Money Matters: How to Pay Yourself a Salary as a Small Business Owner & NOT Feel Guilty About It!

Money Matters: How to Pay Yourself a Salary as a Small Business Owner & NOT Feel Guilty About It!

Image from http://scoopak.com/wp-content/uploads/2013/12/Salary-of-the-Month-Funny-HD-Wallpapers.jpg
 
I thought this picture was hilarious when I saw it.  But the reality for many of us business owners is not that funny.  Many of us are struggling to keep the business afloat that the last thing on our minds is getting paid at the end of the month!  
 
I personally dread month-ends – and I am sure every business owner does to.  In fact this is the only time I wish I was still working for obvious reasons.  That is when your bank account that you have struggled to build up during the month takes the hardest hit!  Can be pretty destabilizing.  And the worst thing is, it has to happen every month! ;-(  
 
And like there is nothing even more worse than the worst thing, YOU – the person who does most of the work does not get paid!  🙁 🙁 🙁
 
And even more worse than what is worse than the worst thing – you get accused by so-called business-people of dipping into the business funds to try and maintain your basic needs.  Yes can be quite frustrating right?!
 
NOW!  Don’t get me wrong…

Image from http://www.careerealism.com/wp-content/uploads/2013/10/Negotiate-Salary-Without-Pricing-Yourself-Out-Of-The-Job.jpg
Many small business owners are guilty of that because many lack discipline.  Many fail to distinguish between personal funds and business funds.  Heck!  In fact many do not even have corporate bank accounts and those who do are not disciplined enough to ensure every inflow goes straight to the bank account.  No wonder at the end of the month, you have have no idea where all the money you made went to.
 
Anywayz… the time to pay salaries is coming up soon enough and yet again business owners will shortchange ourselves yet again.  Many have asked me this question and I have posted it in a Facebook group once so I thought I should post something on how to pay yourself a salary without feeling guilty at the end of the month.  
 
I have literally copied and pasted it (with of course some edits).  This worked for me in the early days and hopefully it will work for you as well. 
 
Image from http://www.centonomy.com/salary-does-it-work-for-you/
Here goes…
 
___
 
“On the personal / business finances, this is my take on it.

Many accuse business owners of dipping into the company’s purse but I can safely tell you it is the business that actually takes from you.
I put every dime I had into my business. If I wanted to be strict, I would say other sources should go to me directly not into my business. It does not work that way.  Those who say they never touched a dime probably had people footing other bills for them. 

This is what I tell people and my students who ask me for advice.

1. Every business income must go straight into the account. For that reason, I hardly take cash and ask people to pay directly into the account.

2. The truth is, you can never really pay yourself salary until you get to a point because you will only end up using it for a business expense.

3. Determine how much salary you think you deserve and then also give yourself a realistic nominal value based on what your business can afford. Eg. You are a CEO so maybe your salary should be n750k per month BUT your business can only afford N50k. That extra 700k should be recorded in the books as what your company is owing you which will help give a basis for the valuation of your business should you want to go limited and sell some shares.

4. With that 50k, you will probably still use some of it for the business so it is a tall order so this is what I do. 

I don’t spend much on myself so it is easy for me to track my finances. I have a book I record it in.

If I ask my assistant to get some petty cash for the office and say I ask him to buy me something to eat on the way back, I will record that expense as a personal one in my book. 

At the end of the month, I will compute all personal expenses and if it exceeds that 50k, I know next month, I must take out that extra.  Simply put, if I have overspent by say 20k the previous month, this means I can only do say 30k personal expense this month and vice versa. If I have not spent up to 50k, it means the office owes me but rather than take it as cash, I add to that 700k.

It takes a lot of discipline but it does work. That way you do not feel guilty when your salary pays for a sausage roll or a movie ticket. After all, why am I working if the business cannot meet my needs.

I am not talking about 250k Gucci bag needs o. I used to be a Jewellery person before but I don’t do much Jewellery anymore because I am running a lean means approach to everything. 

If I need something that I cannot afford, I ask for it. I will pray about it and put it on social media and funny enough, a friend obliges. That’s how I got my iPad mini as a wedding gift and so many other things I use in my business – things I would not have bought for myself.  I am never shy to ask if I need something.  Worst case scenario, I will get a NO.  

But I am allowed to enjoy the fruits of my hard labour. I feel if your business cannot meet your basic personal needs, then you are not running a business!”
___
 
Great!  
 
