How to Think Like an Entrepreneur – Part One
What is an entrepreneur? And why would you want to be like one? Everyone’s saying they’re an entrepreneur these days, but what’s the fuss about? So what you ask?
This is just the first in a series of articles that take a look at the reasons why EVERYONE should be an entrepreneur.
The word entrepreneur comes from the French and roughly translates to “one who undertakes something”. It also traditionally encompasses a loose reference to leadership. These are definitely key attributes but perhaps most importantly, an entrepreneur usually has little resources so they must focus on value in all of its many incarnations.
Value Trumps Cost
Providing value is not something that is ever finished. It’s ongoing and ever-changing. Value changes with the needs of the times so businesses must adjust and the good ones do. Why do you think McDonald’s rolls out “Value Meals” with new offerings every few years? Just being affordable is no way to sustain a business or a job. What determines “value” changes but the need for it doesn’t.
Generally speaking, value is what something is worth as a whole, with costs being only one piece of the puzzle.
What companies won’t tell you is that they view employees much like they do their vendors, suppliers, and other cost-based resources. They ask themselves–what value am I getting?
Compensation to Revenue Ratio
Compensation to revenue ratio is just one way a business might look at an employee’s value. Compensation to revenue ratios are the amount of money spent on salaries, bonuses, benefits and anything associated with keeping you at work, in relation to overall revenue.
Compensation to revenue ratios vary from industry to industry and are expressed as a percentage. If a company has a 37.9% compensation to revenue ratio it pays $37.90 to employees in order to make every $100.00, just as Goldman Sachs did in 2012.
It’s not important that you know your compensation to revenue ratio, what is important is that you understand it exists.
Entrepreneurs have little resources much of the time, so delivering value is essential. Likewise an employee has skills, talent, and labor, but they must produce results that are sometimes many times more what is being paid to them.
Ways To Be Valuable
Here are some ways in which to bring more value to your job each day:
- Be more efficient. Being efficient reduces costs, and sometimes this is as easy as streamlining a process or batching tasks together. Determine what impactful way you can be more efficient at work.
- Tap into your network. You don’t have to walk into your bosses’ office with a bag of money. If you know people that can help grow business all you need to do is set up a meeting and watch as your boss actually smiles once in a while. Think of people you can introduce to each other that may spark a relationship.
- Learn somethin’. You would think I owned a chain of schools they way I promote learning as an answer to most anything. Well it is. Learning new software or a new production technique can increase productivity and help you become more valuable. What class are you taking this year?
Value is only going to become more important as the internet opens up the marketplace to more competitors. Learn what it is that makes you valuable and go with it.
Jason Veduccio is the author of The New American Dreamer: How to Land That Ideal Job in a Nightmare Economy. Click to buy.