Tuesday, January 13, 2015
Regardless of who you work for, you are self-employed. You could be a fry-cook at a local fast-food chain or an art-merchandising internet mogul. Even if you wear a name tag and your check comes from some corporate office, the most important name on that check is your own. You work for You, Inc...or at least the most successful individuals do, no matter what their vocation may be. The difference between themselves and others is the choice to be actively engaged in the promotion of You, Inc; the choice to be responsible for themselves and to prepare themselves for opportunities as they arise.
Consider the basic business model: a business produces goods or services in order to earn income. This income is used to pay for the cost of doing business which is hopefully less than the income earned. Business expenses include overhead; costs like rent, utilities, fuel costs, materials, machinery, and PAY-ROLL. Successful business find the best and most efficient ways to utilize all their resources, from the pens in the offices to the employees on the floor, so that they can increase the margin between income and cost resulting in a higher profit.
Now consider the average household: the average household produces services (the employees who work for the businesses) and occasionally goods. They also seek to earn an income. They have expenses...household expenses. They have rent, utilities, fuel costs, costs for materials, personal and equipment maintenance...everything a business has. The mistake that most employees make is that they fail to factor in PAY-ROLL when they budget their income. This is the key difference between the average business and the average household. Pay-roll is a given in a business, but is ignored in a household.
Think about it. The owner and CEO of a business, large or small, reap the benefits of profits earned by their business...as they should. It is their business after all; they started that baby from the ground up, and can tell you stories about working out of their garage while hustling all over town trying to win over clients. They deserve to enjoy their profits, but do you know what isn't included in that profit? Their own pay! Even the business owner pays themselves, at the cost of the business, and separate from profits. It may seem intuitive, but it surprises many that the CEO at the top of a mega-corporation has a set wage that his household has to live within...profits are a secondary source of income, even if those earning exceed their salary.
The doldrums of working a regular job, at the bottom rung of whatever business you are employed at, can be over-whelming. It is hard to go to work in the morning when all you will be doing is working for someone else, taking orders, wearing the uniform, and getting a paycheck that seems to vanish before your eyes. Just the very thought of it makes going to work a soul-crushing task...and when you get home you might just want to mindlessly engage in some banal television show so you can for a moment forget you have to be back at work for the MAN again in the morning.
That kind of perspective is killing you as an employee. It is precisely where I was several years ago. You, no matter what you do, are probably not defined by your job. Your purpose in life, your passion, is not pushing a mop at the local burger-stop. So, you need to stop believing that it is, that this is all you have, and that you work for someone else. You don't. You are employed at whatever you do at your own volition. You've made a choice to earn an income at whatever level satisfying to your needs. What you forgot to consider in seeking employment is that your ultimate employer is You, Inc.
As an employee of You, Inc, it is your job to see to your success and happiness. In order to do this, you must find a means to generate an income AND that income must exceed your cost of living. This is something you need to determine before you even begin collecting applications, just as a business needs to know its potential costs before it ever opens it's doors. This requires making an honest assessment of your bills. How much is your rent? What do you spend monthly on utilities? What is your cost for groceries? How much is your car insurance and average fuel costs? What about other regular expenses? If your making estimations, this is the time to estimate HIGH.
You've taken a look at your basic expenses, but what about your other expenses? The goal of You, Inc. is to be successful and HAPPY! Happiness means different things for different people. For some people happiness is a collecting comic-books, and for others it is being able to jet off to Europe for a couple of weeks every year. You need to include an entertainment budget. Also, you have costs for your personal maintenance (clothes) that, while not every day or even every month, need to be considered. Think about what you spent last year, divide by 12 months, and again, estimate HIGH!
You now have a monthly cost projection sheet for You, Inc. There may be some places where you can shave off a few dollars, but now is not the time to consider this. The next thing you need to determine is how much of your time you are willing to sell in order to generate the income to cover these expenses. That is the product that you produce at You, Inc: time. Some people have time that is more valuable than others, based on education, experience, and skill-sets. Your time is in demand, especially by you. How many hours are you willing to surrender to see to the success and happiness of You, Inc?
