This transcript is based on my April 16, 2013, WAKE UP! podcast.
The Law of Remuneration
Is this a get rich quick money scheme I’m talking about? Nope. What I’m going to talk about here is different types of remuneration that you can use to leverage what you’re making, and turn it into something more.
Let’s go back to 2004. I remember the day like it was yesterday. I was behind the counter at the Midas muffler shop in Kansas, talking to a customer. At the time, I had been doing research into internet marketing and finding ways to leverage your time online. Here I was, talking to this customer, thinking about how I only have so much time in a day and how I can only talk to one customer at once. My ability to grow my business was limited to the people I can talk to face to face on my own personal time, and that bothered me.
I had to find a better way of bartering my time for money.
What if I could find some way to leverage myself, where my production wasn’t limited to the number of hours I could personally dedicate to the business? At that time, I had what I call a barter category form of leverage. I was trading my personal time for dollars earned during that time. This is how most people earn money, by exchanging their time for it. There are many types of jobs, and many factors that affect how much money you can earn from bartering your time. The limitation here is that you’re not paid what YOU are worth, but you are paid what your POSITION is worth.
I felt that I had more or less topped out at Midas because my position was the manager of that shop. I started out as a landscaper for the guy that owned all those Midas shops and worked my way up to manager. As I moved up, I made more money. At this point I had 10 to 15 employees under me; I was leveraging them, and they were leveraging me. They were doing the work; I communicated with the customers and sold them our products. I doubled my income in a year by moving up like that.
One big reason why I was able to do that is because I was always aware of how much time I spent on income producing activities for my employer, and I always sought to maximize that time. People who just show up to work, punch the clock, and go home are one kind of employee. I was another kind, the kind who always gave 120%. The kind who always looked for an opportunity to do more than just what I was told to do. That’s the way you can increase your income when you’re bartering your time directly for the money you make.
Bartering your time for income is limited as you only have a finite amount of time to give away for money. Your earning ability is limited by the time you spend producing it. The goal for an entrepreneur is to leverage their time where their income is not tied to the amount of time they directly contribute to income-producing opportunities. I call this leveraged income. (We’ll get back to this concept later.)
One thing entrepreneurs like to do is solve problems.
Let me give you a real life example of this: I was sitting in Starbucks the other day, working on a presentation. The guy next to me leaned over at one point and was clearly checking out what I was doing, even though it was obvious I was in my own little world and wasn’t looking to start a conversation. We start talking, and I realize this guy is just a serial entrepreneur. He owned something like 40 different franchises at one point. He’s always starting new businesses. One of his businesses is a pirate ship in Hilton Head that takes people on tours; he does his own marketing for it, including social media. And he was interested in the concept of a digital lifestyle.
So he then shows me, on his laptop, the web page of a landscaper that trims this his trees. “I created this for my landscaper,” he said. The landscaper’s page is a simple yellow pages-style website, which doesn’t show up on Google when I look for it. That website cost the landscaper $500 a month, and it wasn’t yielding results for him. No matter, this gentleman’s not a marketer. He’s an entrepreneur and he’s a problem solver. He bounces from one company to the next, solving problems and learning along the way. That, is the trick!
All the skills you need to learn any job you want can be learned or outsourced. The secret is to look for the opportunity to solve problems for people. This is how entrepreneurs provide value and get rewarded for it. The only way to transition from a situation where you’re bartering time for money to a situation where you’ve leveraged your potential beyond your own time is by solving problems.
Problems equate with opportunity!
Another way you can increase your income is to learn a new skill. Let’s say you work for a company and you recognize a problem there. You see this, and it’s a unique opportunity for you to create a solution to that problem. Maybe it’s not your problem; maybe most people in that situation would walk away and say, “It’s not my problem. Let somebody else worry about that.” That’s NOT the way to approach that type of situation IF you want to become more valuable (and get paid more).
If your identity is trading time for money, you won’t want to solve problems like that. You will see them as a waste of your time, which you could have been trading for money doing your own job. You won’t want to take responsibility for it either. It will always be someone else’s fault.
You’ll have an aversion to dealing with problems, and it will limit your income SEVERELY. On the other side of this, you can be someone who trades talent and skills for money. This is the kind of person who learned skills through experience or upbringing, and would make a great CEO because they know how to use those skills to solve problems. That’s when you remove the limitation of time and can leverage your talents instead of just trading your time for the income you make.