That is what works for me!  Remember, DISCIPLINE is key!  You MUST go around with a pen and paper ALL THE TIME and do not say, oh I will update it later.  When you withdraw from the ATM, write it down in the book and state what exactly you use it for real time.  Whilst buying petrol, write it in.  Whilst on the bus, write it in.  You will be better off for it.
 
You can get something this small that costs N300 or so.  It needs to be small enough so it does not weigh down your bag.
 
 
And each page must have: Date / Description / Amount.  If yours is big enough, you can add vendor (i.e. who you gave the money to).  NOTE that this does not replace your company’s expense register.  You should reconcile this with the company’s.  I include both corporate and personal expenses in this one and do a reconciliation when I can.
 
Okay!  I think I am done with this!  Please feel free to ask questions if you have any and I will be happy to help you out – preferably in the comments section below.  It would be great if you help others out with your questions so everyone learns from it.  I often find people asking me questions privately and I wish they could post it on the site instead.
 
Before I leave… I think you should read this piece I stumbled upon when looking for a picture… 
 
 
I thought it made a lot of sense.
Enjoy the rest of the month and wish me a HAPPY BIRTHDAY in advance! 😀  
What Does Your Business Do in 1 Short Paragraph? (Updated 2020)

What Does Your Business Do in 1 Short Paragraph? (Updated 2020)

I often wonder why companies around here find it difficult to tell us what they do in one or two sentences without making us go through the trouble of reading through an epistle.  I’m sure if you ask the guys in the cartoon up there what they do, they’ll just use one word or max a sentence.  But ask someone around here what they do and they come at you with a barrage of words that leaves you completely confused when they are done.  
 
Case in point No 1.  

I was searching for a company which provided a specific product I needed and this company pops up.  After almost burning all my data trying to upload the company’s page and reading all the grammar, I was left wondering if they actually offered what I needed.  They had to right?!  Otherwise their names would not have come up.
 
 
Case in point No 2!  A mail I received from a company marketing some service I cannot even remember any more.  After reading through an overly constructed mail which I almost had to use a dictionary to decode, I realized when I was done that the company had said a lot without saying anything at all!
 
And then I recalled Case No 3, a conversation I had with an old colleague about what he does for a living now.  When he was done, I literally asked him again “so what exactly do you do?” 
 
These 3 cases made me realize that perhaps this is the way we do things around here.  In fact, with the first 2 cases above (and I really wish I could copy and paste both cases), it almost seemed like the companies were trying to “defend” what they were doing.  Almost like if they didn’t say so much, we would think what they were doing was no big deal.  But truth is, every product or service offering is a big deal!  No need to defend it with so much grammar.
 
As Albert Einstein once said…
 
“If you can’t explain it simply, you don’t know it well enough”!
 

Now don’t get me wrong, I completely understand the need to sound professional and educate people who try to dismiss the service you are offering as a mere “skill”.  That happens often and it can be quite annoying.  We designers bear the brunt of this a lot, when people try to “cheapen” what we do with the usual “so in short you’re a tailor”.  Initially I used to think it was necessary to enlighten them on what exactly I do but now I just reserve my energy for those who have a genuine interest in what I do.  I realized that those who knowingly made those comments either thought they were being funny or felt their jobs were much better than mine.  Better to leave them in their world of ignorance.  

 
I remember someone once tried to convince me to be proud of my skill, that there was nothing wrong with being a “tailor”.  Throughout the (what she thought was sound) advice, I had this look of “with all due respect, please stop manifesting your ignorance in full view of the public”.  1.  If you knew who a tailor was, you probably wouldn’t speak and 2. If you knew what I used to do, you would know this was a calculated decision and keep quiet.  
 
But before I digress, yes I do understand the reason for the professionalism in marketing e-mails.  But I also believe many of us get lost in the “English” to realize that we actually have to sell a product or service at the end of it all.  Yes I used to be guilty of such mails.  BUT I take solace in the fact that, at least, at the end of it all, the mails contained the “specifics” of what I was trying to pass across.  THAT was where the 2 companies above missed the mark.
 
What I would say is… 
 
1.  If you can tell us what you do in 1 paragraph, that would be great. 
2.  If you need more than 1 paragraph to explain what you do, please go ahead but please ensure at the end of the day, we understand what exactly you offer in clear terms.
3.  If you cannot help yourself, please highlight the important points in your mail so those of us who need the required information asap can simply glance through your message and pick out what we need from it.
 
