I’ve worked for myself since 2005. During that time, people have asked me how they can make more money, do interesting things, work on fun projects, etc. It has always been an interesting question, and my answer has changed over the years.
From the perspective of having a safe and secure career, having a job working for someone else is probably the best option. However, in exchange for that security, you must accept a ceiling on your potential income. Your compensation will likely be limited to your salary, unless you are in a sales role, can count on tips, or will receive wonderful bonuses based on certain achievements. Otherwise, your total compensation is unlikely to exceed your salary. But that’s a good trade-off for many.
For those who aspire to earn more, you must be willing to assume more risk or have (or be willing to develop) a clearly superior skillset, particularly if those skills are focused on generating revenue. One avenue is to start your own company, build out a product or a set of products, hire staff, and handle all the tasks associated with ownership. If you’re so inclined, your income potential and your profitability will be governed by the decisions you make, the money you save, the efficiencies you achieve, etc. But the risk is massive.
An alternative approach is to operate a one-person company, as I have done with The Event Mechanic! This ‘scrappy’ option requires rolling up your sleeves and dragging the business in. If you are not prepared to take this on or cannot do it effectively, then short of recruiting a ‘rainmaker’ (see my post on rainmakers) for the business, you are better off working for someone else and accepting the limits of a salary. I write this with a smile, remembering a business acquaintance who recently called me an opportunist, which I considered to be a positive comment. Indeed, you must be able to spot an opportunity and then create and market value to win deals. With those deals and the revenue that you build from them, you can make a living. In terms of my own business, I have earned more year over year than I ever made working for someone else – even when I was in a sales role.
But I’m on the JV team in terms of creating massive opportunity and income. Alan Weiss, long recognized as a guru on consultants, has written a book called Million Dollar Marketing. I’d suggest you read it because the alchemy of building revenue and wealth is fascinating.
Weiss might rank money-making opportunities in the following order, from least to most lucrative:
- Be on call for a retainer – You are available to a limited number of executives for a fixed time period, such as a year. This approach assumes that you have a reservoir of knowledge that is worth a lot of money for your clients to access. Believe it or not, anyone can get to this level with the right skill and effort. It’s not easy, but it is possible.
- Fixed project work for a specified amount – This the most common consulting arrangement, where you are hired for a fixed amount of time to achieve a certain outcome. Though these are the “bread and butter” of consulting projects, you are always in danger of scope creep. If you have underestimated the time and resources you will need to reach the objective and are bound to a fixed price for the project, they can be very unprofitable.
- Paid by the hour – These engagements can be quite lucrative, particularly if the hourly rate is significant. But you are limited by the number of hours you work, so there is a ceiling.
- Commission-based projects – Though these can be quite lucrative, they can also be highly risky. If you can’t close anything, you are investing effort without any payoff. These are the easiest ‘deals’ to get because the risk is mostly your, not the clients.
As far as securing interesting and fun projects, once you are your own boss you get to decide what you work on. That’s something I have found immeasurably uplifting.
If you are looking for higher income then you must invest in yourself and do better self promotion, even if you stay in a salaried position. The benefits and freedom are immeasurable.