Want a Raise? Look to the Customers

Most Bosses Aren’t Rich

Some workers have a passive outlook on their salaries. They believe their income is based on what their boss can “afford” to pay them. But the irony is that employees have more control over their own salaries than their bosses do. 😉 This becomes apparent when we consider the source of all salaries. Money doesn’t come from our employers. It actually comes from the consumers who buy our goods and services. And the amount of money they pay us is directly proportional to the quality of goods or services that we give them. 🙂 So if we want a raise, we should try to please our customers, not our bosses.

Besides, most bosses aren’t that rich to begin with anyway. A 2013 study found that the average salary a small business entrepreneur makes is $68,000. Let’s say a Japanese restaurant makes $100,000 a year after expenses and employs 20 people. If the restaurant owner gives all his employees a $5,000 annual raise, then his entire profit would be wiped out! It’s a different story in large fortune 500 companies or in professional industries, such as engineering. But 70% of Canadian workers in the private labour force are employed by small businesses with fewer than 100 employees. So for most workers, asking for more money from the boss isn’t going to get them very far.

Wealth in Numbers

So if we want to earn more, we have to set our focus on the consumers. 🙂 Our customer base has an endless supply of money that we can tap into. If that Japanese restaurant mentioned earlier manages to attract just 100 more families to dine there every month then the business can easily earn $100,000 in additional sales every year. Everyone can get a raise and the business remains profitable! 😀 The boss is only one person, but hungry consumers are abundant. There truly is wealth in numbers. Instead of trying to get more money from the employer, we should be thinking about ways to work with the employer to get customers to spend more money. 😉

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But for this to work we must offer something of equal value in return to the paying customers. This means finding ways to make them more satisfied. Create additional value to our product or service. Give consumers a legitimate reason to pay us a premium over a generic competitor. Don’t work to please our boss. Work to please the customer instead. Don’t work for money. Work to solve the customer’s problems. The money will ultimately follow.

If you’ve shown that you can bring a lot of new business to the company then usually the promotion will come to you. 🙂 Talent is hard to find. Your boss knows that if you feel underpaid, you can simply leave and work for a competitor instead.

It’s easy for employees to forget how much power we have over the companies we work for. A business is only as good as the people in it. The most important tools in a business are its human resources. That’s us! We can either attract new business potential or convince existing customers to pay higher prices. Either way, we have the ability to make it happen. 🙂

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Random Useless Fact:

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Amanda @ My Life, I Guess
Amanda @ My Life, I Guess
08/11/2015 11:10 am

Just playing devils advocate here a little, but what about people working in the Non-Profits where more customers doesn’t always mean more “profit”?

Anon
Anon
08/11/2015 4:14 pm

I’ve had the unfortunate displeasure of working in the public sector where policy dictates income; work ethic, skill, talent, ingenuity, value-added, et al do nothing to effect wage level. This leads to a workforce doing just enough to fulfill their duties (sometimes even less), and not an ounce more. Why do you think everything in the government takes 4-6 weeks to process?

I’ve also worked for great private sector companies, ones that encouraged employees to find ways to reduce expenses and/or increase revenue; if the idea was implemented, the employee would get a raise in the amount of a percentage of the dollar amount of the innovation.

Wealth is not created from the public sector, thus, as LI stated, those employees will have to utilize the private sector if they want to make more money.

Ben
Ben
08/11/2015 3:14 pm

“70% of Canadian workers are employed by small businesses with fewer than 100 employees”

That sounds incredibly difficult to believe – any credible source to back that up?

Stephen
Stephen
08/11/2015 6:29 pm

The only way you’ll get a raise out of your boss is to show them that you’re making them more money or reducing costs and saving them more money. Otherwise, margins erode if they give you a raise which doesn’t make sense to the shareholders, whether it’s one single person of a six figure revenue small business or thousands of people owning a piece of a huge corporation. I

Vivien
Vivien
08/11/2015 7:17 pm

Business owners are motivated to take a small salary for the following reasons
1. more money to grow back in the company
2. are so busy growing the co., often are bootstrapping
3. are the last to be paid after paying employees (particularly in start ups)
4. pay less tax by taking a lower salary, or paying themselves in dividends.

Ultimate goal is cashing out @ the end, similar to Liquid’s farms, no?

PC
PC
08/11/2015 10:36 pm

Only sushi place near my work closed down permanently. Too bad, their food and prices were decent… but I only went there once for lunch recently. Even though, I’ve been working in the area for 3 years. Always thought their were expensive. The thing that didn’t appeal to me was that they didn’t offer hot foods like tempura, teriyaki, noodles/udons, etc. Just sushi and sashimi.

It’s tough being a small business owner… need to draw in customers to make coin. Of course, there is always competition (franchises) coming into play to take customers away. Need to stand out and make customers feel satisfied and welcomed.

I work for a small firm. I don’t contribute to their profit margin, but they still give me a nice bonus each year thus far LOL.

Anon
Anon
08/12/2015 3:59 pm

A smart owner would step back, hire a general manager for $50,000 a year and collect $35,000 a year in almost-passive income (and tax-free if paid in the form of dividends!).

The Safeway store manager must work 100% of the time in order to keep their level of income.

See why being an owner is the pinnacle in Capitalism?

(On a side note…public transit drivers here used to be paid in accordance to years worked — 1st year paid less/hr than a 4th year driver. The senior drivers, getting paid let’s say $28/hr, would sell their shift to a junior driver whose wage was let’s say $22/hr. The senior driver would basically get paid $6/hr for taking a day off. In theory, a senior driver could make $12,000 per year (not including full wage pension) for doing absolutely nothing. Who needs a raise when can make money for nothin’!?)

Anon
Anon
08/12/2015 4:07 pm
Reply to  Anon

p.s. — using a restaurant for the example is a horrible…example. They have notoriously low profit margins (~5%) and similar survival rates. Some bank just did an analysis on the food truck industry in Vancouver and Victoria, BC, they found that the turn-over rate is 80% per year! Wealth is built over time, I’d bet the business owners who have longevity are more apt to be “rich” than the newbies.

Anon
Anon
08/13/2015 9:40 am

Possibly. But then again, it’s not always the company with the best product that wins, often times its a matter of having deep enough pockets to outlast the competition (e.g. Cactus Club). Thus, the consumer ends up with a range of inferior choices; good for the business, bad for the consumer.

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08/19/2015 2:53 pm

[…] The Freedom Thirty Five blog wrote about the best way to get a raise at work and why most bosses aren't as rich as you would think. […]