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Why you will never earn the value of your salary
June 19, 2013|General

Why you will never earn the value of your salary

ideaHave you ever thought about why companies exist? If you have then you’ve probably realised that companies exist to make money. They aren’t there to make money for their employee’s, oh hell no, they are there to make money for their owners.

We all know (at least I hope you know) that companies make their money by selling the product or service they create for more than it costs to produce.

Have you ever realised that this also applies to your salary too?

You’re only getting paid x amount because you’re adding > x in value to the company.

Say for example you’re being paid a salary of £20k a year, you’re only being paid that because you are adding more value than the amount you are getting paid. So on a £20k salary you could be adding £25K, £30K, £60K worth of value to the company.

This is why you won’t get the value of your salary. If you do, then the company is essentially making a loss by employing you. Ok I’m sure there are plenty of examples of this happening, for example start ups, the NHS, not for profit companies, or social enterprises, but I’m sure you understand my point.

So when I was working for a company, I felt I was working hard to make someone else rich. This is one of my favourite quotes below.

My boss pulled up in his brand new BMW today and I couldn’t help but admire it.

“Nice car,” I said as he got out.

“Well,” he said, noticing my admiring looks, “Work hard, put the hours in, and I’ll have an even better one next year.”

The reason I love this so much, is because it’s true! You’re working hard so the person above you in the organisation can get their bonus, they are doing the same for their boss and so is the person above and so on. The people making the money are the owners.

726 of the richest 1,000 entries in the Sunday Times Rich List 2012 are self-made millionaires. I wouldn’t mind betting that those 726 people didn’t make the list by being an employee at a company.

So I’ve decided that I want to earn the full value of my salary, to do this I became the owner of a business, I went self employed. I’m not sure if I’ll become a millionaire (I wouldn’t say no), I just want to make enough to live and do the things I want.

There are of course downsides too, I don’t have a guaranteed income, I’ve gone a few months before barely making any money at all. I don’t get company bonuses, I don’t get company benefits such as sick pay, or free lunches etc.

This route certainly isn’t the path for everyone, some people are better working for others. Most businesses fail within the first year, but I’m sure if you can make it work then the rewards will be worth it.

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4 coments

  • Simon
    June 30, 2013 at 10:10 pm

    I think you’ve hit the nail on the head with the BMW comment.

    I also think the ‘making your boss richer’ is most keenly felt in small and medium sized companies where you can actually see the monetary benefits of a high performing workforce – e/g a new car for the owner. In larger, more corporate organisations I think the feeling is less accentuated. For example if you work for Esso you are only making the shareholders richer, not the guy sitting in the office next to you.

    This is what drives people to become business owners. However as you say its not for everyone, there is a high level of risk involved. In my experience most people who run businesses started off as sales people. If you can sell something, or manage a team to sell you are (in my opinion) more than half way there, the rest you can bolt on – search marketing, HR, Payroll, etc.

    • Mark Rofe
      July 31, 2013 at 7:17 pm

      Hi Simon,

      I think you’re spot, and the sales skill you mentioned is something I actually hadn’t considered before, but it makes perfect sense.

      Sorry for the slow reply!

  • July 31, 2013 at 8:59 am

    It’s hard working for yourself, at least to start with, but if you can survive the first year or two you should have learned enough/failed enough to find something that works for you.

    • Mark Rofe
      July 31, 2013 at 7:16 pm

      Hi Richard, you’re right.

      These past 7 months have been a big learning curve, and I’ve learnt a lot from things that haven’t worked out.

      I’m just hoping to repeat the things that I did get right now :)

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    About Me

    I’m Mark, but you can call me Rofe. I'm an internet marketing guy based in London Dubai.

    I believe the internet is full of money making opportunities, and I seek to take advantage of them where I can.

    If there’s a way to make money online I’ve probably tried and failed at it, and then attempted it again with some degree of success.

    I’ve tried my hand at affiliate marketing, lead gen, ecommerce, trading domain names, adsense, and I’ve even created a novelty gift.

    Here I share my journey making money online, my outlook on life, and whatever other stuff I feel like. Thanks for dropping by.