The Ultimate Guide to Making Money

Companies don’t care about money

18 Comments

0 0 0

At least at our level. The basic point of this essay is how you can get free stuff from your company, but that’s crass, so I have to say that it’s about much more than that. It’s about using your existing resources, like your job, to improve your skill set. It’s about learning how to write a proposal that will get you funding for anything from a $5,000 conference to a new lemonade stand. And it’s about realizing that companies don’t care about money as much as you think.

Have you ever wanted to do something in college or at work that just seemed really cool but was too expensive? Maybe it was attending that fancy conference. Maybe it was getting a new piece of software, or taking someone you’re working with to a fancy lunch, or traveling to one of your company’s other offices on the other side of the country. How come it hasn’t happened? Usually, the answer is “there’s not enough money.” Today, I’m going to show you how to get around that.

When I was in college, there were a few times that this funny thing happened. A bunch of us would be standing around, asking each other what we were doing that weekend, and people would start to answer. “I’m working on this damn paper,” someone would say. “I’m tutoring some high-school kids,” another would say. Then it would be my turn, and I would say something like, “I’m going to Hawaii for a conference this weekend.” The rest of them would just stare at me. It wasn’t that I was rich or cool, but just that I had figured out how to do stuff I wanted (travel) and get someone to cover it.

Let me explain.

Today, I want to talk about how companies don’t care about money–at least, not the money you have in mind. You’re just one employee. They are a Big Company or Large University. See, lots of people have this funny idea that there isn’t enough money to do the things they want at work or at school. “My life would be so much easier if I did X, but we don’t have the budget,” they say. I’m talking about “resource constraints,” a fancy word meaning there’s not enough money or people to do everything. But I want to show you how to get individual benefits–like attending conferences, getting a new monitor, or a new piece of software–that also benefit your company. An interesting point: If a company has 10 employees and each of them makes a $50,000 annual salary, the firm is actually paying about $75,000-$100,000/year for each of them when you factor in taxes, benefits, office space, equipment, etc. That means a small firm of 10 employees has to be making around $1 million/year just to break even.

That means there’s a lot of money in companies. And they want to use it to grow. That’s where you come in.

What do you want?
Companies don’t care about spending money on their employees as much as you think. As I wrote in Don’t Quit Without Asking For What You Want,

One of my friends, for example, was unhappy about having to pay the toll every day for her commute–a very understandable complaint. But she didn’t tell her boss about this, who I guarantee would have moved heaven and earth if he’d known an employee was close to leaving. $6.00 per day is nothing to companies.

That’s a simple example. But there’s more. See, companies don’t care as much about spending money as they care about getting things done and making more money–much, much more than could be saved by being stingy with you.

That’s why you should be taking advantage of the incredible opportunities you have if you work at a company or attend any large institution. You want to go a conference? No problem, you just have to craft the proposal the right way and find the right person. Will that piece of software help your team finish the project on time? Great, read on to learn how/why your company will sponsor it. Now, I’m not talking about small things that you could purchase out of your pocket. Those are nice, but I’m talking about large items that you wouldn’t ordinarily purchase on your own. Things that are equally useful to the company as you. A sales seminar you’ve always wanted to go to, for example, or a $5,000 conference, or a trip to meet the remote person you’ll be working with for the next six months. Things that help you develop as an employee and help the company, too.

But first, the barriers. Why don’t more people ask their companies for these kinds of things? I think (1) we don’t realize that companies will pay for our personal development and (2) we don’t take the initiative of figuring out what we want and asking.

Companies don’t care about money
I realize I’m being a little sensationalistic with that title. But the point is that most large companies care about getting things done and making more money. If it came down to higher revenues or cost cutting, can you think of one company that would prefer to cut costs? I can’t.

Ironically, companies are often far less risk-averse than individuals when it comes to spending money. They know that costs wil be incurred–and some failures will happen–but the successes should outweigh the costs. Early-stage VCs (very risky) expect that out of 10 companies, about 5 will fail, 2-3 will do ok/flounder, and 1 will succeed in a huge way. Basically, they estimate want a 10x return on average, and they’re perfectly ok knowing that most of them won’t do very well. Let’s look at the shipping industry, which also understands very well that it’s worth paying inconvenient costs like parking tickets, even if they add up to a lot. UPS, Fedex, and other delivery services get over 7,000 tickets every day in New York City alone, which cost them over $102 million in 2005. It’s just the cost of doing business.

