Everyone likes getting a raise, right? The problem is, business owners tend not to think of the money they make in the same way an employee does. Employees trade time for a paycheck and measure their earnings in terms of rate of pay – the wage they earn per hour or the salary they earn per year. Business owners, on the other hand, invest their time, money, and energy into the business in hopes of earning a profit. The harder they work, the more they can earn – at least that’s the goal.
However, it might be helpful for agents to adjust their thinking about the money they make. What if you thought a little more like an employee and measured your success in terms of dollars per hour? If you do that, then you can change your goal from earning a handsome profit to increasing the amount you make on an hourly basis, and that’s a lot easier to control.
Let’s say you make $100,000 per year and typically work 40 hours per week. That equals an hourly rate of $48.
If you want to give yourself a raise, then there are a few business decisions you can make:
- You can cut expenses
- You can work more hours
- You can hire someone to duplicate your efforts
- You can invest in technology
- You can expand into other product lines
If you cut expenses, then you can take home more money because you’re spending less of your monthly commission on your business. Be careful, though, only to cut unnecessary expenses; don’t eliminate costs that actually help your business succeed, like advertising or website maintenance.
Working more hours can help you bring in additional money, but you might not have any time to enjoy it. This strategy may not be sustainable long-term as it can have a negative effect on your health or lead to burnout. Also, it only works if the hours are productive; simply staying at the office longer does not necessarily lead to more money.
Hiring additional employees and/or investing in technology can allow your business to grow without you having to do all the work. Technology can improve your efficiency, reducing the time it takes to do each task, and hiring someone to do lower-level tasks can give you more time to focus on what’s important.
Finally, expanding into other product lines can allow you to increase your revenue per client as some clients will buy multiple different insurance solutions. It also helps with retention as clients with multiple product lines tend to stick around longer.
There are, however, some other things you can do that are even easier.
While the above ideas can certainly help increase your take-home pay, there are other ways to “give yourself a raise.”
- You can work the same number of hours but make more money. How? Realize that insurance premiums normally increase, and agents are often paid a percentage of the total premium, so there’s already a built-in raise. If you just replace the business you lose each year, then you will make more money year over year.
- You can also sell more by reaching out to your existing clients and seeing if there’s something else they’d like to buy. You’re their insurance person, so make sure that you’re meeting all of their insurance needs. Yes, you can expand into other product lines, but you probably already market multiple different solutions, like health, dental, life, and disability. Are you talking with your clients about each of these lines of coverage?
- You can work fewer hours. That’s a weird suggestion, right? But think of the calculation: $ per hour. To increase your rate of pay, you need to earn more in the same number of hours OR earn the same amount but work fewer hours. For instance, if you can earn the same $100,000 and only work 35 hours per week rather than 40, then your hourly “wage” increases from $48 per hour to $55 per hour. Plus, working fewer hours will give you the opportunity to enjoy life more, and isn’t that the reason you’re working in the first place? Of course, you can’t work fewer hours all year long, but during the slow time of the year, if you really don’t have anything to do, why waste your time sitting in your office every day? Use that time to enjoy yourself so that you’re ready to put in the hours when it’s busy again. So, in summary, you can get an hourly raise and a vacation at the same time!
Look at your personal expenses
One final thing that’s worth mentioning is a strategy that most hourly workers are very familiar with: if you can reduce your personal expenses, you may not need as much per hour to maintain the same lifestyle. That could allow you to work less or save more, depending on your goals.
This doesn’t mean that you need to cut out the little luxuries in life that help get you through your week, like the daily cup of overpriced coffee. But if you’re paying for a gym membership you never use or premium cable channels you never watch, consider cancelling them. You probably won’t miss them, but you will appreciate the extra money that you can put into savings or use on something you’ll actually enjoy.
A good time to analyze and reduce your personal expenses is when you’re doing the same thing for your business.