How to Rapidly Scale Your Income

The formula for financial independence is pretty simple. Acquire income producing assets that yield a return. Create a lifestyle where the return fully covers for living expenses and leisure. That’s it!

Simple right?

But simple doesn’t always mean easy.

Acquiring income producing assets is a journey that can take an immense amount of energy, time, and most importantly… money. But for the average individual, the ability to generate cash is severely capped by the notoriously popular term called the “salary”. Yes that’s right, the enemy of financial freedom is the coveted stable job. To be more precise, these are the “well paying” careers that have an negotiated annual salary, predictable monthly paychecks, yearly bonus opportunities, a committed work schedule of 40 hours a week, and perks like a retirement plan or insurance coverage.

While the benefits of a salaried job sounds attractive, and even crucial depending on the stage of life, the amount of income is always limited. Want to earn more by putting in more hours? You can’t. A salary predetermines the pay regardless of how many hours you work. Want to work less instead? Good luck, especially in a highly competitive market where younger and smarter employees produce better results for less pay. Want to get promoted quickly? That’ll require more than just your typical job skills, as office politics play a much heavier role. A more probable and “safer” route is to climb the corporate ladder over a long period of time, accept the 3% pay increase each year (which gets destroyed by inflation anyway), and try to earn some company bonuses littered in between.

In other words, the salaried job is one of the slowest ways to reach financial freedom. You can certainly wait it out and live off a large 401k investment after you retire at 65. But wouldn’t you agree that parts of life can be enjoyed much more when you can experience it at a much younger age? Now this isn’t to say every salaried job is a dead-end job. High paying careers in tech, engineering, finance, medical, or legal fields can offer plush pay and fantastic benefits. But these types of well compensated careers require deep mastery of specific skills that take years or decades to master. More importantly not everyone has the mental capacity, passion, or discipline to endure the intense and bone tiring grind.

So what’s an option that can help rapidly scale income if your current job doesn’t pay well, and you’re not interested in getting an advanced degree for a highly specialized profession?

Generally speaking, jobs are categorized into three types: Salaries, hourly wages, and commissions. While salaries and hourly wages have the slowest earning potential as described earlier, commissions is an entirely different animal. Also known as objective based pay, commissions have the potential to scale income significantly faster than salaries or hourly wages. The more transactions you complete (like selling a service or product), the more you earn based off a percent of the total revenue made (the objective).

Let’s see this in action! Suppose Sarah starts as a junior sales associate at Vendor Inc, selling vending machines to local businesses. She’s fairly new to the role, so her experience is limited. At first Sarah sells just 1 vending machine every 2 weeks. If a vending machine sells at $5,000 per unit with a 20% commission, then Sarah made $1,000 in commissions per sale, and $2,000 a month. That comes out to be about $24,000 a year. With a base pay of $30,000 per year as an entry level sales professional, her net income after the first year with commissions would only be $54,000. She probably also worked 60+ hour weeks to close deals with her clients. With these numbers, her earnings rate is at most $18.75 per hour. So after 365 days and 3100+ hours of grueling work, she made barely above minimum wage.

But year 2 looks a little different. With more sales experience and a larger network under her belt, Sarah is able to sell 3 vending machines each month. That’s $15,000 in sales revenue a month, $180,000 a year, and an earned commissions of $36,000. Compared to $24,000 the previous year, Sarah increased her commissions pay by 50%.

But Sarah is determined to do even better and works harder in year 3. Her sales experience is sharper now, her network is bigger than before, and she is able to sell 5 vending machines a month. That’s $25,000 sales a month, $300,000 total revenue a year, and an earned commission of $60,000, which is a 150% increase compared to year 1.

Sarah is on fire and finds a way to double sales in year 4. She sells 10 vending machines a month, which brings her earned commissions to $120,000 a year, which is a 400% increase from year 1. Then in year 5, she’s crafted a system that allows her to sell 15 vending machines a month. That’s $180,000 in earned commissions a year. So from year 1 to year 5, she increased her commissions pay by a whopping 650%!

So let’s do a quick recap of Sarah’s income growth, while factoring in base pay plus commissions.

• Year 1: $30,000 + $24,000 = $54,000
• Year 2: $30,000 + $36,000 = $66,000
• Year 3: $30,000 + $60,000 = $90,000
• Year 4: $30,000 + $120,000 = $150,000
• Year 5: $30,000 + $180,000 = $210,000

Total: $570,000

Let’s compare these results with a safe and stable salary that Sarah could have chosen at the start, which pays $70,000 a year with an annual 3% raise.

• Year 1: $70,000
• Year 2: $70,000 x 0.03 = $72,100
• Year 3: $72,100 x 0.03 = $74,263
• Year 4: $74,263 x 0.03 = $76,490
• Year 5: $76,490 x 0.03 = $78,786

Total: $371,639

The salary option is ahead in total earnings for the first 3 years. But by year 4, the commissions pay overtakes it. By year 5, it’s not even close. Even if Sarah worked ridiculously hard in her salary paying job and earned 10% bonuses each year, she’d still trail behind commissions pay by year 5. Remember that a salary is fixed. So no matter how hard Sarah works, she doesn’t receive any more monetary rewards directly proportional to her level of effort.

But if Sarah chooses commissions based pay, continues to level up her sales skills, learns to sell the product to a wider audience, partners with team members to help find more customers, and exponentially grows her sales year after year… She’ll be in a different universe in earnings compared with a salary after a certain number of years. This is the power of a rapidly scalable income.

But wait, you think commissions work isn’t for you. It’s too hard. You’re not good with people. You don’t understand how to sell a product. You don’t even have time to transition to a new job. These are all understandable concerns! Frankly, commissions based work isn’t easy. It requires endless practice, lots of trial by error, constant training, tons of rejections and failures, good mentoring, and lucky breaks. It’s hard work.

But if you want to quickly acquire income producing assets in order to become financially free, commissions based work is a fantastic option for individuals who don’t want to invest more time and energy into even harder specialized professions. Remember that life doesn’t give out free lunches. True success sure doesn’t come to those who are lazy. So choose the hard path that few attempt to walk, and choose wisely.

The formula for financial independence is simple. It’s just not easy to rapidly get there if you don’t have the right income generating vehicle. By finding and specializing jobs with commissions based pay, getting to your goal may be a lot faster than you think. So unless you are making the “big bucks” from owning businesses, or earning an exceptionally high salary from a highly desired profession, find ways to acquire the skills necessary to do commissions based work.