The US has been going back and forth on the minimum wage. One study cited that $20 per hour is the lowest wage to provide a stable life. No matter what you feel about the minimum wage, you have to ask yourself, “Why would I work for pay that can’t cover the basics?” In the end, the question is what is your time worth to you?
I was recently speaking to a friend who works as an accountant for a national corporation. She is very good at her job and has been with the same company for over a decade. Even though she is paid well, she does extra work preparing taxes at the end of each year, because her husband has a low income. In our recent conversations about a business she was thinking of starting, we talked about how much time she was willing to invest in the company. (She had already done fantastic research in how much money she was going to invest in the business.) The question threw her off for a minute. Then she said, “I really try not to think about my time as money. I don’t think I could do that and feel ok about my job.”
I couldn’t believe what she, an accountant, said. Time IS money! And when we stop thinking about our time as worth money, we fall into two traps: inefficiency and low income.
Inefficiency: Here is the average breakdown of a US worker’s day. I know more of you work more than 8.8 hours a day, but let’s imagine that you restrict your hours to that. If you worked every weekday for 8.8 hours for $8 you would earn less than $17k before taxes. At $20 an hour you would make $42k. The question is, how can you maximize your working hours to make the most money?
Low income: Earning low wages in a part-time job usually leads to people taking on more part-time work for more low wages. I understand why someone would do this, but the pie chart above drives this home. The more you work, the less time there is for family, sleeping, and eating decently. Instead of adding ten more hours a week earning $8 an hour, why not start a side business that can add to your life instead of taking away from it?
The Solution: You can earn much more than $8 for one hour of work if you have a simple, profitable business idea where one employee does the work, you run the business, and both of you split the profit. 2 people and 1 idea is all it really takes.
I have started businesses where my key responsibilities were hiring, marketing, and setting the direction of the company. I was able to perform these functions before 8am and after 4pm, which allowed me to keep the day job I held at the time. By keeping my day job and the guaranteed income, my stress level was much lower than if I had jumped into my new business full-time. I also maximized my time. Knowing I had limited hours before work and in between coming home and dinner made me really efficient. I probably accomplished more in three hours than I did with the 9 to 5 job. The best part is, I had my employees working when I was working. I was actually getting paid two incomes for the same hour!
Once your business is off the ground, you have two options: 1) devote less time to running it by increasing the efficiency of the business or 2) leave your part-time job and expand your business. I recommend the first option to start. Allow your business to develop and expand. After the company starts to run itself and you have a core team of employees, then you can think about leaving your day job. Sounds pretty good, right?