A couple weeks ago, I was having lunch with a friend of mine who’s a former consultant at BCG and now goes to Stanford Business School. We were both talking about business stuff, and pretty much mocking ourselves for a business idea we both had a few years ago. We used to think that it would be so smart to to start consulting for management-consulting companies on how to help them cut costs. For example, they spend an incredible amount of money on last-minute airfare. “They waste so much money!” I remember saying a few years ago. “They’ll book the most expensive ticket instead of waiting 3 hours to save 50%.”

Now we know better. “They don’t care about costs,” my friend, the former consultant, said. “They’re a top-line company, especially when their consultants are billing $500/hour.” In other words, for these companies with a focus on their intellectual capital, time is money. And they’d rather spend more to make more–focusing on increasing revenue–than try to cut costs, where the gains are comparatively small.

Luckily, neither of us started this not-quite-stupid-fratboy-business-idea years ago. Instead, now we can recline and chuckle at our earlier naiveté, feeling supremely self-satisfied. God, if you were there, you would have been disgusted at how pleased we were with ourselves as we chomped on our Baja Fresh.

(As a funny sidenote, that same friend told me about a consulting firm he once interviewed with. After the final round, which they flew him to New York for, the firm realized it hadn’t given him a drug test. No problem, my friend said, I can do it out here (California) at any drug-test place around. Nope, the company replied, you have to do it here–that’s policy. My friend said, “That company literally flew me to New York to pee in a cup, and I turned right around and flew back.”)

Ok, back to companies. They will pay for more things than you can imagine provided you demonstrate a couple of things:
1. It’s relevant to your work. This is a deal-breaker, and without relevance to your work (“I want to visit Puerto Rico because the beaches are nice!”), you’re not getting anywhere.
2. A convincing argument why doing it will be more valuable than not doing it. I mean valuable to the company and to your self-development.

Now, here’s how.

How to convince your company to sponsor your cool activity
I’m going to approach this from the perspective of a manager. I’ll tell you what I look for from employees when they ask for some sort of sponsorship.

First, take the initiative to figure out what you want to do. I’ve given some ideas before, but the basic thing I ask myself is, “What would help me work better, and what would remove barriers?” Is it new equipment? Is it meeting someone in person? Once you know that…

Research the options and pick the right one. Any manager is more convinced when you show that you’ve done your homework and made a choice for a reason.

  • Bad: “I like conference X!!!!!!!!!”
  • Better: “I’d like to attend Conference X this year. Michelle From Marketing attended last year, and here’s what she got out of it: (Testimonial here)”
  • Even better: [Everything from above, plus...] “After reviewing these 3 options of relevant conferences, I’d like to attend X because it’s in our budget, it will help my career development for this year (mention metrics), as well as give me the tools to work faster on Project Enigma.”

Bam. If someone takes the initiative to go through all that and present a convincing case, it’s hard to say no. There’s just one more thing.

Show the potential ROI (return on investment) to the company. Show them why ordering that report is worth its price tag. Tell them how that new tool will help speed up your development process. Use your company’s language to show, honestly and plainly, why you need additional resources to do your job optimally. Yes, it’s scary to ask for more things, but any good manager will respect someone who takes the initiative to identify a goal, craft a proposal, and ask for the resources to be better at their job. It doesn’t even have to succeed in ROI, although it really helps if it does. You just need to make the case why it could result in ROI. For example, when I was on a business trip last year, I got a great opportunity to meet someone important if I stayed an extra night. I changed my ticket–for a price increase of over 100% the original ticket cost–just to meet this person because there was potentially huge ROI if it worked out. We didn’t end up closing the deal, but that was the cost of doing business.

When I worked at AuctionDrop, I told my boss that I wanted to buy a usability report that cost about $250. I wrote up a 1-page proposal explaining why I wanted it, what it would do, and how I would use it. He looked at the report and actually laughed out loud. “$250? Go for it.” It took 4 seconds.

