Posted by Dave Lorenzo - Business Coach

The most important rule in business can be summed up in a quote often attributed to Willie Sutton.  When he was asked why he robbed banks Willie allegedly said: “Because that’s where the money is”.

He was right.

You often go through the same amount of work to get a job that pays a little money as you do to get a job that pays a lot of money.  You will definitely go through the same amount of work to get a client that will pay you a little money as you would to get a client who will pay you a lot.

Go where the money is. 

Set a price and then ask for it. 

You’ll be glad you did.

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Posted by Dave Lorenzo - Business Coach

Check out this CNNMoney self survey to determine if you deserve a raise.  Here are the questions:

1. If you left the company, how easy or hard would it be for the company to replace you?

2. To what extent do you have abilities or possess knowledge that most others — both inside and outside the company — do not have?

3. If your company had to eliminate departments, what would happen to yours?

4. Is your department respected by other parts of the company?

5. How much does your business or division contribute to the profitability of the company?

6. Does it look as if your business will grow or shrink in coming years?

The stronger you feel about a positive answer to these questions, the more you deserve a raise.  

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Posted by Dave Lorenzo - Business Coach

Here’s the quote:

“This site lets you search by job category and zip code, then zoom in on the description that most closely matches the job you’re looking for. Personalized reports cost $30 to $80, but the free basic service gives you a median salary for your position to help you judge potential offers. You can also see how bonuses and benefits sweeten the deal and get a net paycheck estimate — which lets you calculate actual take-home pay after taxes and deductions.”

I really like Salary.com as a tool for researching potential pay packages.  This is must-have information for people who are looking for a job.

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Posted by Dave Lorenzo - Business Coach

Careerbuilder has five tips for us on how to get a signing bonus.  They are:

1. Know what to expect.
Research the company and your industry to see whether your position or company frequently awards hiring bonuses. The Internet, industry contacts and current workers at your future employer are valuable sources of information.

2. Delay the money talk until after you get an offer. Wait until you have a written job offer before negotiating a sign-on bonus. Asking too early could make you appear difficult or greedy.

3. Be upfront. Employers are more likely to offer a sign-on bonus if accepting the offer would cause a candidate financial hardship. If you would have to forgo your year-end bonus or triple your commuting costs, say so.

4. Make sure you understand the terms.
Employers are increasingly tying a longevity clause to hiring bonuses. Find out if you will need to pay back part or all of the signing bonus if you leave before a specified period of time.

5. Remember that a signing bonus is a one-time deal.
If a company is offering a salary that seems too low, a signing bonus will only make up the difference for one year. Negotiating a more reasonable salary will have a long-term impact.

There are a few key points missing from this list.

First: You must offer a “dollarized” list of what you are going to accomplish.  In other words, detail the value you will be bringing.  The idea is to show the firm the bargain they are getting in hiring you.

Next: Show the hiring company how they will be saving money by hiring you quickly.  Provide tangible evidence of your ability to provide value quickly.  For example;  If you have an established book of business, show the hiring manager the value of the clients you could bring to your new firm IMMEDIATELY.  This will make the signing bonus seem like an “advance payment” rather than a gift.

Finally: Don’t hesitate to put some “skin in the game”.  In other words, tie the signing bonus to future performance.  Offer to pay the bonus back if you do not achieve a certain performance criteria.  While most employers will never take you up on this offer, it goes a long way toward building up an environment of good will.

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Posted by Dave Lorenzo - Business Coach

Today’s questions for the panel of professionals are:

Are you happy with your salary? Do you know how to negotiate for better salary?

I am not happy with my salary. Although my employers whine about how much they pay me, I am paid about 30% less than what others in my field make. I have not received more than a 2% raise in the entire six years I’ve worked for the university. There is no negotiating here. What they pay is set in stone. For other jobs, no, I don’t know how to negotiate well. I’m reading a book on negotiating in an attempt to figure it out. And I’m getting ready to move on from this job. (Tim, Computer Programmer)

I think Tim has the right idea. If you feel locked into a situation that is not benefiting you, I would encourage you to move on. If you feel undervalued by your employer, you’re probably not going to give it your all and you’re not going to reap the rewards you could in a job that provides a strong return on your investment. Starting at a low salary and moving up the pay ladder in tiny, incremental steps is a big disappointment. Take your talents elsewhere, somewhere they will be appreciated and rewarded.

My pay is adequate, but I’m getting ready to ask for a raise. My strategy is to showcase my contributions and to convince them why I’m worth it. (Jane, Nurse)

Jane’s on the right track. I encourage her to take it a step further, though, and assign dollar values to her contributions. How much money has she saved or brought in for the organization in the last six months? How has the care she has provided translated to long-term gain for the company? Show up at a salary negotiation meeting with hard figures and you stand a much better chance of getting what you want.

I am satisfied, but only because I have more than one revenue stream. I don’t know how to negotiate for better salary, no. My only successful salary negotiation happened when my boss asked me unexpectedly how much of a raise I wanted. Even though I would like to, I don’t think I could replicate that experience. (Will, Web Designer/Database Administrator)

Will should be commended for the fact that he was given a raise out of the blue. However, for maximum success, you can’t wait for good things like this to happen to you. You have to pursue them assertively and regularly.

