There’s a trick to getting more money, and it’s not begging your boss for a raise.
According to a recent USA Today article, compensation for CEOs of companies in the S&P 500 jumped 13% in 2013. That means that more people at the top are making over $100 million than ever before.
You can’t live on that money, but it’s a nice start.
I’ve always been convinced that you either have to:
be able to bring something to the table as a key employee
you have to be the person running the company.
Time and again, statistics prove my assertion is correct.
Rethink Working For The Man
Back when I “worked for the man,” I was often frustrated. If you work for someone else, you may know this story: I had bosses that didn’t have a clue what they were doing. I’d have to beg for even a cost of living raise. I worked long hours with the threat that someone else would take my job any day.
But I told myself that I “needed” the job. I “had to have a consistent paycheck.” Meanwhile the idiot I was working for brought home more money than me while I continued to please the client.
I Decided To Work Differently
Finally, I’d had enough. At the very least, I wanted the ability to control my own destiny. I wanted to determine how much (or how little) money I made. I wanted a direct correlation between the success of my plan to earn an income and my ability to buy something. It always bugged me when I had to ask a third party to give me money when they weren’t the customer. I didn’t have to convince the customer that I was good at my job….I had to convince my boss that the customer loved me.
It Isn’t Easy
Owning the company or bringing a key skill to the table is nice, but it isn’t all roses. In most cases, the person at the top has a huge struggle to get where they’re headed. Especially if you’re building from the ground up, you’ll have to believe in your product and your mission.
Whenever I’d counsel someone who was starting their own company, we’d walk through these crucial action steps. You MUST do these three things before starting your business:
- Build an emergency fund and free up lots of credit. You don’t want to have to use these resources, but businesses fail because they aren’t adequately funded.
- Complete a business plan. Yeah, really. I’m not kidding. I met SO MANY entrepreneurs who failed because they didn’t have a real business plan. Your business plan is the strategy that you’re going to use to make money. Even if your plan is flawed, you’ll find that out soon enough and fix the plan rather than floundering.
- Read. Two of the best books for new entrepreneurs are The E Myth and The Goal. Once you’ve read those books you’ll have a feel for running the company and increasing throughput. Whether you’re cutting hair or making widgets, throughput and low overhead are the keys to the game.
Option #2: Be The Key Employee
I’ve met people who clearly aren’t key employees who tell me that they aren’t cut out to run a business themselves. That’s fine. Just realize that without taking risk, the chance of increasing your pay dramatically is going to be difficult. However, there are still methods to increase your income:
- Determine your unique talent. If you’re going to work for “the man” your whole life, the only way to get ahead is going to be marketable to as many different firms as possible. What can you do that nobody (or only a handful of people) can do? You know what that skill is when you read this. Gain that skill so that you’re in demand.
- Frame yourself. Marketing your talent is half the job of making more money. Hell, based on some of the overpaid people I’ve met, it might be 3/4. Once people refer to you as a “specialist” or a “guru” you’re immediately more marketable. How do you do this? Begin speaking to local groups. Write for websites and publications in your focus area. Become someone that others see as the go-to person in your field.
- Keep score. You’ll either have to prove to your boss that you’re worth a ton more than you’re making now or you’ll have to prove it to a new company. Either way, you’re going to need to keep track of how much money your skill is bringing to the business.
- Even if you aren’t going to own a business, I’d still read the E Myth and The Goal. You need to be able to think like your boss to find out how to get further into her pocketbook.
- Ask. Tell your boss how much money you’re making the company and demand a bigger slice of the pie. Go about this the right way. You can’t demand the whole pie that you’re bringing in to the company. If you read the E Myth, you’ll realize that there’s no way you can get all of the money you bring in. There are too many support functions that help you do your job. Even demanding half of what you’re bringing in is a huge number. However, you can easily justify upping your percentage so long as you’re not already overcompensated.
Making more money always involves either taking more risk (ownership) or making yourself more valuable to those who are taking the risk (key employee). In life, most people reach for security, when the highly paid person realizes that in business, unfortunately, the security of just getting by while you work for “the man” is a myth. By upping your game and making sure you’re compensated for it, you’re likely to demand a higher pay rate.
Joe Saul-Sehy is the co-host of the popular Stacking Benjamins personal finance podcast.
Join our newsletter
Get financial tips from a licensed professional directly to your inbox.