And that is my tip for today.  Enjoy the rest of your day! 😀
 
Cheers!
Voluntary Rest or Mandatory Bed Rest. Choose One!

Voluntary Rest or Mandatory Bed Rest. Choose One!

http://i.dailymail.co.uk/i/pix/2010/02/17/article-0-0857EC92000005DC-962_634x639.jpg


R.E.S.T!  What many of us think we don’t need…until the word “bed” precedes it.  And by then, the doctor is already involved and we really have no choice!

Yes!  Many of us think we are invincible and can do everything.  Typical life of a start-up entrepreneur.  Our usual quote is “I can do all things through Christ who strengthens me”.  And whilst that might be true, many of us conveniently forget that on the 7th day, God rested!  

And remember that heavy storm which Jesus calmed with His words (Matthew 8:24)?  Jesus was sleeping before the disciples came to wake Him up.  Yes, He was also resting.  

And why did I decide to write about the importance of rest?!  Well I’ll tell you just now!

I decided to check up on a fashion designer who needed assistance with her business. We chatted about her goals and she informed me about an international competition she planned to participate in.  She also wanted to restructure her operations which was why she chose the FECs.  

I hadn’t heard from her in a while so thought I should check up on her to find out how the competition went and what she told me was completely shocking.  Here is a direct quote from our Blackberry chat.  Don’t worry, I asked for her permission and she said she didn’t mind.  In fact she said and I quote: 

 “I don’t mind, seriously people need to learn from it!” 
 
So here is what she said to me about what happened to her.
 
“I’ve been battling with my health since August and didn’t have the privilege to think of work.  Collapsed in my shop Thursday to your wedding.  Almost closed down my business because the doctor maintained it was health related.  I’m walking very well now and will fully start work again”.
 
Turns out she almost had something similar to a partial stroke.  Just imagine that!  And she is only in her thirties… in fact early thirties.
 
And what caused it?  Stress!  She was doing pretty much all the work because she couldn’t find the right people.  Which is a valid reason but look at how it turned out.  
 
This is a snapshot of her typical day:
 
“I am awake by 4.30am everyday to get the kids ready for school.  I usually pack my breakfast which I usually forget to eat till noon.  I close from work by 3.30 to pick the kids and head home.  I get home between 5pm and 6pm depending on the traffic, feed the kids, bath them and prepare them for dinner.  Once I’m done with homework, I see to laundry and every other thing I could not do before leaving in the morning.  Since I have limited time in the shop, I sometimes bring work home.
 
I still do freehand cutting so I am usually on my feet cutting for my 3 tailors and at the same time supervising them and attending to my clients who come at all times since I don’t work on appointment basis.  It’s like being under pressure all through the day with no time for rest, recreation, exercise and sometimes food.
 
You can imagine what my immunity level could be like.  I ignored the signs and blamed it on malaria till the big one came.    
 
At home and at work, I felt doing it myself meant getting it right because of my past experiences with delegating jobs.  Now I would rather spend time and energy finding the right team than leaving my kids motherless!
 
My irregular eating habit and lack of sleep nor rest made my blood pressure very low that I found it hard to help myself nor run a business.  I have learnt now to first take care of myself and you can imagine how easy it is to work with a clear head!
 
My husband confessed he was scared for me but didn’t say it because he didn’t have any solution.  Thank God I am alive to make things right!
 
And this is pretty much the story of the typical designer out there.  I have often maintained that the major problem with the fashion industry is entrepreneurial burn-out.  We take on too much and believe now is the time to do the work since we are still young.  And yes we might be, but when that is followed by too little rest, which is often the case, look at what happens.  
I still spoke to a lady just last week who said she was too busy to attend a Course her sister had paid for because she could not take any time off work.  I tried to talk to her but she was having none of it.  And I just smiled.  Been there, done that.  Working till 4am in the morning to ensure I delivered on my jobs.  And what happened? Fell ill, complete bed rest twice.  The last one was so bad, I was throwing up and had to be heavily sedated for a week.  And my mum ensured I didn’t get up!  In fact I dared not get up, I was too groggy to even use the loo!  I didn’t even know stress could cause people to throw up.  And I was severely dehydrated so had to be on ORT.  
 