Let say that you want to have a regular, "full-time" job; 40 hours a week. That's 160 hours a month. Simply take your monthly projected costs and divide them by 160. This number represents the base amount per hour of your time required for you to cover your projected costs. Now, add to that amount another 20%...that is your average income tax (you may need to adjust that amount up or down once you start working). You have now arrived at your minimum dollar value for an hour of your time, at 40 hours a week, to cover your projected monthly costs.
But, who wants to work at something just to break even every month? No one! That is why you feel the way you do about your job now! Its why your not getting ahead, why you don't see any possibility for something better. You BREAK EVEN every month...or worse, your You, Inc. is operating at a deficit! Nothing is more disconcerting, more stressful, than not having enough income to cover your basic expenses. That is why you need to operate You, Inc. at a PROFIT!
So, how much more do you want to make? It is a subjective question, dependent on what it is you want to do that makes you happy and how long it you are willing to wait (and work) to make it happen. You could be focused on a "short-term" goal, like spending a year in Europe, to a "long-term" goal, like retirement. Lets say you want to retire, and you plan to do so at the age of 60 with $1,000,000. In planning your retirement, you should really do more than pulling numbers out of the air, but this goal is good enough for our purposes. So, lets say you are 22, that means you need to earn 1,000,000 in 38 years. That's about an additional $27,000 a year, or an additional $12.65 an hour over you projected monthly costs.
You see why not everyone retires a millionaire. Of course, there are other, more efficient means to get to that goal, but that is for another article. The important thing to consider is the formula for calculating how much profit you want You, Inc. to make. That profit does not have to be made on the front-end of your income; it could also be made by shaving off some dollars from your monthly projected costs, if you can go without some of those items built into that budget. Once you discover that magic number that you need to generate as a profit to achieve your goal, whatever that may be, then you need only to engage in the one habit of successful people that the average person fails to grasp...
Every paycheck, pay yourself first.
Stay focused on that goal and pay yourself first. Before you spend money on anything else, pay your favorite employee of You, Inc.
Now, that job at the burger-stop mopping floors takes on a new relevance. It is your current stop on your way to the success of You, Inc. If, after this analysis, you look at the amount your selling your time for and realize that you will not meet your goals at that exchange, then it is time to do something about it. Perhaps it means putting your time back out on the market in hopes of a higher bidder. Maybe You, Inc. needs to invest in product development and you need to go back to school for additional training. In any case, you need to make a change. Don't just sit at your projected cost of living amount (or worse). Do what you need to do to make a profit!
In the meantime, whether you need to change how you get your income for You, Inc. or you're selling your time at a profit already, keep in mind that the product you are selling needs the best maintenance and promotion. Whatever your job is, take pride in it, do your best, and give it your all. This isn't just some "rah-rah" motivational babble, it is the easiest way for you to improve the market value of your product, time, to your buyers. If you are the mop-jockey at a burger-stop, then you should seek to be an expert at what you do. Know your task inside and out. Look for ways to improve the way the job is done and ways that your customer (your employer) can get the most for the money they are spending on you. Word of mouth is the ultimate advertising, and one day you will submit a resume to another buyer of your time listing the best features of your product AND references from previous customers. Even mopping floors provides opportunities for you to improve and shine. Look for them.
Finally, think about what you love to do and look for a way to be in that industry. Let's say you love video games...you're a digital cowboy who meets every pixilated challenge with gusto and zeal. You read the magazines about the games, follow the companies that develop the games...you might even buy the merchandise associated with the games. Have you looked up and realized how many opportunities are a part of the video-game industry? Get involved, look for those opportunities and work toward making what you love a part of your income stream. Even a video-game company needs someone to mop floors, and wouldn't you be happier mopping floors there than at burger-stop? It takes time, commitment, and hard work to make You, Inc. a success.
The nice thing about the process is that with so few people actually making the effort with their own You, Inc's, you will typically find that the little things you do will move you well ahead of the pack.