Yes, and I definitely know how to negotiate. I simply don’t work for less than my hourly rate. I resolve payment issues as soon as they come up. I choose whom to work with, and if clients become negligent regarding payment, I don’t work with them anymore. (Jill, Marketing/PR Creative Director)

Jill showcases one of the top benefits of running your own business. She determines how much she earns. She offers value and sets her own prices. Being in control of how much you earn, and under what circumstances, is the ultimate in job security.

I am not terribly happy with it, but I’ve only been here a few weeks. I want to impress them with my level of performance before I ask for anything. I have negotiated successfully in a couple of jobs. You just need to have the performance to back yourself up and then outline it in your request, along with showing what you intend to do to further your asset to the company. If they see it as an investment, they’ll be more likely go for it. (Marianne, Forensics Researcher)

Exactly right, Marianne. Your employer is most likely going to be willing to pay you a good salary if you demonstrate that you provide value consistently. Remember, there are three major components to lasting career success: personal evaluation, value creation, and value demonstration. The third piece comes in during salary negotiations, when you show your boss how much value you have contributed.

People often don’t realize just how much power they have to earn a great salary, based on their own performance and negotiations. Remember that top talent is always at a premium. If you offer outstanding value to your company, they want to keep you. You’re holding a winning hand. All you have to do is bet big and play it right.

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Posted by Dave Lorenzo - Business Coach

The July issue of Entrepreneur reports that “In 2005, median CEO pay at the 100 largest U.S. corporations increased 25%; typical American workers saw only a 3.1% increase.” Obviously, there is some room for improvement in the average employee’s salary! What’s the best way to negotiate better pay? Here are the two most important steps you can take:

1. Demonstrate value. When the topic of salary comes up in an interview for a new position or during your annual review, focus on the value you have created in previous positions or your current position. As specifically as possible, put dollar values next to your contributions. How much money have you brought in or saved the company? How has productivity increased as a result of your efforts? What process improvements have you devised? Keep a list of your accomplishments in your desk, and update it often. An employer is most likely to be impressed and swayed to your side with hard facts.

2. Ask for more than you want. Plenty of my clients have earned 20% salary increases at one time or another, and this is not too much to ask. For great performance at a traditional employer, you can realistically expect a raise between 6 and 10%, but you should always start off by asking for a generous increase and giving yourself some room to negotiate. A common worry people have is that they’ll seem greedy if they ask for too much. I see it differently, of course. Asking for what you’re worth communicates confidence, and, as they say, it never hurts to ask! A client of mine tells that at her recent 90-day performance review, after several months of performance that her boss acknowledged as outstanding, she requested a 20% salary increase and was granted approximately 10%. Keep in mind, also, that all your benefits—vacation and stock options, for instance—are open to discussion. Your employer is not going to pay you any more than he has to, so it’s up to you to be your own advocate and make strong negotiations for what you want.

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Posted by Dave Lorenzo - Business Coach

A common mistake that individuals starting up their own businesses make is undervaluing themselves and undercharging. They often believe that if their rates are lower than those of their competitors, they will build up their client base quickly and easily. They may charge the same amount they earned at their corporate job, not realizing that self-employed individuals have business expenses, self-employment taxes, advertising costs, and insurance costs that they did not have as an employee of a company. Here are five reasons you should never undercharge:

1. Your time is valuable. Giving discounts, cutting deals, and doing favors means you have to spend more time to earn the same amount of money. Not charging a reasonable rate dilutes the good energy you should be using to strengthen your small business and provide excellent work to all your clients. When you run your own business, you have much more work to do than just that which is billable, such as the administrative, marketing, and accounting work. Of course, you can pay someone else to do that work for you, but you’re going to need a solid income to pay those contractors.

2. Your product or service is valuable. Charging a fair rate for your work sends the message that you have something great to offer, something you believe in, something that is worth the client’s investment. Charging too little undermines your product or service. If you have a great product or service to offer, clients will pay a fair amount for it. Optimizing your earnings for the amount of time invested means you have all the more time and energy to devote to refining your procedures and your product. That results in greater value for everyone involved.

3. Your progress is essential. If you do start out charging a rate lower than you hope to earn in the long term, it’s very hard to unlock yourself from that. Clients looking for a deal will latch onto you, certainly, but they won’t want to pay more in the future, and you’ll be stuck working for cheap or letting those clients go. Undercharging is a strategy that is not effective or sustainable for the long haul. Instead of offering bargains and unbelievable deals to drum up business, focus on quality that endures and attracts clients who will remain loyal to you.

4. Respect must be earned. In any area of life, when you insist upon what you need, you insist upon respect. Pricing fairly communicates self-confidence and self-respect. The more your clients respect you, the more likely they are to recommend you to their business associates. And of course, that’s good news for you.

5. You must set yourself up for success. The most successful small businesses are the ones that start with a great business plan and stick to it. Pricing is a huge factor in growth and success, and you’ve got to get it right. You need to have an overview of estimated costs and projected income before you start your business, and you need to be firm with those numbers. Start strong, and let that power propel you ahead.

All these guidelines apply to everyone, not just business owners. For those who are looking for new jobs, I recommend determining your bottom line and simply not accepting anything less. Demand for talented employees is presently very high, and you’ll be doing yourself a huge favor by continuing your search until you find a job that meets all your needs, including salary requirements.

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