Only after that did I fully appreciate my mother’s question to me: 
 
“What exactly are you chasing after?!  Is it this same money?!”… 
 
Of course that’s a literal translation from Yoruba.
 
After that, I realized it was not worth it!  If you fall ill, your young business dies!  Only then did I begin to really think about what I was doing and reevaluating my business and its processes.  And even though I changed tactics, I still did not eat well enough, drink enough water or rest well enough.  And look at what happened.  Years later, I landed in hospital a week to my wedding!  Contrary to what people believed, no not from wedding stress.  From working and not resting!  
 
Interestingly enough, now that I think about it, this problem is not only specific to designers.  I think it is pretty much affects every one who works around here, either at a skill or in a professional environment.  All we do around here is work…so much that the average individual is already growing grey hair at 27!  In fact we work so hard we even refuse to take a vacation.  And during vacations, instead of resting, we are busy either writing exams or traveling and going shopping, or learning one thing or the other.  
 
Has anyone stopped to analyze their typical week?  This lady did and I am sure deep down, if you look at it, your day is not much different from hers… even if you don’t have children.  Have you stopped to take a look around on a typical Friday or Saturday?  Friday evenings, people are drinking – loads of bars come alive on a Friday evening; Saturdays we’re at weddings and Sundays we are at church and visiting family and friends.  When do we ever have the time to rest?!
 
I only truly appreciated the real value of unadulterated rest during my honeymoon.  All I did was sleep!  I had no choice.  And boy… now I can fully understand and appreciate why the Western world do not joke with their holidays!  They plan for it in advance!  And I wish we had that same culture.  
 
I honestly believe we all suffer from very poor time management skills and bad work ethics in Nigeria.  I once asked myself why everyone was always in a hurry around here.  I only realized after careful observation that it was because the typical motorist is constantly running late for one appointment or the other.  That’s why they drive like maniacs, trying to beat the lights or refusing to give access to other motorists!  No wonder there’s so much traffic because the bad time management really skews our sense of reasoning that rather than wait 10 seconds or less to let the next car in, we waste 30 minutes on the road and perhaps an hour or two of other people’s time when you both hit each other!  
 
Honestly, there really is no reason why people should not close at 5pm.  I am firmly of the opinion that whatever it is can wait till the next morning.  I can understand the odd instances when we close late but it shouldn’t be standard practice.  That’s why I try as much as possible to let my staff leave at 5pm, except when we have serious work (which is not often) or our classes end late.  And whatever happened to family time?  In fact, I believe some of us take pride in coming home late…. just to show that “oh no!  I work really hard!”  Guess what?!  You are playing with your health!  Surely it cannot be healthy getting home at 12am and starting the rat race at 4.30am again, barely 4 hours later.  Not to talk about how that affects our eating habits!  Gosh!  It must be tough!  
 
Please please please people, you need to take it easy!!!!!!  I beg of you!  You forget that if you fall ill, your business stops!  Forget what anyone says… except you run a conglomerate, I am yet to find a fashion establishment that has reached a stage where it can continue to run itself perfectly in your absence.  Well except a major factory… and note the word “major” where there are systems and processes in place!  You need to rest!  
 
http://t2.gstatic.com/images?q=tbn:ANd9GcSTBDhpjzk2EnzfoneAMuYb17CaGEXbSZqGqmiAB3UvabSoDZtApQ
 
http://t3.gstatic.com/images?q=tbn:ANd9GcR-jFj5C0oFVBbFh6jNYvihfMVnOdKfIh7BFzpZ9M_qsBpvhm1w
 
Now I understand why my husband sleeps early.  He jokingly calls himself “a hen” when I harass him on how early he sleeps.  Yes he might be the worst person to watch a late night movie with (because he’s asleep like 20 minutes into the movie), but better that than indulge me and wake up very grumpy which has happened on a few occasions.  And he’s an early riser as well… unlike me!  I am more of a nocturnal person; sleep really late and wake up early, consoling myself that the biggest entrepreneurs claim they have only a few hours sleep!  Ha!  Guess our bodies are different!  And who knows how many drugs they swallow in a day anyway?!  Clearly Benjamin Franklin knew exactly what he meant when he said:
 
“Early to bed, early to rise, makes a man healthy, wealthy and wise!”  
 
I honestly did not expect to hear this story from this lady who had such bright plans for her business and honestly, I am glad she plans to make things right this time!  And not a moment too soon thankfully!
 
