Goals are an important tool to every business as they help teams focus on priorities and align resources. Effective Goals take it another step by dialing in the key strategies that will help teams focus on the few things that will make the difference between a so-so business and an outrageously successful business.
In today's episode, you'll learn how to maximize your effectiveness by identifying the catalyst, the one thing, that if you follow, you'll reach your desired outcome. Understand how the corporate pyramid constraint is in direct conflict of increasing your effective rate and how to avoid the trap of chasing the corporate ladder treadmill.
Jeremy Epp: One of the things I like to do at the end of the year is to begin planning my goals for the upcoming year. I enjoy reviewing the past year and seeing how life played out and how much progress I was able to make toward my past goals. In looking to the coming year, there is a chance to reassess, reset, and realign toward my desired future state. What about you? Are you a goal setter? Do you set annual goals for yourself to help prioritize your focus for the coming year? In this episode we’re going to talk about how to ensure that you're focused on the right areas if you ever thought about how to expand your income as you take steps toward creating your own business.
Welcome to episode #24. My name is Jeremy Epp, and I'm here to help you set up, launch and grow a profitable business. Before we begin, do me a favor and go to JeremyEpp.com and subscribe to the show.
Ahhh, goal setting. Do you love setting goals for the coming year, or do you waive them off as a future broken New Year’s resolution? If you’re listening to this episode, I’m willing to bet you lean toward being a goal setter.
Before we get to goal setting, I want to set the stage and talk briefly about some of the core things that drive our motivation. I want to start with Maslow’s Hierarchy of Needs. If you recall there are five levels that start out with our physical needs. These include food, clothing, and shelter. Next we move to our safety needs, which include our physical security, financial security, and our health. Thirdly, we move to Social Belonging- which centers us on friendship, love, and a sense of connection with other. Fourth level is Esteem- which includes status, recognition, and respect. And finally, we have Self- Actualization which is the desire to become the most we can be.
I want to start with this as each of us are in a different stage of life. Some of you may be starting out in your career, going through a career change, or have a job that has an uncertain future and you’re focused on stabilizing your income. Some may be going through a tough relationship situation and feel the drive to stabilize your social belonging, or you may have a health issue you’re working through and need to reprioritize your focus for the coming year.
The point I am making is that even though we climb up the level’s of Maslow’s hierarchy, there are periods in life that threaten or change a lower level, causing us to shift our focus on a lower fundamental level till we can overcome and reestablish that level.
If one of your personal goals is to create and grow a business, examine what is driving your motivation. Is it income driven? Security driven? Social or Esteem driven? Or are you driven to maximize your potential and have more control in your future? There is no wrong answer. In fact, I’d venture to guess that there are reasons within all of the levels of hierarchy that play into what is driving your desire to create and own your own business.
If you’re in the stage where you’re currently working a full-time job and you’re setting up a side-hustle with the goal of it replacing your income stream in the future then you need to be conscious of Conflicting Priorities. What do I mean by this? Are you interested in moving up the corporate ladder, increasing your paycheck, bonuses, responsibilities, and respect within an organization, or are you more interested in creating your own path, having the flexibility to make decisions and make you’re own “mark”?
Let’s break this down further and talk specifically about income as I believe this would be at the core of your motivation. After all, increasing your income opens up future doors- paying off debts, supporting your children’s college goals, funding your retirement account, and creating a more stable, comfortable lifestyle.
In thinking about income, I don’t want you to think about your hourly rate or your annual salary amount. Instead I want you to think about your “effective rate”. Don’t fall into the trap of thinking if I earn, let’s say $50 per hour, how many more hours can I work. Instead think of how do I increase my hourly rate or my “effective rate”. If you’re in sales and can earn $100 per sale, and a sale takes 2 hours to close, you should ask yourself, “how can I close a sale faster” or “how can I close more sales in the same 2 hours” which will increase your effective rate.
