The unemployment rate in December 2004 was 5.4%, the newspaper tells me. Then it goes on to compare that to unemployment rates in prior Decembers. Who cares? I don’t. And neither should you. It doesn’t matter how many millions of people are out of work in America. Or, for that matter, throughout the rest of the world.
Your employment isn’t dependent on government statistics. What matters is the health of the business you are working for and how likely it is to keep you employed. Think about it. The unemployment rate matters only if you are at the furthest margins of employability — someone who would actually lose his job if the rate shifted by a few points. What kind of person is that? The kind of guy whose best hope for a “career” is filling orders at McDonald’s. That’s not you.
So there’s no reason for you to worry about unemployment rates. You should be focusing on what does matter: the health of your business and the value you bring to it. How to Check Out the Health of Your Business If you have a management position in your business, you already know how healthy it is. If you are further down the power chain, you can get a good indication by poking around and asking questions.
For example, you should figure out your company’s:
1. Recent history of earnings. What were its profits in the past five years? Is the trend up, down, or flat? Up is best. Down is bad. Flat is OK, so long as there is a decent profit, both in relative terms (as a percentage of revenues compared to industry averages) and in absolute terms (cash as compared to the cash requirements to keep the business going).
2. Cost efficiency of customer acquisition. How much does it cost to acquire a new customer now as compared to what it cost in the past? Do you make money on the first sale? Or does it take a second, third, or even a fourth sale to break even? The closer you can get to acquiring your customers at “breakeven” (when the money they give you covers your marketing and product costs), the stronger your company’s prospects are. With customer acquisition, as with earnings, the trend is critical. If each new customer used to cost you $50 and its been going up about $4 every year for the past five years, that’s a bad sign.
3. Ability to come up with new products. A company’s ability to come up with new products that sell well is an essential component of success. Businesses that succeed do so because they hit upon a product that people want. Unless your creative team can generate another winning product every year or two, sales and profits will eventually diminish.
4. Corporate culture. Many growing businesses stagnate (see “Word to the Wise,” below) when management becomes political. By “political,” I mean focusing on power rather than profits. Leaders who seek to measure their success by how many people they can get behind them, rather than by how much money the business makes, are dangerous. Profits are the lifeblood of a business. When you stop paying attention to them, the company gets anemic.
So don’t worry if you read about some marginally useful workers working for a minimum-wage business getting laid off. If your company is strong and growing, your job is probably secure. What If Your Company’s Prospects Don’t Look Good? What if your business is not healthy? Or if you can’t find out how healthy it is? Then you simply focus on yourself.
When a business fails, everyone working for that business — including its CEO — is out of a job. But when failed businesses leave good people unemployed, word gets around quickly. The good people are quickly scooped up. And the really good people get invited into partnerships. I’ve been in the publishing business for 25 years.
During that time, I’ve witnessed at least a dozen major businesses disappear. In each and every case — including the dissolution of one that’s going on this year — as soon as word gets out that the company is in trouble, the rest of the industry starts poaching the top performers. It takes about 24 hours before every really good employee has a job offer. Or two.
So don’t worry about unemployment rates. Focus on making your business strong. Do everything you can to become your company’s best employee: Discover how your business really works. Find out how customers are acquired. Understand the nature of a good product — and why it sells.
Develop the four critical skills that make any employee invaluable:
(1) creating new products,
(2) selling them (i.e., front-end marketing),
(3) increasing back-end sales (by knowing what your customers want), and
(4) managing profits. I talk a good deal about how to do all that in my new book “Automatic Wealth” (published by John Wiley & Sons), which will be available in bookstores and through Barnes & Noble.com on March 1.
In the meantime, get to work early and do at least one important thing (something that makes your business better and more profitable) every day.[Ed. Note. Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]