At PBwiki, we’re actively trying to adopt this idea of not being cheap, but instead looking forward to growth. We’re not a deep-pocketed company, but there are things that are strategically important that are worth it. Want a book that will help you kick ass on your project? Get it. Want huge whiteboards for your office? No questions asked. We’ve paid for software, business lunches, travel, conference fees, marketing experiments, and a bunch of other stuff. It’s not like we’re particularly special–most companies that value their employees give them the tools they want/need to succeed (see another example). But it’s a good example that companies will spring for more than you think. And that’s what I want to share so that you can help your company and do cool things for free.

It’s not just for companies
This advice applies to more than companies. For example, think about where you could take the idea of (1) picking something you’re interested in, (2) making the case in the right way, and (3) asking for someone to sponsor you?

How about parents? Although I think that Letting your parents manage your money is dumb, I think asking them for money for a specific project, like a business venture, is very cool. Lots of people email me saying, “I want to start a Roth IRA, but I don’t have the $3,000 to open up the account.” To me, that seems like the perfect time to ask your parents. You say, “Look Mom and Dad, I want to start a Roth today. Here’s why it makes sense to start early. Here’s my plan for where I’m going to invest. Here are the risks, here’s my timetable for returning your money (plus interest), and here’s some research I’ve gathered about the best place to open it.” Honestly, I’m not a parent yet, but if my son or daughter came to me saying that, how could I resist? It works for investing, opening a lemonade stand, traveling somewhere on a learning trip, or any number of things. How could you use the idea?

Also, from being in Silicon Valley, there is a huge culture of angel investors, who are basically rich people that invest in interesting companies. When I realized how many there are, I realized there’s a 2-way street going on here: Entrepreneurs need cash, and angels want interesting investments and the excitement of a new venture. If it works right, everyone can benefit.

The big takeaway
If you’re not taking advantage of your company to do cool things (that also benefit them) for free, I honestly believe that you’re wasting your opportunity. Part of the benefit of working at a company–especially larger ones–is the immense resources they have. $200 is nothing. Neither is $2,000 for some things, or even $20,000 if the potential ROI is justified. Where else could you get the opportunity to pick something you want to do, ask someone to hand over a bunch of money, and get you a pat on the back to do it?

Part of succeeding here is acting like you have an unlimited budget. If you had $10 million dollars at work, what would you do? As Ian Ybarra puts it in another excellent post,

I can’t stand when I ask people what they really want to do and they won’t answer. They sit silently, thinking about their excuses for why they can’t do what they want to do. They all have different excuses, and they won’t tell me what they are, so I have to go fishing. Here are 10 questions I ask to get the real answer.

What would you do…

1. if you had a billion dollars? (Now money is no object.)

2. if your parents were completely supportive of any path you chose? (Now your parents can’t make you do something.)

3. if your older sibling(s) weren’t so successful? (Now you’re not trying to live up to something you’re not.)

4. if your friends weren’t all going to work in finance (or another industry)? (Now you’re not letting peer pressure pistol whip you.)

5. if we could all travel at the speed of thought? (Now you can live where you want and work where you want, no problem.)

6. if you had graduated from the best college in the world? (Now you’re not paralyzed by a lack of the “perfect” brand–whatever that is.)

(See all 10 of Ian’s questions.)

The point is, once you start acting like you have all the tools at your disposal–which you basically do–it becomes less a matter of “How do I get this?!?!” and more a strategic question of, “What do I want to do?”

Also, when it comes to asking your parents or personal contacts for money, please don’t get me wrong. If you read this and think, “Ramit, you’re an elitist who has rich friends/family and I can never do that,” you haven’t taken anything away from this post and I question whether you are literate. It’s not about the amount, whether it’s $10,000 or $100. If you just ask for money without a plan, that’s stupid. And if you plan to take without giving back, that’s charity, not personal development. But I’m still puzzled when I hear friends say, “I have this great idea, but it’s so expensive to get it started.” A lot of my friends have plenty of money and would be happy to invest a little bit into a new venture, especially the ones in Silicon Valley.

Come up with a plan and try asking the right people. As long as you have a specific plan and have thought through the issues, it doesn’t hurt to ask whether it’s your boss, parents, or even professional contacts. I’m hoping a couple of my friends will send me proposals after reading this.

