Quick Roundup

Clarify Your Goals
The clarity of your goals will ultimately have a large impact on your ability to achieve those goals. Vague goals only lead to confusion, and often send us in the wrong direction. For example, a goal to spend more time with your family in 2009 is much different from a goal to achieve the financial position to be able to spend more time with your family. On the surface, they may seem the same, but the latter specifies the more fundamental goal. In other words, achieving a certain financial position makes more free time possible.

Brian Tracy addresses this in The Law of Clarity:

People with clear, written goals, accomplish far more in a shorter period of time than people without them could ever imagine. This is true everywhere and under all circumstances.

No matter our goal, we must identify the cause and the effect. And we must focus in on the real effect we want. That will often help us identify and clarify the specific steps we must take to achieve that goal.


What Was That Bump?
In working with other contractors I am often struck by how resistant they are to try a new idea. They seem overwhelmed by the potential for making a mistake or failing, and this fear stops them from attempting something new. For example, many contractors are extremely reluctant to raise their prices.

Certainly, nobody enjoys making a mistake or failing. But it is a part of life and business. As Dan Miller writes in Go Ahead--Make More Mistakes:

Here’s what Robert Kiyosaki (Rich Dad Poor Dad) has to say about “bad luck.” He says, “Making mistakes and becoming smarter is the job of an entrepreneur; not making mistakes is the job of an employee.”

An essential part of entrepreneurism is taking calculated risks. Doing what you've always done will continue to get you the same results. Getting different--better--results means doing something different, and that necessarily involves the risk of making a mistake or failing. Taking calculated risks won't eliminate mistakes, but it often reduces them to minor bumps.


Five Essential Skills
Michael Gerber's new book, The Power Point, lists 5 essential skills that every entrepreneur must possess. Mastering these skills, he says, is necessary to create a great business. The skills are:

1. Concentration--The inner force and energy that allows you to focus your attention.
2. Discrimination--The ability to choose upon what, where and who our attention (or concentration) is directed.
3. Organization--This is the ability to turn chaos into order.
4. Innovation--Innovation is that spark of genius that all entrepreneurs have and should be seen as an asset.
5. Communication--The ability to transmit ideas with clarity, precision, passion and purpose.

These skills are crucial to achieving our goals, no matter what they are. We must identify our goals (discrimination), prioritize those goals and the methods for achieving them (organization), focus our efforts on the goals (concentration), seek creative ways to accomplish the goals (innovation), and share the goals with the relevant people (communication).

Not only do these skills help us achieve our goals, they also help us clarify those goals and develop a plan that will minimize the risks involved.


The Two-Minute Rule
One of the biggest obstacles to achieving our goals is procrastination. While there are many causes of procrastination, they all result in delaying work on some task or project. We may write the task down, or swear that we will remember it, or whatever. But we delay doing it, and suddenly we can have a very long list of tasks. David Allen, of Getting Things Done, developed the Two-Minute Rule--if a task will take less than 2 minutes to complete, do it now. Here is a short video--it is only 2 minutes long--on how to apply the Two-Minute Rule.

Take What You Want, and Pay For It

I recently received an email asking how the owner of a paint contracting company should determine his salary. I have previously written that it is often recommended that the owner be paid 8% to 10% of the company’s revenues as his salary. As the emailer pointed out, if the company does $120K in a year, this means the owner’s salary would be $12K at most, which is not very good money.

At the risk of sounding flippant, the owner’s salary should be whatever you want it to be, so long as it is reasonable and fair. Of course, that raise the question—what is reasonable and fair?

To begin, the owner should be paid for each service he renders to his business. If he does sales and estimating, he should be paid for it. If he works in the field, he should be paid for it. As a general rule, the owner should be paid 8% to 10% of the company’s revenues, and he should also pay himself a commensurate amount as a sales commission. When he works in the field he should pay himself an hourly rate.

Doing all of this accomplishes several things. First, the cost of these expenses is built into the price. If the owner hires an estimator, that cost has been built into his price and he avoids a dramatic price increase. Similarly with paying himself for his field work. Second, the owner makes a salary that more accurately reflects his efforts. This allows him to live a reasonably comfortable life, save for his future, etc.

But this still does not tell us what the owner’s salary should be.

The 8% to 10% suggestion is only a guideline. Like the directions provided by Google Maps, one should take a look around to determine the accuracy of those guidelines. One should look at one’s personal and business finances to determine what is fair and reasonable.

The starting point is one’s personal finances. What do you need to make to pay your bills, have money to save and invest, and enjoy life? This is where you must be reasonable. It would be easy to say that you want to make $100K, but if your business is only doing $120K, this is clearly not reasonable. You must also be fair to yourself—you must make enough to pay your bills and invest in your future. If you don’t, then why own a business and endure the stress and headaches?

I should clarify one important point. There are three separate components involved in the owner’s income if he also does sales and works in the field—owner’s salary, sales commission, and painter’s wages. Each is separate and distinct, and the total is the owner’s income. But in one’s budget, and on one’s Income Statements, each item will appear separately.

Identifying your personal income goal is the first step. This number should then be used to determine what your selling price must be. If your income goal requires that you sell at a reasonable price—that is, a price that you can actually sell paint jobs at, such as $45 an hour—then your income goal is reasonable. If the calculated selling price is not reasonable—you don’t think you can sell at that price—you are faced with two options. You must reduce your income goal, or learn to sell at the requisite price. Unless your desired income is outrageous, I strongly suggest the latter.

This last point is particularly important. It is a fact that 90% of the contractors who started a business this year will fail within 5 years. The primary reason for that failure is the simple fact that they do not make any money. And the cause for that is not charging enough. There is no reason to endure the trials and tribulations, the headaches and stress, and all of the challenges involved in owning a business if you are not going to make a decent salary.

An old Spanish proverb states: “Take what you want, and pay for it”. That applies to the owner of a paint contracting company. Take the salary you want. You pay for it by learning the skills that are necessary.