Work-Life 9/28/2016

Mastering The Costs and Returns of Doing What We Love

By Leslie Juvin-Acker

When you’re not in business for yourself anymore, you will find yourself paying the salaries and added the costs - greater costs - to allow you to function at the rate you do and will. The greater the impact, the more significant the costs. Yes, a clever business person will want to be clever with their costs, but will never want to be resentful to or burdened by the responsibility. Don’t want the costs? Then don’t do it! But then, you risk failing your mission...

Many people don’t undertake their missions because of the costs associated with conducting their affairs. “Employees” want their costs free or paid for them and want a salary on top of it. There is nothing wrong on passing the expense onto customers - however, only if the outputted value exceeds the initial investment.

Some “salary men” want all of the advantages of paid costs and yet struggle with understanding - forget communicating - the value they offer. Don’t tell me what you do, tell me the value that you offer! Then, I’ll want to know about what you do, and how you do it, and decide for myself (the hiring manager) if your value is worth my investment to allow you the opportunity to do what you like to do (on my dime).

Many people do not see farther than getting paid to do their jobs. They do not think like true entrepreneurs who see the costs of doing the job and gamble on the outcome. Many believe they do their job and then exchange that for their income. This is an entirely incomplete picture.

There are:

  • The costs to provide the stage for your performance.
  • The costs to protect you, your rights, and well-being as you do your job.
  • There is (as many businesses in America have assumed) the investment in your future when you are too old or informed to do your job (disability and retirement).
  • The costs associated to replace you if you can’t, won’t or are incompetent to do your job.
  • Any amenities, tools, supplies, and travel accommodations so that you can do your job in comfort and ease.
  • The government and public’s share in the process (government agencies, roads, etc).

You have to not only earn your salary, you have to earn this investment back! So, if you made $150,000 and it cost $70,000 to give you what you need to do your job, then you’d have to generate $220,000 minimum in value so the company doesn’t lose money. Then, on top of that, your job must make a profit. If you cannot clearly communicate how you can manage to do this - let alone describe in clarity the purpose, function, and value of your work - then do not be angry or resentful if you cannot find anyone who is willing to do the math for you!

This is why successful companies and entrepreneurs are not only cost conscious but see the value in these investment costs. They know the value - quantifiable and unquantifiable - of every spending decision. Do your spending decisions literally pay off?

With this said, any successful business person worth his or her salt must have an appreciation and respect for the costs and, in turn, reciprocate by providing equal or greater value in return. Quantifying the returns is the fastest way to get the notice of worthy investors. You don’t even have to be the best - you just have to provide the best value. If you can alleviate the costs for your customer, taking away as much burden in them doing things themselves, and provide the greatest impact and return, then you’ve found yourself a business model worth continuing to invest in. Therefore - guaranteed work for a lifetime.

You’re not only paying for the end result, you’re paying for the process and materials that went into it. This goes for the buyer to know, but is most important to the seller to execute and master. As an entrepreneur, and the CEO of the business of your name brand, you are always mindful of the two.