Are You an Employee or Entrepreneur at Your SMB?
The mindset matters more than you think.
With RTO policies and WFH preferences colliding, it is more important now to consider options in terms of working for another company or deciding work at your own SMB.
If you already own an SMB, ask yourself, "Am I using the employee mindset?" Here's how to quickly check.
When you're an employee:
You supply time to the labor market.
Wage is set by industry Demand curves.
Your supplied time and wage are usually fixed.
Your Average Costs drive your working decisions.
In the example:
work for 40 hrs a week at $50/hr.
Total Costs = $20 * 40 = $800
Total Income = $50 * 40 = $2000
Net Gain = 2000 - 800 = $1200 per week.
When you're an entrepreneur:
You create or work in a niche market.
The supply curve = your Marginal Costs.
You directly have access to Market Demand.
You decide hours based on the Marginal Revenue.
In the example:
Hours determined at MR = MC = 25hrs/week.
Demand curve shows $100 as what buyers will pay.
Total Costs = $20 * 25 = $500
Total Revenue = $100 * 25 = $2500
Total Profit = 2500 - 500 = $2000.
Difference between the two mindsets:
Increased net gain from 1200 to 2000 = 67%
Time saved from 40 to 25 hrs per week = 37.5%
Actionable Insights
Consciously change your mindset if you own an SMB.
If you're wedded to hours worked, you might overwork.
Don't allow market to determine your "wage" or "costs."
Saved hours can be used to expand your SMB better.
Additional income can elevate cost-related concerns.
P.S.: How did you figure out the right price for your SMB?
Want to increase your SMB’s profits by 10-20%? My Data-Audit & Action Plan does that for you!