Recently I’ve been asked career advice by both recent college graduates and experienced workers still in the early stages of their professional life. Since I have had broad experience in different types of companies and roles, these young guns are either seeking insights into a specific industry (or company) or starting their own venture. Almost every one of them is very ambitious and is trying to find a way to make a lot more money than they do today. To frame the conversation, I begin the discussion with a simple framework which postulates that there are basically four routes to make a lot of money in your business career. Here are the four options I discuss and the implications for each one:
1. Work at established companies and work your way to executive level roles
While this may sound a little old school and take several years, working your way up the corporate ladder is still a great way to make a lot of money. Note that I used the word ‘companies’ not ‘company’. This does not in any way endorse or recommend working at a single company for your entire career (although if you find the right fit that can help accelerate your progression to the executive ranks). It just means that working in established companies gives you the opportunity to be financially rewarded as you climb towards the top. Staying focused on a particular industry like packaged goods, technology, defense, financial services etc. can lead you to the executive level faster . All you need to do is read a public company’s annual report to see the kinds of compensation packages the executive team earns.
As I compare myself to my peers with whom I started my career, so many of them are now VP level or higher at well known companies (such as GE, Pepsi, Kraft and Viacom) with tremendous compensation packages. The key is that they became functional or business experts and either stayed in one industry or had transferable skills to adjacent industries. Most importantly, they stuck with their career path and did not jump roles at the drop of a hat. Instead, at one point in their career they stayed at a single organization for many years, climbing the ranks to reach a level with large responsibility and scope. This dedication and commitment pays off if you are a solid performer throughout your career. Even average to slightly above average performers tend to keep climbing over the course of several years as they become expert specialists in their function for their industry.
2. Work as a professional service provider
Examples of these would be as a management consultant, investment banker, lawyer, accountant, real estate agent, doctor etc. In these types of professional services roles, if you are good at what you do and work very hard you will get paid very well. The tradeoff is of course the lifestyle you lead and the dues you need to pay when you are first starting out. Most of these roles require very long hours each week and many require travel. In addition, you typically start at the bottom of the organization and it typically take 7-10 years to achieve a level of success where you can finally have a some control over your work life and the financial rewards start to scale. On balance, if you are willing to put in the years and accept the lifestyle, this is probably one of the best risk/reward choices to make if you are focused on the financial benefits of your career choice.
I have several friends who are lawyers, management consultants and accountants who after many years working for companies like McKinsey, pwc or Accenture left to start their own firms. While it took time and persistence for their practices to take off, they now run successful firms of their own and are reaping the financial rewards.
3. Become truly world-class at something for which there is real market demand
This can be anything: a scientist, a mathematician, a public relation manager, a designer, a software developer, athlete etc. If you are one of the best in the world at something – you can make a lot of money either working for a company that specifically needs your skills in order to succeed or creating your own invention that you can sell directly as a one-person company. You can also make additional income as a professional speaker or writing books in your field of expertise. The obvious challenge is you need to be truly world class at what you do, and typically this takes years and years of dedication and passion. And it is very possible that the financial reward will be uncertain until there is confirmation that there is indeed a market for your area of expertise or you are viewed as truly world-class. But once you are considered world class there are many ways to monetize your abilities.
4. Try being an entrepreneur.
As a rule of thumb this is the biggest risk, biggest reward option. There is a lot already written about what profile makes a good entrepreneur and various types of companies an entrepreneur can pursue (small business, franchise, tech startup etc.). Not everyone is cut out to be an entrepreneur based on personality, risk profile and skill set. Given the large standard deviation in possible outcomes and the commitment required to have a reasonable chance of success you really need to know if this path suits your competencies and mindset.
My general advice is to only pursue starting your own venture when you have some level of expertise in a specific area that can be applied to your venture. Really having some unique skill sets combined with understanding the market, customer need and how to solve them usually requires some deep knowledge of a function or domain. While there are some very notable exceptions (e.g. Mark Zuckerberg at Facebook), this is by far the exception and not the norm and experientially knowing how to solve a problem better than what already exists should be your starting point.
As I tell the folks I talk with, you don’t have to make a commitment to any of these options. You are not necessarily locked into any one, but there are tradeoffs as your career progresses and you close some doors to opportunities. You can still do quite well financially trying out two or three of these options, but in order to be on track to a certain level of expected wealth, picking a lane will enhance your chances. What is most important is that you understand the trade-offs for each one option.
About the Author: Ray Tenenbaum is the founder of Great Hires, a recruiting technology startup offering a mobile-first Candidate Selection platform for both candidates and hiring team success. Ray has previously spent half of his career building Silicon Valley startups such as Red Answers and Adify (later sold to Cox Media); the other half of his career was spent in marketing and leadership roles at enterprise organizations including Procter & Gamble, Kraft, Booz & Co. and Intuit. Ray holds an MBA from the University of Michigan as well as a bachelor’s in chemical engineering from McGill University.