If you can leverage your skills to solve problems, your value to whatever business you’re in (and your income potential) goes WAY UP.
Let me give you an example from my days at Midas: I noticed that the mechanics who fix the cars would also interact with the customers. Most of the mechanics I know who are great mechanics aren’t great with people skills. I saw that as inefficient. If the customer asks a tough question about a repair, it gets personal for that mechanic because they just put their hard work into that repair. So it got pretty heated between the mechanics and the customers sometimes, which is terrible for business! Mechanics just didn’t function well as sales people.
I saw this as an opportunity to create leverage using my skills as a communicator. Now I’m not a great car mechanic, but I’m pretty good with dealing with people when I want to be. I saw this customer service problem as an opportunity. I asked the general manager if I could take over the customer service duties for the mechanics. I told him this would: a) make them more efficient, because they had more time to work on repairs; b) I’ll do a better job with the customers than they would, using my people skills; and c) the mechanics would appreciate it, because they don’t have to do something they don’t want to do anymore. That means their production will probably go up as well. Everybody wins.
I figured out a way to leverage myself and coworkers to a point where within a year I doubled my income.
I solved a problem and I got paid. They accepted my idea and offered me 2% revenue above whatever average we earned last year. If I produced, I got paid. If I didn’t, no loss for them. I only got paid the bonus IF we did more than the previous year for that month.
I saw the opportunity in the problem and used my skills to leverage my income. Now the mechanics had more time for their income producing activity. Their ability to create more money by bartering more of their time increased because of what I did. Now they had the whole 8 hours to fix cars instead of spending 2 or 3 of that time on customer issues. Because of this, they were all getting bonuses of 20 to 30% from that extra time they were able to work. Guess who was the most popular guy on the street?
That’s how I doubled my income in one year. It took some balls to have the confidence to walk up to the general manager and tell him I saw a role for myself that way. Mind you, this is a traditional franchise that doesn’t create roles out of thin air. Nevertheless it was hard for them to say no when I brought them my proposal.
I suppose another way you could do it is to say “Hey, I’ve been working hard here for 2 years. Don’t I deserve a raise? If you double my income, I’ll find a way to work twice as hard.” That’s one way. The other way is to silently go about your business and be a problem magnet, because inside every problem is an opportunity – and the entrepreneur in you.
Inside every problem is an opportunity
There’s an entrepreneur inside every one of us. We all have problem solving skills. I hate it when people tell me “I’m not cut out to be an entrepreneur.” In less than 10 minutes, you can figure how to do just about anything simply using the internet. You get my point. “I don’t know how” is not going to cut it today. What you require is a different mindset.
When you learn how to sever that connection between the amount of money you make and the amount of time you have to make it, you can multiply your income by 10 or 100 with little effort.
Back to the guy I met at Starbucks. He saw his landscaper’s crappy webpage, and he saw a problem he could solve. He contacted that person and told them he could help market their landscaping business and get it on Facebook, and this guy isn’t even a marketer! He just sees tremendous opportunity.
There’s SO much opportunity out there to help businesses transition into the digital economy, it’s absolutely mind-boggling! This guy was telling me this. And he had no idea who I was or what I do. You better believe I gave him my number and promised we’d grab a coffee sometime!
This guy is about 50 years old. He could easily have said, I’m not a programmer or web developer. I don’t know marketing. But he sees the world through a problem solving lens. He’s drawn to problems. That, is an entrepreneur! Entrepreneurs look for problems to solve.
My son Milo is catching on to the concept of leverage. He’s always puffing his chest out and telling people, “My daddy owns his own work.” (SO adorable!) He wants to be either an actor or a model one day. Way to go, I told him! I know he’ll figure out a way to make money doing what he loves and then play the rest of the day. He wants that digital lifestyle.
If a 7 year old can learn to think that way, why can’t all of us?
Even if, you’re still working in a barter economy (where you’re trading time for money), there are ways to significantly leverage your income without leaving that type of work.
If you can transition the way you think about your income from how you can trade time for it to how you leverage yourself, you can EXPLODE the money you make. Even as a 7 year old, Milo recognizes he’s got this personality and charm that goes a long way. Those are his X factors. He wants to do something with them. It warms my heart to see him thinking this way.
For the rest of us who aren’t as cute as Milo, we go out there and solve problems. Look for problems. Because every one of them provides an opportunity to increase your income.