I’ll leave you with verses from the Bible about rest…
 
Psalm 127: 2 “It is vain for you to rise up early, To sit up late, To eat the bread of sorrows, For so He gives His beloved sleep.”
 
I am sure there might be a deeper interpretation of that verse but I’ll take it at face value for now.  
 
Honestly, I really thank this lady for sharing this with us!  It is SUCH an eye opener and an wake-up call.  Ecclesiastes 3:13 says:  
 
“And also that every man should eat and drink and enjoy the good of all his labour – it is the gift of God”
 
Yes!  It sure is!  I tell you, there is nothing more painful than spending all your hard-earned money on drugs for your health.  Makes you wonder what the point behind it all is is right?!  Besides, if only you knew what the lack of sleep or rest does to the body, you will be amazed.  I watch The Doctors a lot so now I have learnt to respect myself!  I take it easier now, sleep more and if any of the recent compliments I have received are anything to go by, it appears to be working.  People have commented that “I am now glowing”.  😀  And I hardly even wear make-up these days…
 
That said!
 
We are about to start a new week people.  Please make a resolution to take it easy.  Even if not for ourselves, for the sake of those who love us and who gave up a lot to help us get where we are today!  Rest and a good night’s sleep are both free!  Please take advantage of them.
 
Here’s wishing you all a very productive yet restful week ahead!
 
Cheers!
Fashion Business: Do I Need to go to Fashion School to Succeed in the Industry? (Updated 2020)

Fashion Business: Do I Need to go to Fashion School to Succeed in the Industry? (Updated 2020)

That’s like asking if you need an education to succeed in life generally. But, I could also argue that many self-made billionaires either never went to school or dropped out of school. Cases in point: Richard Branson, Steve Jobs, Mark Zuckerberg, Bill Gates and also our very own Cosmas Maduka of Coscharis Motors…and the list goes on.


I know you could say well… those people are not in the fashion industry – or the fashion industry is different and a lot more complicated so I’ll bring it closer to home.   Ralph Lauren – yes you know him (many of us own at least one of those tops with a horse on it) – well… he never went to fashion school and also dropped out of business school. The last time I checked, he was worth about $6.5 billion according to Forbes in 2012 and I am sure he is worth a whole lot more now.

Ralph Lauren

Image from www.mrkoachman.com

So with these reference points, it kind of makes you wonder why you need to put yourself through so much stress and spend all that time and money to get the knowledge right?   Yes, I also asked myself that same question at some point until I realized that although these men may have dropped out of school, they opted for a different kind of learning environment. They got the relevant work experience and spent a long time at it as well.  Cosmas Maduka revealed how long he spent as an apprentice learning the nitty gritty and Ralph Lauren worked at a tie manufacturing company. So whilst it was not the conventional fashion school, they still learnt the ropes in a formal establishment.   Needless to say the learning would have been pretty unstructured since I doubt there would have been any form of proper curriculum to follow. So it would have been pretty much “on-the-job” training – which, by the way, you still need even if you go to fashion school!

 

graduation from fashion schol

My graduation from fashion school

So lest I digress, on the question of “to go to fashion school or not to go to fashion school?” here is my take on it. I’m listing just a few of the benefits of going to fashion school from the perspective of someone who attended one.

 

1)  First, we all know that to be the very best in any field, you NEED to learn the basics – especially if you are coming from a completely unrelated field. That foundation is key!

 

Attending a proper school gives you an in-depth knowledge of the processes and procedures and makes you extremely knowledgeable in the field. There is also some form of structure to what exactly you are learning as against work experience where you are learning on the job with no set curriculum. That way, you can properly plan your time and finances as well. Plus you tend to draw your customers in with your knowledge since they are convinced you know what you are doing.

 

Now don’t get me wrong, work experience is vital! You still need it! But I have found that the questions you ask during the work experience will be more channeled towards how to apply what you have learnt in school. Plus, things make more sense to you in a shorter period of time and you can also use the opportunity to learn other areas you may not have been exposed to in school. Which is why a lot of fashion schools include some form of internship during the programme.

 

2)  Fashion School changes your whole perspective of what fashion and the industry is really about.

