I’ve been reading a lot about CEO pay lately. You’ve maybe read the same articles about the impending SEC requirement for disclosing the ratio between CEO pay and the median salary at those same companies. At Walmart the ratio was 1,133:1 for 2014. Starbucks came in at 669:1. UPS delivered a 533:1. Obscene numbers. And when I share them with my clients, friends, and associates who are small business owners, I usually get a rueful look and a whisper of “If only….” Because most of the small business owners I know consider themselves lucky to be at 2:1 or 3:1.
And many aren’t even at 1:1. The names have been removed to protect the under compensated, but here are some actual quotes from clients who are small business owners:
- “I’m working twice as hard but certainly not taking home twice the pay.”
- “I haven’t paid myself anything this quarter – there’s no cash.”
- “When was my last raise? Oh I don’t know – never.”
- “Of course I pay Tom/Sue/Bob more than me. S/he is my top sales person, my top producer, my top whatever. Tom/Sue/Bob is more important than me.”
Small business owners of the world unite! Take off those shackles of poverty! You are one of the most underpaid professions in the world. Of course, some of you are doing quite well. I know that. I’ve seen it with my clients. But I see a much larger contingent of small business owners who work long hours for little compensation. And they are invisible most of the time.
Oh, we see them at networking events, trade shows, and PTA meetings. But they’re wearing a mask. Their public image is one of success and prosperity. But behind that mask stands a stressed out business owner who’s too embarrassed to share with you that his/her sales guy takes home more money than the boss. Test my assertion by asking your favorite small business owner how their business is doing. I’m betting he/she will tell you “Business is great. Just great.” And they’ll give you that answer seven days a week. They’re too embarrassed to say otherwise.
All that toil and stress with little to show for it. And many of them believe there’s nothing they can do about it other than to continue to plug along and pray for better days. Of course there are actions that the underpaid small business owner can take to improve their circumstances. But first and foremost they have to stop accepting their indentured servitude as par for the course. Like they say, the first step in recovery is admitting you have a problem.
If I can get real for a moment, I will share this with you. One reason I am passionate about this topic is because for years when I looked in the mirror, one of those zombie business owners stared back. And then I woke up one day and said, “Enough!” If pride goes before the fall, it was time to swallow my pride (or prepare to fall down hard). So I changed behaviors – big and small. More importantly, I changed my attitude. As hard as I worked, I deserved more dollars from my business. I began to manage my business in new ways. Mike Michalowicz’s book Profit First (http://profitfirstbook.com/) was a great addition to my business owner tool box. I installed Michalowicz’s systems in my business and paid my first quarterly profit distribution soon thereafter.
Small business owners take big risks. Too often their risk reward ratio is out of whack. The first step in correcting that imbalance –and getting paid more- is to acknowledge that simply hoping for change won’t cut it. A better tomorrow will require a different today.
I’m guessing you can tell that this is a topic near and dear to my heart. It’s a big part of how we work with clients now. I’d love to hear your thoughts on the subject. And because I know your business is doing “just great”, please pass this along to anyone you know who might appreciate knowing they are not alone in the small business world.
Wishing you lots of positive cash flow,
What Can I Learn Today to Improve Our Financial Performance?
You can hear when an engine is running smoothly—or racing or sputtering. The same is true for the financial drivers of your business.
You just need to know what to listen for. The good news is that your numbers are talking all the time!
Here are the best ideas we can find on how to ask your business for the information you need, to understand what it says, and take action on what you learn.
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- Budgeting (8)
- Cash Flow (12)
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