Earn Profits Through Leverage
The late great business philosopher, and legendary speaker Jim Rohn taught a powerful principle that “profits are better than wages”.
When you think about it, every one who aspires to financial freedom must choose to pursue it by either earning wages or earning profits. We are either in the pursuit of wages as an employee or profits as an business owner or entrepreneur.
On the outside it may seem like there isn't that much of a difference. However upon close examination I would submit that vantage point of profits through leverage it is a quite profound and true difference.
Now when it comes to earning money, in theory it should be that the harder or longer one works the more leverage or control a person has over their earnings. I suggest this is far from the case in reality. The vast majority of people for example, who have worked on a job one year or 20 work as hard or harder than they did when they started without much significant influence over their earning power.
Obviously there are exceptions, and that leads to the very point of the discussion. The person who is in C-level management or other senior positions typically has significant leverage over their earnings. Interestingly, this leverage can be described as ownership or equity which is based on benefiting from the effort and work hours of others. I contend that equity is the beginning of leverage over earnings. As long as you only get paid for the hours you personally exchange for your pay then you will never received the benefit of leveraged profits for yourself.
As we look at this term in its generic form, we assume that it’s about justice according to what is right. The unfortunate thing in the context of working and earning is that equity typically plays out in the complete opposite way. When you receive equity your able to separate yourself from the linear equation of x number of hours or days worked equal x number of dollars earned.
Equity in the workplace usually results in earnings that occur to your benefit outside of the direct work equation above. Over the next few post we’ll take a look at the dynamic of profits being better than wages in relations to leverage and other components.
- Wages Vs. Profits | eHow.com
Wages Vs. Profits. As an employee, your earnings are based on a different system than that which determines the amount of profit your employer makes. Working for a wage provides you with a degree of stability that an entrepreneur working for a profit