Fashion Business Opportunity - Visual Merchandising

Like others, I thought fashion was all about designing great clothes and sewing them but after just one year in fashion school, I realized that was just a parochial view of what the industry had to offer. Anyone with a thorough knowledge of the industry will tell you that there are SO SO MANY business opportunities in the Industry over and above the real art of fashion design and manufacturing. Do you need school to learn that?! Well… no. But it does help you know about them and you do get to learn how to exploit those industries in a shorter period of time.


3)  Fashion School helps to shape your vision and further mould your idea into something more tangible.

Specialization in the fashion industry

It also helps you discover who you are as a designer. You may have started out with just an idea and no clearcut plan on how to achieve it but attending a fashion school helps to put that plan into better perspective. You also learn quickly enough what your strengths and weaknesses are so you can build on those strengths, work on those weaknesses and focus your energies on the areas you naturally gravitate towards.


4) Fashion School is a highly competitive environment. 

Fashion Courses at Martwayne Fashion School

You are in a classroom filled with a lot of talented people so it helps you up your game as well. Of course, everyone thinks they are the best. Well, that is only up to the point when you get into a learning environment and realize that someone else is better at what you thought you were the best at. Watching others also inspires you and pushes you to put in your best –and you definitely need that best when you eventually start off on your own.  PLUS it helps you know what others are really doing so you can add that extra touch to your work which will help you carve that niche for yourself when you start off.


5) Fashion School gives you an opportunity to create vital networks and also learn from others in a controlled environment. 


Your teachers and fellow students form part of that network which you will definitely need when starting your business. They are collaborators who you can always call on for help because of that bond created in that environment.

 

Well I usually stop at 5 but I’ll throw in an extra one – which to me is the most important.


6) Fashion School affords you the opportunity to make mistakes in a learning environment and learn from them.

Learn from your mistakes

Image from www.jagranjosh.com

 

More often than not, the stakes are much higher when you make those same mistakes in your business – mistakes you could have avoided if you had learnt about them in fashion school.  You will end up losing wayyyy more money when you start the business than if you had spent an even less amount investing in the knowledge.


I often tell people, fashion school is not just about learning, learning and learning. You have to test the principles that are being taught and apply them before you leave that environment. When you are in school, you can ask questions on what worked or did not work and your teachers are there to help out.


applied knowledge is power

PLUS, your customers encourage you and do not mind being your “guinea-pigs” or your mistakes when they know you are still learning. But once you are done learning and you project yourself as a full-fledged designer, that’s it. You clients become vicious and those mistakes can make or break your business before you even begin to crawl.


Great! I’m done! One thing is certain though – to succeed in any industry, you have to know a whole lot about that industry. Ralph Lauren and Cosmas Maduka certainly taught us that. I don’t think I would really have appreciated fashion as I do now if I had not attended fashion school. But I’m glad I did, and if you can attend one, you should.

knowledge is power

If you, however, cannot attend one now, don’t let it deter you. Start off with learning what you can learn now. There are so many great resources available on the internet which can help you start off. Start the research now, not later and don’t only focus on the art or the skill. Also learn about the business sides as well. 


Being a fashion designer is great but useless if you cannot make money from it – well except it’s a hobby to you.  But what I always say is, if you make something for yourself and someone likes it, the minute you make that same thing for someone else and accept money, even if it is just to buy the materials and fabric, that is the start of a business.  And we do know many people make a whole lot of money from their hobbies so why shouldn’t you?!  But that’s just how I think.

And how about you?! What’s your take on fashion school? Is it a a “yay” or a “nay”?! And if you did not go to fashion school, do tell us what you did to get you so far in your fashion business so we can also learn from your experiences.

 

Do leave your thoughts in the comment section below.  I'd love to hear from you. 

 

Cheers!

Recommended Resources

It's Finally Over!  My Graduation from Fashion School

Which Fashion Course is Right for You

Specialization in the Fashion Industry

What Makes Ralph Lauren Who He Is? 6 facts to know about him

2020 Top 20 Richest Fashion Designers with Net Worth in Millions and Billions (PS. Ralph Lauren is top of the list!)

The Man. The Myth. The Style Legend – Mr. Ralph Lauren

Debunking the Various Myths About Fashion Design & the Industry

Some Top Tips You Will Need To Know If You Wish To Pursue A Career As A Fashion Designer.

How Students can learn from their Mistakes: Must know these 7 tips

About Me

Tope Williams-Adewunmi

Tope Williams-Adewunmi

A fashion entrepreneur passionate giving power through fashion by sharing knowledge guaranteed to help fashion lovers turn their love for fashion into a viable business.

