And why working towards educating them may be the answer.
*I Don’t Understand?*
I can remember being fresh out of High School and working for a contractor. Some of the people I worked with had a bad attitude about the lifestyle the owner was able to live.
He had a boat, a nice car, and seemed to be making a lot of money. For an individual making $8.00 per hour many of these things appear to be out of reach.
I remember very vividly some of these guy’s telling me how we were being taken advantage because every hour we worked at $8.00 per hour, the
contractor made $24.00 per hour. I soon adopted a similar attitude to my co-workers.
How is it fair that he makes $24.00 per hour while only paying me $8.00?
That’s not fair! I should be making more!
What I was uneducated about was what goes into running a business. I had no skin in the game, all I had to do each was show up to get paid. If the contractor did not go out and get more work, his lifestyle would come to a screeching halt.
I had no clue about how his business worked, or the risk he had associated with running it. The stress of running a business can be very high at times.
When I discuss being uneducated, I mean about the way a business runs, not the education you receive in school. The education you receive in school is not necessarily going to apply to what I’m discussing here.
Years later as I progressed along as an employee for different companies and started to learn about selling and then marketing, I worked on being educated in business.
I learned about overhead, and all of the other expenses that go into running a business. Things like insurance, repairs, janitorial expenses, employee gifts, bonuses, etc.
I started my own small businesses along the way such as mowing, vending machines, a sandwich shop, and eventually taking the plunge and devoting my family to being 100% entrepreneurial. Yes, I left a job where I made good money to go out and start my own business to make zero money. Crazy huh?
You can read, discuss, and complain about how you should make more money, but until you run your own business, you don’t have any real experience about what pay for performance really is.
The average person doesn’t realize how much sacrifice, struggle, and heartache the small business owner has to go through to build a successful business.
If you want to make more money as a small business owner, you can do four different things.
- Get new customers.
- Sell more to your existing customers.
- Increase your average sale.
- Raise your prices.
*Educate Your Employees*
It’s a personal decision on how much you want to educate your employees about the inner workings of your business. I have met owners who will
disclose anything, and others who disclose nothing to their employees.
I believe the people who are protesting on Wall Street and other venues around the country are not educated on what it takes to run a business. Why else would they make such crazy demands.
I mean really, do they actually think someone should just send them a check because they have more money than they do? You must be uneducated with that type of thinking.
It’s hard to make a business successful, and most employees don’t appreciate what it takes. This can give many owners a bad taste in their mouth about sharing information about overhead and other costs. Most people don’t realize that it costs the business money to even pay them. There are costs associated with payroll taxes that the business must cover to even have employees.
From a small business owners point of view their employees must be able to add something to the business, or the small business owner cannot afford to keep them.
Let’s use an example from one of the most well know pay for performance venues in the world, professional sports. I’m going to use football as the example.
Joe Montana was one of the best quarterbacks in the game. At a certain point the team he played for knew he was nearing the end of his career. When his performance started to decline because of injuries, he became less valuable.
In professional sports you are judged solely by your performance, you either make the team or you don’t. There is no tenure, you either perform or you don’t.
There are no handouts in pro football.
Even if you win the Super Bowl one year, you better keep winning, or the owners will find someone who will. This is the “Law of the Jungle.” Only the strong will survive.
*The Everyday Workforce*
In the everyday work force it’s typically not that harsh, especially in a small business. I’ll say that a small business is less than 99 employees for our discussion here. Most small business owners I know feel an allegiance to their employees, but there are always exceptions.
It’s easy to get a pack mentality and think you deserve more. Or listen to a small segment of leaders in our country spouting off about people who are making more than we are to “Pay their fair share.”
I have been on both sides of the fence and understand what each side feels. The bottom line is that as small business owners we can’t do it by ourselves, and most employees can’t do it without small business owners.
If you’re an employee, think about what you can do to add extra value to the company you work for. If you’re constantly working to improve yourself, and make the company better, your small business owner will appreciate it. If they don’t, go find somewhere else to work.
If you’re a small business owner, work towards educating your employees about what it takes to run your business. Share as much as you feel
comfortable sharing. It’s your business, do as you see fit.
If I can leave you with one thought it would be “There are no free handouts.”
Yes, there are things that are publicized as free, but they are not free. Just because you don’t pay for your insurance, doesn’t’ mean it’s free. Somebody, somewhere has to cover that cost.
I have a client who pay’s an average of $1,000 per month, per employee to cover health insurance. That means that one employee is costing $12,000 per year, just to cover their insurance. Holy cow, that’s a chunk of change!
If you’re making less now than you did 5-years ago, look at yourself. What have you done in the last 5-years to improve your skills, knowledge, and abilities to help become more valuable?
Your value at any job has a shelf life. There is no status quo in anything. There is only growing or dying. Most employees are letting their value decrease because they are not taking responsibility to make themselves more valuable.
Take responsibility for yourself and don’t wait for someone else to tell you to improve, be proactive and improve yourself.
If you wait for someone else to tell you what to do to improve yourself, you become beholden to them. Once this happens, it’s difficult to ever get out of their chains.
Stop the protests. If you don’t like what you’re being paid, start your own business. The opportunities are endless.
If it is to be, it’s up to you
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