I want you to think of an image of a pyramid. The pyramid is in the shape of an equilateral triangle with all sides being equal in length. This pyramid represents your current organization. At the top is the CEO, and the bottom are the employees. If you move down from the CEO, there are different layers within the organization. You have the VPs, the Directors, Senior Manager and Managers before you reach the masses of employees at the bottom. If you desire to increase your income within this organization, you must pursue the process of climbing the corporate ladder to reach the next level. However each level up gets smaller and requires fewer people that will be accepted at that level, which eventually will cap you out unless you're one of the lucky few that can rise through the completion to the top.
Now let’s overlay the concept of effective rate and we’ll get to what I refer to as the Pyramid Constraint. Keeping the image of the pyramid we just described in mind, we’re going to overlay it what another pyramid, however, this pyramid will be upside-down. This new pyramid will have the pointed end at the bottom and will expand outward as it rises up. Do you have this image in mind? Good. This second pyramid represents time, specifically the amount of effort required to perform the work at a particular level. For most employees, this would mean that the work is performed at a 40 hour per week span. But as you rise the corporate ladder, the expectation is that 40 hours is no longer enough time to perform, and your hours per week rise. This continues as you go up the organization levels until you reach the top. We’ve all seen high level executives that have no life outside of work. Their on-call 24/7, weekend, holidays, and on their family vacations.
Next we’ll look at their effective rate. If an employee is working 40 hours a week and earning a salary of $62,400 a year, their effective rate is $30/hr. If a Senior Manager is earning a salary of $100,000 a year, but working 55 hours a week, their effective rate is only $35/hr. Let that sink in. Yes, of course the Senior Manager is earning roughly $40,000 more per year, but this is at the cost of working 15 hours more per week, or 780 hours more per year to make this happen. In addition to having fewer positional opportunities as you rise in the organization, you’ll also have little to no say in the income level that accompanies those positions, and thus the Pyramid Constraint.
Instead of looking within the organization for income growth, look outside through a side hustle of creating your own business to increase your effective rate. Avoid the trap of trading time for dollars. Becoming an Uber driver or an Amazon delivery driver will not increase your effective rate. Instead find products and services to sell that will allow you to earn money without requiring a 1-for-1 effort. Find ways to sell many in the same time it takes for you to sell one.
Getting back to goal setting. I want you to think about major areas of your life to focus your goals on. This may be broken down into Health, Financial, Career/Business, Relationship, Spiritual, and Personal Goals. Or as Stu McClaren does, you may break it down into Business, Personal, and Habit goals.
Next I want you to to think about goals in light of the goal itself, the result, and steps you’re going to take to reach that goal. For example, this year, one of my goals is to get my weight down to 200 lbs. The result of achieving my goal will be better health and having more energy. The steps that I am going to take to achieve my goal are to have a health coach, change my eating to a low-calorie, plant based diet, exercise, stretch and meditate.
From this point, think of how you’re going to manage and measure your progress. Going back to my weight goal, I track my calorie intake daily on a phone app, I weigh myself and take body measurements monthly, and I have a weekly phone call with my health coach.
The final step I want you to take is to identify the “one thing”, the catalyst, that is going to make the biggest difference to your goal success. For me, my catalyst, or “One thing” that is helping me with my weight goal has been to change my diet to a low-calorie plant based diet. This has increased my mental and physical energy to the point to where I want to exercise more, stretch and meditate, and engage with my health coach. If I remain focused on my One Thing, I’ll reach my weight goal this year. You’re One Thing may look different. If you also have a weight goal, your catalyst may be exercise, or specifically, join a soccer league throughout the year or play racquetball 2x a week or take a spin class. This exercise routine will motivate you to begin eating better and thus lose weight.
In each of your identified goal areas:
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If you’re struggling with coming up business ideas that are right for you or have too many ideas and need to narrow them down, be sure to download my Discovery Worksheet that will walk you through the 9 steps to help you find the right business idea for you based upon your experience, skills, passions, and interests. Go to jeremyepp.com/discoveryworksheet to download the worksheet.
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