Update: This post is dedicated to my dad, who taught me that companies don’t care about money time and time again.


To see more articles from iwillteachyoutoberich.com, check out my table of contents (over 300 posts), my RSS feed, and my newsletter.

0 0 0

Related Articles

The intriguing psychology of “travel porn”

Notice how some of the most popular blogs and Instagram accounts are people sharing beautiful travel photos. In fact, when ...

Read More

Conquering guilt: How to enjoy what you’ve earned

If it were up to personal-finance “experts,” we’d never spend a penny on ourselves. We’d save 80% of ...

Read More

18 Comments

0 0 0
 
  1. Nice post. Its a little skimpy on the details of writing a good proposal though, and more so heavy on the motivation to get out there and sieze the day, get what you want.

    I didn’t know you are involved with PBWiki. What a great site, I’ve had a wiki there for many months now and it was fundamental in being able to organize a 10-team sports tournament with only 1 month. It enabled my worker bees and I to share information on a wide variety of topics to ensure everything went off without a hitch.

    NLG

  2. I believe the business-y justification is: Corporations have a lower cost of capital than individuals.

    There are many reasons for this (including the tax structure for corporations, that they have so much, and that hopefully they think their employees are worth it).

  3. Nice article. I know these take time to write, and this is an especially long one, so thanks.

    I’ve gotten used to looking for things I can pass off on the companies I work for. It feels absolutely great like you’re getting away with something that you shouldn’t, but did.

    Currently, I’m trying to get my friend to get used to this. He’s in a smaller company with a boss (the prez) that’s a known cost cutter, but I also know that the guy is willing to put money into potential ROI items. Right now, the company has a round trip ticket to Singapore that my friend needs to use before the end of this year. He’s in a new position, however, that doesn’t require him over there ever couple weeks, so he doesn’t really need it anymore.

    Now, I want to visit Singapore and have him show me around, so I’m encouraging him to just ask his boss to use it even if it’s not for business so they don’t waste the tickets. I know the boss will go for it, but my friend is still getting comfortable with “yes the company will actually pay for it.” And in this case, they already have.

  4. My company is just the opposite. We have very well paid engineers and consultants and getting them to spend more than the absolute minumum is like pulling teeth. For example, one of my co-workers wanted a partition around his (very cheap) cubicle so that he could have some privacy while he worked. The company’s excuse for not spending the $100 for the partition was that if they gave him one, everyone else might want one which could cost $5000! And this is for someone who probably makes $150K a year. We found some unused bookcases and placed them where the partition would be so he could have the privacy. We never had a rush of people asking for bookcases either. How cheap can you get.

  5. hi ramit, re: travel expenses…im not sure i agree with your analysis.

    dont consulting companies, tier one all the way down, pass on the cost of consulting T&E to the client? the folks at the higher levels of the chain – partners, etc are the ones bringing in the flow, so nobody questions their T&E (billable or not)…ive never seen a consulting shop that absorbs the cost of billable related t&e – unless its built into the contract up-front. furthermore – these days, most (or the ones ive worked for, at least) all have t&e policies which are a guideline for trying to identify the lowest cost X…it’s still expensive for sure, but its not near what it used to be…worst case scenario, consider back in dot com era…you want to talk about spending stoopid $$$… :)

  6. These are your best posts – empowering and motivational.

    There are so many whiny, lazy people out there that are afraid to do stuff. And lots of people are afraid of crap that is listed in the above questions (myself included).

  7. Even lamer post than usual, and overly long as well. You write like a high schooler who’s trying to fulfill a 1000-word requirement.

  8. Hi Ramit. Just wanted to let you know (if you don’t already) that your sidebar thingy shows up at the bottom of the page, rather than the type where it should.

    Cheers

  9. Thanks. A new redesign is in the pipeline, which should fix that.

  10. Awesome post – I’ve been trying to figure out a way to get to a Tony Robbins Conference (yea, call me shallow, but I love the guy) – but the Conferences are typically $2500 or so. I’m a 5th semester Business Major and I teach an incoming freshmen “get to know the campus” type class. I wonder if I can spin a proposal that makes my University pay for an expensive conference if I can guarantee an ROI…

  11. I’ve been working a large aerospace company since I graduated from college two years ago. Sometimes I regret not hiring into a smaller company or working for myself. Large companies can be frustrating and it can take forever to get anything done.

