Highest Salary does not mean Biggest Earner

If you run a business, it doesn’t matter if you’re the highest-paid person in the organization.

Here are two scenarios where it’s a good thing you’re not:

Your Salesman is Killing it

If you have an excellent salesman, and he’s making crazy money on commissions, that’s good! Never cap your salesman if they are ethically bringing in new customers.

An insecure CEO might feel weird that their employee is getting richer. But a wise CEO loves when his business is doing well. The better the salesman does, the better the company will do (not just that year, but every year following when the customer remains with the business and the one-time commission has been paid out).

The only time it’s bad for a sale to happen is if the lifetime value of the customer is simply lower than the customer acquisition cost. In that case, your business model is broken (which is usually not the salesman’s fault unless he gave an outrageous discount or an expensive promise in order to make the sale).

When your business is set up wisely, you want all your salesman to be out-earning you. Every time that happens, it means you are promised a lot more down the road.

Your Time Investment is Near Zero

Let’s say you own 50 vending machines. They bring in $100,000 a year. You pay someone to fill them up once a week, take out the cash, do maintenance when they’re broken, and deal with any problems. You pay them $55,000 a year.

Forget whether or not these are accurate numbers—the point is that someone else is doing all of the routine work, and you’re doing nothing (after setting it up). It makes sense to pay your worker what they’re worth. After all, 55k for 20 hours a week is actually less than 45k for 1 hour a week.

He’s making the time equivalent of a $110k salary, but you’re making $1,800,000. Obviously you’re not making that much, but the value of your time genuinely is that much (in that one instance).

All this to say—don’t overthink it. If your business is going well, and the effort-to-reward ratio is good, don’t worry about petty things like who’s making more. If you set up a good system, your reward is getting to trust it.

Leave a Reply