focus is on the checking or banking account, and anticipating any kind of drain on their resources, such as a health crisis. This is their main worry. They are interested in the improvement of the society that they are in, but within their financial limits.

2) The Entrepeneur:

This one is interested in a piece of the pie. They are primarily promoters, and salesmen. They may not have any technical expertise, but know how to extract resources and money from others. They are somewhat predatory, but some do have a conscience, and those realize that posterity will judge their actions, so they should leave a legacy behind. Not having a professional skillset to speak of, they rely on others to accomplish this. This category does not understand “sweat equity” and will give a few dollars or euros and expect a complete project at the end, in an unrealistically short period of time. Some of those in this category are New Agers, which makes matters worse, as they have an even more feeble grasp on reality. In this category, a serious look will have to be made to balance the effort to explain to them the scope of the project and ROI and the amount they are willing to contribute. This category comes by money easily, but they also squander it before it can be put into a creative channel. They cannot do any long-range planning, and will contribute on impulse, at the moment. Ask them tomorrow and they will not remember you. This one is very difficult.

3) Consultants & Part Time Professionals:

This category probably has a shop that they work in, and understand what it takes to put things together. They have free time, but value the monies that they finally were paid by their customers and clients. Their pocketbooks may be tighter than The Working Professional, but they want to see the project succeed. This category are those that know what it takes from concept to a finished product, such as a chair, working engine, etc. and want to contribute their expertise rather than money. However, if the project is beyond the scope of their resources, they understand that and will find a way to obtain resources, situations and locations to accomplish the goal. This category knows how much their labor is worth, and how difficult it is to get paid, and will want to contribute their labor and knowledge instead. This is fine, as they are like having someone working with you on the project, and they find satisfaction in doing all they can.

This is the key: emotional investment. If you are doing the CAD drawing, or machining/printing parts, or doing something to see the completion of the project, that involvement puts pressure into seeing it finished and working. Holding something tangible is far different from just an idea in your head. The more that are involved in pushing the project forward, the faster it will be moving, like any massive object in the real world.

4) Unemployed Professionals, or Retired:

This category has no money to speak of, but enormous amounts of time. For those that are retired, there is a desire to work on a project instead of vegetating in front of a television set. I have seen this many times, including a friend that began a newspaper in his 70’s despite those telling him he was too old to do so. This is their “swan song”, a last project to contribute their decades of knowledge in before leaving this world. They want the project to be something to remember them by, and will dedicate all they can to see it completed. Being older, they will work at their own pace, knowing their limitations. These individuals are a gold mine of detailed know-how, and their sweat equity is desired above all, as they can not only troubleshoot projects and see hidden flaws unseen to others, but will be able to shorten development time with that knowledge.

With those being said, there is also the matter of what the “equity” part of the “sweat equity” means. This will vary from individual to individual. Here is an example in dollars per hour:

Editor: $25-30

Draftsman: $30

Machinist: $30-40

Carpenter: $50

Electronic consultant: $50

Engineering consultant: $100

Law consultant: $120

So we see that in sweat equity, different professions will contribute different amounts of time. If I do an hour of CAD work, that is equal to contributing 30 dollars. If I do enormous amounts of number crunching and computer time in Engineering, then that hour is worth 100 dollars. The gray area comes in something like business plans, as it can be done by an editor at $30 per hour, or a legal version at four times that rate, at $120. So we have to be aware of what everyone’s time is worth in the contribution process. Also, there is less of an emotional investment in giving money than rolling up one’s sleeves and making the parts. That has a euro or dollar value depending on their field of expertise, and also has an unseen or visceral quality that connects one to the project.

So we have three different kinds of involvement:

1) Money

2) Labor/resources

3) Emotional

Conclusion

As I mentioned earlier, it will be less of a connection in funding a project and being at a distance than buying parts from a Ferreteria or Ebay, taking them to the shop to help assemble things. The sense of accomplishment is not there when there is no hands-on involvement. An analogy is giving someone money to attend a university and congratulating them on graduating, versus actually attending the courses and passing the tests. This is what is meant by an unseen visceral connection. The same thing is seen when we view a mountain climber on a video versus personally climbing that mountain.

It is my desire that this clarifies the concept of sweat equity, if at least a bit. If not let me know.

Eliza