Assuming you want to make more money, have you ever considered there are just three ways to make more money?

1. Find more people to pay you. This might imply taking a second job or multiple other jobs including selling stuff on eBay. If you are an employee and think like an employee – all you have to sell is your time. So sell more of it. If you are a bit entrepreneurial you can always sell something besides time (which still takes your time) by finding new people to pay you for your stuff. Note that of the three methods, this one is the hardest to do. It is the same problems companies have when they need to get more customers. We call is customer acquisition – and the cost of customer acquisition can be high. In your case you give up more of your life and also have to find that other customer who is willing to pay you.

2. Get your customer to pay you more frequently. If you are an employee you have this one licked since your employer already pays you on a regular basis. But as a way to make more money this is still something we need to look at. A business can get customers to purchase more frequently. How? Provide great service is one way. But for you, if you do not have an employer paying you frequently, how do you make the money flow more often. For instance, if you are an on-call independent contractor, what could you sell more often to get them to take out their wallet. The independent computer technician will often try to get a maintenance contract where he or she will come in periodically and service equipment to keep it running instead of waiting for something to break. If you are not being paid frequently by one of your customers or employees, what can you do to make that happen?

3. Add more value. While your employer is already paying you, what else can you do? Forget the political concept of a “promotion.” Instead think about what other roles you could do. Could they pay you an incremental amount more if you do some other things, even things that are a slight increase in what you are doing? Perhaps you can take over the roles of a vacant position – or even some work from your boss. If you go to a fast food restaurant, they do this by asking, “do you want fries with that?” You are already buying fast food when you here this statement. So the food chain figures if they can just add a little more value while you are already paying they can make more money.

Note of the three listed above, they are in reverse order of difficulty. The easiest way to make more money is to get the people already paying you to pay you more when you increase your service to them. The hardest to do is finding new customers.

One reason few people start their own comapny is that they are afraid of being broke. Or, as Pamela Slim puts it, they are afraid of living in “a van down by the river” (because that is all they can afford).

My ideal path would not be one of starvation between day job and the work you love. In fact, I like money and the things it does for me so I prefer to never move in a backward direction.

So here is how I would do it. 

First, if your endeavor is going to take significant capital or full time effort, consider how you could start with less. If you need to develop software that will take 6 months of full time activity or require a $30,000 investment, start instead by consulting on the side. Work with customers who will let you start small after hours or on the weekend. If instead your new plan is a storefront or selling product that has you working all day, then consider how you might start marketing your product on the internet.

Note that no matter what the business model, you can find a way to start small. But more importantly, you can find a way to start today. 

Now when do you quit?

• Option 1 – When your new business income is getting close to your day job pay. If you are making $60,000 at your day job and have grown your new business to $40,000, you might notice that you can now quit. You might take a small hit in income for a few months, but the extra time at work might allow you to make it up and surpass it quickly.
• Option 2 – Wait till they are about equal. When your new business is making $60,000 you will become confident that you can do it.
• Option 3 – Wait till it is so obvious it is just silly. I have seen this many times. One friend of mine was making five times his annual day job salary on his part time work before he quit.

Each of these options has two assumptions:

1. You do not want to starve and are willing to work extra hours for your financially conservative approach.

2. You are not living on both your day job and your new business income!

If you are like me, you often find yourself needed someone else to do work for you. But who do you need? Do you hire a pro who will cost serious cash, hire in someone like an intern, or delegate to someone on your staff. (And be hire I mean pay an outsider to do the work. I do not mean put them on the payroll permanently.)

Here are my rough rules on this issue.

Rule 1 : DELEGATE – I know how to do it myself and I have a team member who want to learn.  In this case I delegate it to the team member and offer them the resources to help them grow such as tools or training.

Rule 2 : HIRE – I know how to do it myself and I have time to train someone. If I am an expert and I know exactly how to do it and can show someone, I hire anybody who is conscientious. Skills may not matter as much in this case since I have the skill to show and tell.

Rule 3 : SUBCONTRACT - I am not an expert and what needs to be done needs special attention. Things that might cost me more money if done wrong are in this category. Things such as websites, product creation, etc. In this case I find an expert and pay them. I also spend some time searching for the RIGHT expert.

I know many of you do it differently and have your own reasons, but this method works for me pretty well. At least up to now!

A frequent question from budding entrepreneurs is

“How do I hire people? And when?”

My Answer:

When you doing the work is getting in the way of you growing the company AND when I have the cash to pay. Or when you just cannot stand it anymore!

How?

My general rule is that I NEVER hire anyone – I always contract via 1099. I only make exceptions if I cannot get away with contracting or if there is some overwhelming reason not to do so. (People I might hire inside UAB or other corporate structure is one example – the risk is not all mine.)

Generally when you hire I would suggest you do so as 1099 or on contract also. (I know – go ahead and flame me!) By doing this contract role, you get complete control of the work without the risk of having an employee.  This way you pay them a direct amount and use them when you need them. I would even do this for a long term worker! Some IRS rules apply, and if in doubt seek the advice of your CPA.

It is not a big deal

Some people really freak out over the hiring deal. Really is it not rocket science. You need work done, they want money. You agree to terms and commence in a working relationship. Just forget all the complexity you might see in your day job or HR, employee handbooks, benefits, etc. These matter – but later.  In the beginning just get the work done.

Next time we will take a look at how to find define who you need to do the work.

“How do I identify investors so I can start my company?”

This is one of the most frequent questions I get from hopeful entrepreneurs. It is often centered on getting VC (venture capital) or angel investments.

Here is my short answer! Don’t.

I have nothing against investors. But, practically speaking, most of investors are not going to invest in ideas. Instead they usually want to invest in a company that is taking action. So if you want investors to be interested in you – start by making money. Trust me. A company that has made some money without spending much up front is very interesting to investors!