    Despite the occasional frustrations, one of the biggest benefits of being at a large company is for all the reasons Ramit mentioned in this post. If you’re motivated and can sell your pitch, you really can do just about anything. In many cases, the path may already be cleared for you. The company I work for will pay for any degree you wish to pursue and the degree doesn’t even have to relate to your job.

    As for borrowing money from the parents, I really hate doing this primarily because I try to keep money and family far apart from eachother. I might be forced to “pitch” them on helping me purchase a home, however, since the housing market in Southern California is so expensive right now.

    - Josh

  12. I worked at a medium sized university. Unless they see the HUGE ROI of sending you to a conference ESPECIALLY if you are a student, then ur chances are slim. I brought in multi million dollar business for the university so as a result, i could go on ‘luxurious’ recruiting trips to asia.

  13. This would be a great thing to ask in an interview… “So, what do I have to take if I want to go to conference X?” Great post!

  14. Just like everything else it is more who you know. If you know the boss or the VP (or better yet ARE the boss) then you can get practically anything. I wanted to get a sports team funded for a few thousand dollars and it was easy once I got an inside connection. Others who go the business case route have a much tougher time.
    Regarding peeing in a cup: Behavior in large companies are sometimes that if the expense is not being charged against the person’s budget then they don’t care. Either that or the person you were talking to didn’t own a budget. There was no personal connection to the money being spent so they don’t care, and having it done a different way was probably a hassle for him. I don’t like those kind of managers.

  15. Hey Ramit, first of all, great post!

    I followed the link to “Don’t Quit without Asking for What You Want’ and a fellow reader commented:

    “Ramit. I’d love to hear you riff on salary negotiation. What’s the best way to play your cards when you don’t know what the dealer is holding?”

    I’d like to second that reader’s request.

    In my particular situation, I’ve been with the company six months and have concluded from others that the company is very ‘cheap’. When I was hired, I attempted to negotiate my pay, but was repeatedly shut down vis-à-vis the alleged “costs we’ll need to cover in order to educate you”. The company paid about $12K to “educate me”.

    Once my review comes around, I want that $12K added on to my current pay and maybe even 4% raise on top of that. I can’t help but think this is unreasonable and unethical of me to ask for such a request.

    I’ve taken appropriate initiative thus far. My boss and I went to lunch just last week to go over my thoughts on the workload, his expectations, etc. Everything was in check, but I felt that it was not appropriate to talk about salary six months after being hired.

    I’d love to hear your two sense, but maybe this is a topic for a future post.

    Keep up the great work.

    -Erich

  16. Salary Negotiations: #1 Find out what others are making — if they are making more than you then it is easy to get into their range because of precedent. Make up any reason except complaining about workload, personal bills, etc. Just cite that you accepted the “developmental” rate before, but now you are a proveably strong contributor so it’s time to pony up the “strong contributor’s” rate.

    If you already make near or at the top then you are the golden boy and could probably get even more raises or a promotion just by asking strongly.

    If you try to grumble towards a raise you will get nothing but a bad rep.

  17. I see your point TS.

    Unfortunately, it’s hard to find out what others make … outside of asking them (unethical), I’m not sure what else I could do.

    I know I’m at the bottom half salary wise. I checked salary.com and for my role I’m about 10% less then the average base salary.

  18. eROCk – you could always check out averages for salaries in your area, they tend to be fairly accurate at least as an average. And as far as negotiating salary, never make it about the money but about what more you’ll do, and what it will bring. If you are just negotiating for salary alone, you are greedy and won’t get it. If it’s because you’ll go above and beyond, you contribute xyz, then it’s easy to justify.

    Ramit – I agree with most of your post; and I know PBwiki is your small company example. But there are small companies out there, partner owned (like mine) that DO care about money a whole lot. Because dollars going to me take away from the partners at the end of the day. I think a key point in what you ask for is also to see if it’s a tax write off for your company, especially if you are smaller. Then, it’s not coming out of the partner’s pocket but actually helping them out. It’s all about ROI as Ramit said.