I stumbled across an article about CEO pay recently. The SEC requires public companies to disclose the ratio between the CEO’s paycheck and the median salary at those companies. According to what I read, in 2020, Aptiv PLC reported a ratio of 5,294:1, Mattel Inc. reported 4,987:1 in 2018, and Abercrombie & Fitch Co. reported 3,294:1 in 2020. These are obscene numbers.
When I share these figures with clients, friends, and associates who are small business owners, I get a rueful look and a whisper of, “If only….” Most of the small business owners I know consider themselves fortunate to be at a 2:1 or 3:1 ratio. Many aren’t even at 1:1. To protect the under-compensated, the names have been removed, but here are some actual quotes from 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. They are my top salesperson, 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. Sure, 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 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. Many believe there’s nothing they can do about it other than to continue to plug along and pray for better days. But there are actions that underpaid small business owners can take to improve their circumstances. 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’ll 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. 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 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 was a great addition to my business owner toolbox. 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 requires a different today.
This topic is 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.
