Safety margin is a term in business management, and, like the safety factor, it is used to measure business risk. The safety factor can be illustrated by a truck: the greater the difference between its actual load and its rated capacity, the higher the safety factor.
Here is a formula that explains it:
Safety margin = total sales − costs,
Safety margin ratio = safety margin / total sales.
For example, if a company has operating costs of 80 and revenue of 100, its safety margin is 20. If we then divide 20 by 100, we get a safety margin ratio of 20%. Generally, a safety margin above 40% is considered very safe. The greatest value of a safety margin is that it leaves you some surplus, or flexibility, so that when something unexpected happens, you can occasionally withstand some sudden additional pressure.
If a place is only half an hour away, don’t wait until half an hour beforehand to leave.
When you meet someone you like, you can be enthusiastic, but don’t hold nothing back,
When doing business, leave the other party some room to bargain. These are all examples of applying this way of thinking.
Summary (redundant backup, breakaway point, redundant backup)
Margin of safety: generally cost-free; what you want to adjust is self-operation within a bearable range, leaving yourself room to reduce surprises during operation
Breakaway point theory: relatively low cost; it substitutes small losses of your own for a large overall loss. It can protect important devices from being damaged, but usually also causes the device to pause operation.
Redundant backup: generally costs a bit more; once one device pauses operation, other backup devices can still substitute for it, keeping the overall system running.
No single protective mental model can guarantee complete safety at its own level, so they are applied in repeated, single-direction and multi-item combinations, thereby making an important engineering system more stable. Correspondingly, to ensure the stability of your life and work systems, you can also use this engineering protection trio for reasonable planning. For example, a person's trump cards, a company's cash flow, or a family's living expenses should all be appropriately reserved—this is the margin of safety, setting certain bottom lines and principles. Once the margin of safety is breached, in what way should you refuse and stop it? That is breakaway point theory. Of course, some loss-cutting methods may make you pay a price or add hidden risks, such as losing a project, a client, a job, talent, or friends. At this point, you should realize whether you need to add redundant backups and keep a fallback, so that during the damaged transition period you can muddle through the hard times. Overall, such arrangements actually further increase the margin of safety of your entire life system.