There are three different types of businesses out there: those that make money, those that get money, and those that earn money. You might say: “Jay, aren’t all those the same thing?” No, they’re not. They’re absolutely unique. Let me explain.
Let’s start with “making money”. Making money in business is similar to the way employees barter their time for money. For example, if I am a graphic designer and I am able to work 40 hours a week and bill myself out at $50 an hour, that’s $2,000 a week I can earn as a graphic designer. There’s an element of leverage here because I’m using my skills to do something unique, but my ability to scale my efforts and make an impact on the bigger world is very limited. I’m confined to that space of making money.
Now let’s go into “getting money”. On this side of the spectrum, there’s very little exchange of value for the money. Like winning the lottery or going to an ATM, there’s no effort involved here, and there are plenty of business opportunities that offer the chance to get money quickly.
If there is very little exchange of value for the money you’re getting, I don’t believe that is sustainable.
I’m not saying there’s anything wrong with it; I just don’t believe it can last long. What value is being provided to the end user in such a business? The less value that is provided along with the exchange of money, the less sustainable that company is. If there’s only a handful of people benefiting and most everyone else is paying into it, that’s the hallmark of a “get money opportunity”.
Making money is much more sustainable, You can go on trading your talent and skill for money as long as you want. But it’s hard to scale your income when you’re making money this way because it’s directly tied to you and how much time you personally spend producing it. If you want to gain leverage to expand your income beyond that, you have to sever that tie between spending time and making money.
Think of all of this as three columns on a sheet of paper. On the left is “getting money”, wanting something for nothing. (I call this “the lottery mentality”.) “I just want the end result without having to learn anything or being required to invest my time and emotion into that. I’m entitled. Give it to me.”
In the middle is “making money”. Trade time for money, exchange value for money. Like my friend at Starbucks, who is helping his landscaper market his business for $500 a month. (He’s not even a marketer! He was just using common sense to help that person solve a problem.) That’s the first distinction here. The second is that you only have to know a little bit more than the person you’re solving the problem for. This guy knew nothing about marketing, but he was looking at solving the problem of his landscaper’s webpage in a different way than the landscaper was. He was looking at it from a leverage mentality, not a barter mentality.
The third column on the right is for “earning money”. This is where we learn to leverage ourselves in a way that extends our earning power beyond our own efforts. I don’t care what industry you’re in or what you do; if you see the world through this lens, you can double your potential in the next 90 days. It’s about the law of remuneration, which states that your value is a byproduct of the value you provide to society. What if you could be in 10 different places at the same time? That would mean you have a 10 to 1 leverage and 10 times as much earning power.
Of course, you can’t copy yourself, but you can leverage certain elements to give yourself the ability to be 10 times more efficient.
One of the big mistakes entrepreneurs make is that they wait too long to hire another person. When you’re transitioning into that entrepreneur mentality, you feel that working longer equates to earning more. If I just work more, I’ll make more. But the secret isn’t working more; it’s applying leverage.
Credibility is a form of leverage. Stick with something long enough and you’ll get good at it and develop credibility from that. You’ll learn new skills. If you keep bouncing around and trying different opportunities, you won’t gain that leverage. You won’t ever build something sustainable that way, and you won’t increase your value.
80% of the energy required to solve a problem comes in the initial phase where there’s no payback to you for trying to solve it yet. What this means is that if we keep trying new things, we’ll go at it for a week or month or so and then scrap it if it doesn’t appear to be working.
An entrepreneur sees the bigger picture and isn’t attached to getting paid today.
You CANNOT get attached to being paid today. You could be learning a skill today that won’t benefit you at all for months, or even years but when you commit yourself to adding value, that’s when you can earn more money.
Your value to society is the size of your magnet that attracts wealth into your life. This is something you can work on and increase EVERY DAY. You can increase it through study, mentorship, and investing in your personal growth or professional development. The more you can increase your value, the bigger problems you can solve. The bigger problems you can solve, the more opportunity you have to solve them, and the more money you can make.
You can double your potential by shifting your mentality from barter to leverage.
Think of EARNING money, not just making it or getting it. You’re not just exchanging time and talent for money anymore; you’re seeing opportunity and providing value. Try this with your own life and look at all the opportunity around you. You might not see it now because you walk away from problems instead of viewing them as opportunities to provide value. Embrace them, and you’ll embrace the opportunity to double your income and your potential in the next 90 days.