So figure out how to start with nothing or next to nothing. We call this method of funding “bootstrapping.”

How to start with nothing – some practical hints.

• If you need a storefront for your big grand plan, can your start out of the trunk of your car or by selling on the internet? The result would be that you learn what products the customers really like and which they do not. You get to test your assumptions.
• If you need a giant piece of software to solve a problem in industry, can you start by offering consulting for your customer base. By doing so you learn more about the problem and establish yourself as an expert.
• If you need a nice plush office, forget it. You have the wrong idea anyway. Even Warren Buffett does not do this.

Point is – get started NOW and do something to bring in some money. Forget plans, forget investors (at least for the moment) and just make something happen.

Related posts:

Gerard Butler and Pursuing Your Dream In Spite of Difficulties

What sets apart the winners from the losers?

The Secret to Getting More

Myths and Truths on starting your own business

I received this email as part of an application to Information Engineering and Management. I thought it so described what others tell me that I would share it with you. 

Escape From Cubical Quick Sand 

It is 5 by 5 feet wide, 5.5 feet in height and the floor feels like quick sand.

It appears that there is no one around to pull me out, so I must take matters into my own hands and figure out a way to escape.  It, is just a regulation cubical used by 100’s people everyday but for me it’s the hole filled with quicksand from which I must escape.  But how?

Idea after idea comes to me but I just cannot seem to come up with a method to make them work.   I feel the quick sand under my feet as it begins to shift and I begin to sink ever farther.  I am starting to shake and sweat, I can’t seem to catch my breath, but I will not panic, then suddenly I get this great plan of action, use those God given gifts and talents as a ladder that’s been there all of the time and climb, climb, climb.   Enhance my tools and skills; more education, better credentials, information and networking.  Go back to school get a Masters Degree in Information Engineering Management.  Although, I previously earned a degree it has not exactly served me well. Unfortunately, I failed to be as aggressive as needed in that pursuit and thereby a subsequent career path in this area failed to manifest itself.  A now I find myself in this cubical of quick sand needing an immediate means of escape and this is what has brought me to this specific juncture in life.

I need to obtain the knowledge as to how to market, network, package and be financially and emotional rewarded as I use my previous education, experience and skills while affording for new experiences outside of a cubical of quick sand.  Now I ask you, please take my hand help me climb out of the quick sand and then show me the way to personal success and fulfillment as a self empowered entrepreneur.

How about you? Does this describe your career?

Monday, August 01, 2011 from 8:00 AM – 11:00 AM (CT)

Do you feel underpaid, unappreciated, or perhaps even unfulfilled in your work?

Are you tired of having your pay artificially controlled by arbitrary pay grades?

Learn to take control of your career!

Come and join me and you will learn:

• how to find new opportunities that are not posted in job ads,
• how to apply entrepreneurial thinking to enhance your career,
• how to determine and increase your value, and
• how to increase your salary!

Who: Bob Montgomery

The Story: Bob has told me many time he believes in starting at the top. But talk is cheap – we all have to see to believe. When I was looking on how to get our IEM Program in front of military officers I contacted several friends in the military. Then – on a whim – I also asked Bob for help even though Bob has no connections to the military. Within an hour Bob emailed me that the had called the White House and then followed with calls to Senators Richard Shelby and Jeff Sessions offices to determine the right contacts in within the Department of Defense. Over the next few days I worked with Todd Stiefler, Senator Shelby’s National Security Advisor to define the right contacts inside the Office of the Secretary of Defense. Waiting on the final outcome – but now I know I am waiting on the right people!

What stood out: Results. Starting at the top can quickly identify the right people at the right level. In other cases this would have taken days, weeks, and maybe even months to get to the right people. A second think stood out also. Bob is very willing to help and encourage even when he has nothing to gain personally!

You are always being watched. Think about someone being on the news after being caught on video doing something illegal, unethical, or just plain embarrassing by a fellow citizen with a video camera. How would you feel if you were being recorded and what you said and did was shown to the world?

Well, like it or not, the same type of judgments are being made about you all the time. People are watching you now and they always have been. We all form opinions of others, it’s normal. We tend to form immediate judgments. A book is judged by its cover!

The classroom provides a very interesting look at this behavior. I find it interesting that people will behave unprofessionally in the classroom and expect you to think they will operate like professionals in the ‘real world.’

I have seen this play out many times in undergraduate engineering courses. The character a student displays in the classroom will carry forward and follow them. Their classmates and faculty have made a judgment of them and, without some powerful change of heart, that judgment will stick. Past students often ask me to be an employer reference for them, not realizing what they’re asking for.

Remember, everything you say and do brands you! If you do not want your actions, words, and images played on the news tonight, do not offer them up to be replayed and repeated in the mind of someone who observes you during the day.

Earl Nightingale, the famous television commentator and founder of Nightingale-Conant Company, tells a story about a man looking for a job and saying “I want someone to give me a job.”

His analogy for this mindset is someone who sits in front of the fireplace and asks that it bring forth heat when they haven’t given it any fuel. This is the same way most Americans operate in the job market. We want to get an increased reward WITHOUT increasing our service.

The question is not “Will someone give me a job?” or “How to I go from making $25,000 a year to $50,000 a year?” The question should be “How can I add value?”

Thinking for a change

What is the secret to success at work? Simple. Start asking yourself,

“What am I gifted to do that other people need?”

and

“What services can I offer people that will offer them great value?”

If we would just sit down and think about it—- just think ——we could probably come up with many alternatives to how we can better serve and therefore make a living and a career by providing for others needs while also doing work we love.

The point being :

People are only going to pay for what services are delivered.

So as we look back at “I want to increase salary” or “I want someone to give me more money” we should be asking

“How can I offer more service?”