|
Good
morning !
Four Squares
There are essentially four quadrants for making money. Normally
each person occupies but one square.
The
employee exchanges time for money. The
consultant exchanges time for more money per hour but still no
leverage. The
business owner hires people who exchange there time for money
and makes money based upon a business system. In theory the
owner can expand they capacity to meet demand and make more. The
investor owns the business and reaps the rewards with no input
of personal time.
Sounds great on the surface but there are risks to each as well.
The employee’s risk lies in continuation of employment but the
paycheck is assured. The consultant’s risk lies in loosing
a client or keeping one that does not pay. More risk and larger
reward. The business owner is on the hook for the salaries of
the hired people (whether or not they are producing more that
they cost). The investor owns the most risk because the business
could lose money if not effectively managed.
While risks and rewards are linked, so too, the whole. It does
not matter in which quadrant you work, you are part of the whole
square. If you are not doing your work in square one then the
investors in square 4 are injured. If you are in the owner-
management square and make a bad decision then investors may
lose and employees may be laid off.
While these are the ways to MAKE money there are additional
ways to have the whole system deteriorate. Outside influences
such as legislation, litigation, disaster (natural or man-made)
can effect the whole square. For the travel industry it was
9/11. For drug companies it might be a drug recall,
reimportation, or patent loss. Whatever the outside pressure,
it only makes sense for all parties to “circle the wagons” and
try just that much harder. Employees should work to be more
productive, management to make sound decisions based upon solid
information and projections and investors to accept smaller
returns for awhile, until the storm passes.
If
the business is expanding then it only makes sense for employees
to be productive, managers to manage effectively and owners to
enjoy profits.
So
the bottom line is two-fold:
1)
If you want to shift your earnings potential then you will have
to shift your risk profile.
2)
Do your best in good times or bad times (it's in everyone's best
interest!)
-----
ps. Best answer this week to
the question "How are you?" was
"Vital signs are stable" ... I think this is a variation
on "Every day above ground is a good one".
pps. Apologies to whomever came up
with the original idea for the grid box. I've read so many management books that they
are all starting to blur together (in a good, kind of ingrained,
way). |