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Fashion Business Tip: Commission vs Salary… Which is the Better Option for Your Tailors?! (Updated 2019)

Fashion Business Tip: Commission vs Salary… Which is the Better Option for Your Tailors?! (Updated 2019)


This question is one many designers always have a headache about as it deals with money matters.  While many of us shy away from it, it is one major problem everyone has. I’ll limit what I have to say to the one question most designers who run production units ask at every event, every seminar and pretty much at every opportunity:

 

“Should I pay my workers per piece or should I put them on a salary?”

 

THAT is the million-dollar question and here is my take on it even though when I revisited the subject of producing for designers, we have a policy which I will share at the end of the post.

Naira exchange

edited from http://3.bp.blogspot.com/–sbGZ0lpdEg/Ui01xntdosI/AAAAAAABeHU/K_w-RApHe9c/s1600/naira-dollar.jpg


Before I begin, first let me say there is no right or wrong answer to this question.  What is more important is knowing which option works for you and your operations.  I’ll point out the pros and cons and use my experience as an example.

When I first ran a production unit, I had no clue what the going rate for anything was.  So like everything else in my entrepreneurial journey, I learnt the hard way.   When I started, I was advised to pay per piece… which of course is what everyone means when they say “commission”.  “That’s what everyone does around here” I was told.  So I went with the “norm” against my better judgement.  Why did I say against my better judgement?  

Well… I knew the obvious structure that worked was a type of “division of labour” system where one person on a production line sewed a a portion of the garment rather than the whole garment.  But how would a commission payment work if I wanted to run a production line?  How would I calculate the pay per person?  And would it be fair to punish everyone else for the incompetence of one person in the line?  (Which is actually what I do now even though I don't do commission...)

But anywayz, since I knew this was what the general consensus, I chose to try out the commission structure.  After all… that is what seemed to work around here, and I thought those running that option were doing pretty well… or so it seemed…

Did it work for me?  NOPE!  Far from it.  In fact, that was a HUGE mistake!

Not only did the machinists keep ruining my work, getting them to redo bad work was like asking them to jump in a lake!  Not only could the looks melt wires, the “inner” grumbling and their attitudes were so bad, it was completely discouraging for me as a business owner.

And to be honest, could I really blame them?  Nope.  In their minds, who cared if the stitches were not straight?  To them, the customers would not notice.  All they were interested in was churning out the work and getting paid so all my complaints fell on blank looks and deaf ears.  And to be fair… they did have families to feed… No that is not an excuse… but to them what they had done was good enough, the customer could wear it so what’s my stress?  To them, as long as we delivered the clothes, all those stories of straight stitches and perfect zips were all just a bunch of grammar.

So what was the “real” implication or opportunity cost of their bad work and my commission payment?  

Simple!  All my personal hours which could have been better spent on more productive work, marketing or simply relaxing was spent working late into the night unpicking bad stitching and zips and repeating the clothes.  This also meant I was burning more of my resources, mostly my fuel, redoing work that should have been delivered.  So the payment to the tailors and the petrol burnt earlier that day was a total waste of my money!  I might as well have have fired them and sewn the clothes from scratch.  

SO when this didn’t work, I switched to salary payments.


And yes!  The image pretty much captured how I felt at the end of every month when I started salary payments.  I faced a different kind of headache.  Well I must say the quality of work was a bit better… and yes the “bit better” in the tiniest text possible is intentional.  The work was better but blimey…  short of stopping work and snoring right at the machine… each garment took at least 3 days to complete… some a week!  It was just ridiculous!  

To them, well… she wants good work, we’ll spend 3 days giving her what she wants.  After all we get paid at the end of every month.  But guess who was incurring all the costs!  The costs of delayed delivery to the client, disappointments, the costs of petrol, the salary payments and of course, not mentioning the opportunity costs.  So I traded a bad situation for another one.

BUT one thing I must say was at least, I didn’t have to unpick and redo the clothes as much which was better but I had to sit and think about which option worked better for me.

Eventually, I settled for the salary payment.  Only later when I stopped sewing for people did I realise that it should have been a blend of both… i.e. a basic salary which would ensure you don’t cry to the bank at the end of every month and some commission as a reward for good work.  And I tried it and it worked for the few jobs I did.

Shame I had to learn this the hard way…

Since then, I have advised people to opt for a bit of both.  Though some ask me for actual figures, truth is, it really is difficult to say since we do not have a standard pay structure in the industry.  But whatever system you choose needs to be based on an agreement which the employee will sign before s/he commences work.

For example, when you employ a machinist, you can agree on a certain figure say N30,000 but split the N30,000 into 2 parts – a basic say N20,000 monthly pay and the additional N10,000 spread over the number of days.  If you expect him/her to complete a garment in a day, he loses that portion of the extra N10,000.  That way, you don’t feel cheated, and he works hard to complete the work so he gets the extra N10k.  BUT note that late-coming should come out of the N20k basic because there is no reason why s/he should come late to work.

It might be easier said than done but when I tried it, it worked and I was able to breathe easier.

Truth is, the subject of dealing with employees and salary payments is a tough one, and you will constantly be faced with the scenario below:

http://www.businesscartoonshop.com/media/catalog/product/cache/1/image/350×350/185c2993af677842ae94e5dda12f0e6e/t/h/this_is_file_name_2767.jpg


…but you ultimately have to decide which option works for you.

Before I sign off, I’d like to address the issue of “Oga ta, oga o ta, ise alaru a pe”.  The first time I heard this phrase, I had no clue what it meant until my assistant explained it to me.  To those who do not speak Yoruba, it basically means “either the business makes money or not, the employee gets paid”.   The implication of this statement?  Well, it simply means if there is no business, the employee does not get paid.

I hear some designers have this policy with some of their workers.  Personally, I think this is pretty unfair if the machinist is not involved in marketing or sourcing for work.  I know that I personally will never agree to these terms if getting the business in is not part of my job description….which I guess would explain why those who include this in their policies will have issues with their machinists leaving.

For me, I have found that salary payments make me work harder when I know people are dependent on me at the end of the month to feed their families and pay their bills.  It challenges me to get my act together because I now I have to pay salaries.  Granted at the end of the month they are smiling to the bank and I am crying to the bank, but at least it forces me to work harder and hustle, even if for nothing else, to pay my staff.

Honestly, designers should not make their employees suffer or put them on a commission payment simply because it minimises their risk.  If you cannot afford to keep someone on permanently due to shortfalls in revenue, then please vary their employment terms and make them come in once or twice a week.  They lose out both ways if they have to come to work and yet don’t get paid because you haven’t done the needful.  And honestly, they will keep leaving or even opt for other production units.

And please respect your staff.  You cannot deduct their money or not pay them for unfinished work if they spent half of their day washing your clothes or picking your child up from school.  I have heard some designers do this and I am completely shocked!  There really should be a distinction between work and your personal errands.  And if you merge the 2, then please put them on a salary.  You really can’t eat your cake and have it!

tip


POST UPDATE:


So when I revisited the subject of starting a production unit for ready to wear designers, Garment Production House, I decided on, not only a monthly salary, but also getting accommodation for my staff not too far away. Yes it still has its challenges but here are 2 things I do that perhaps help you as well save some money in the event of the tailor leaving unceremoniously.


1.  During the interview process, I inform them that for the first 3 months I will deduct a certain amount of their salary.  If they stay for one year, they get it back in full, if they leave they forfeit it.  Has it helped?  In a way.  Those who left during the year (and I did have some people leave), forfeited the amount and honestly, I did not feel as burnt.  At least there was some financial savings to me.


2.  I have recently implemented a policy that everyone in the production house bears the costs of someone's error or lateness.  This refers to unpicking clothes, not our own set deadlines, etc.  At the end of the month I take out these amount which also results to some form of cost savings.  Truth be told, I don't deduct as much as I should because really, these people have families but I deduct just enough for them to feel the pinch and it seems to work.  Plus now that everyone's pay is deducted, they all now act as a check on each other to minimize errors. 


Great!  That’s all I have to say.  Hope this helped.  Let me know what you think in the comments section.

Recommended Resources

A Passionate Plea to Fashion Designers Part 1

A Passionate Plea to Fashion Designers Part 2

Growth Tip: Outsource to grow your fashion business

About Me

Tope Williams-Adewunmi

Tope Williams-Adewunmi

A fashion entrepreneur passionate giving power through fashion

by sharing knowledge guaranteed to help fashion lovers

turn their love for fashion into a viable business.

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