My Rat Race

Working for a Cash Flow Company

I currently work for a company that is based on cash flow. This company is one of the biggest website design and development companies with their own website directories designed for Doctors, Dentist and Lawyers whose clientele are all over the United States and has branched out already to Canada, South America, Europe and Australia. This company is a cash flow company and did not start out with big multi-million investments. It was all a smart apartment based start-up with a few employees that grew into two large warehouse type buildings with over 170 total employees. In the company’s presidential speech, that he gives out annually, he did explain the situation of the company being a cash flow company. Despite the large growth and many employees that started very small, the company is a cash flow company that generates positive cash flow so all employees salaries are 100% dependent on the expected collectibles for every month. Any slight delay in client payments may seem to be a delay in salaries as well. For some, this s a suicidal move for the conservative businessman. But I can see that the company president is indeed somewhat that way. And as some believe that people that have a bit radical business moves are either the ones that are doing it wrong, or are the ones that will make it big time with giant leaps. While the conservatives may start earning little by little making sure of every move, they grow slowly. And the radical business movers that make it big are the ones with very good decision making and has a good understanding of the market. They may have some kind of Machiavellian approach sometimes that they can sacrifice some matters for the greater good.

The company is known to not retain employees that well even if the number of employees is growing over time. People come and go, and on my rough estimate, they stay for at least 2 years and leave. One reason is the employees are not really the highest paid in the industry. As I can understand why, being this cash flow-based company, they really can’t pay higher that much. Now that the sales people are selling a lot, and the production is moving slow, this causes backorders and the solution they see is more people in production. But since it is a cash flow company, money-in, money-out, they keep salaries conservative at the minimum possible. They give raises little by little just trying to keep employees there but once the employees bid salary goes beyond their threshold limit, they won’t give it, only if they see you really exceed in your job performance and giving raises based on time only, by length of work, they won’t really give much. Which I can see is the wise move of the people in authority in setting up the rules. If many employees complain saying that the company pays so low, and this other company where employees do the same thing pay higher, they often leave. And that is where the Machiavellian principles come in and so yes, they that person go if they resign, and just let new employees willing to stay at a cheaper rate. There will always be someone willing to stay for a cheaper price, and those that will leave right away that cannot get a raise knowing that there is another company out there willing to pay more. This company where I work just does not have that investor capital that serves as a buffer to pay at higher salaries, and does not have that room for error that the collectibles are very important and any delay will cause disaster in the payroll.

Running a Cash Flow Company

I run my own business too. Web Hosting, Web Design, Web Development, Domain Registration and Search Engine Optimization (SEO) are my services. The high paying one-time-payment services are Web Design, Web Development and SEO but are very time consuming. The low paying with many competitors in a price war, are Web Hosting and Web Development, but these are passive income generators. You nearly spend no time on it once the system is setup. The time you spend are on keeping the server running 100% of the time with no down time, but the amount of work in doing that does not differ for handling 1 hosting client and handling 1000 hosting clients. The more clients you get, the more passive income you get. So I try to minimize Web Design, Web Development and SEO clients and concentrate on Web Hosting and Domain Registrations. In 2004 I had about 30 web hosting clients, and by the end of 2005 it was 100 web hosting clients and I targeted 200 by the end of 2006. But it is only May 2006 and I already have more than 200 clients, so by the end of 2006 I now have a new target of 400 websites hosted on my server. Why the exponential growth? Simple, through customer referrals. The more customers, the more customer referrals so I am not the only salesman now. In effect, my clients are also my sales people.

My payables include everything needed to keep the websites up and running on the server, running a server at a datacenter that includes also labor of technical personnel that deals with everything from electrical power to leased lines. This is a monthly fee and with other payables that can be supported by the current amount of clients it is also a cash flow company. I run this business like a one-man-band, but I do have 1 all-around secretary that serves help in billing, accounting, customer support, and technical support, and my wife that helps as a PR person, sales and customer support, all technical matters is run by me, and started with nothing and nearly no invested capital at all. I also have no buffer money to pay my payable if ever something negative happens to my cash flow. And I accept payments online, and this causes some delay as payment gateways accept payments, detect fraud, transfers money to the bank, and bank gives some clearing time, before it can be used as money. And this delay can cause payables catching up with the collectible’s delay. And this is where salary from my job comes in, my salary is the buffer, but then again I personally also have family obligations to fulfill. Credit cards help and the worst case scenario which has happened for more than once since January 2006 was getting negative values in my bank account which are penalized for about $30 every time my checking account goes below $0. And my worst is paying this 3 times in one month, considering the increase in amount of gasoline prices, that money is very valuable.

Solving the Problem

Working for a higher paying company was my best solution at the moment, just to build up that emergency buffer without sacrificing my family obligations and adding a buffer to the transactions to avoid any supplier payment delays, and  I did a quick search on Craig’s List and asking all my former co-employees who now work elsewhere if they had job openings. I am currently earning $35,000/year and I have found a job on Craig’s List which I believe I am very much qualified willing to pay $60,000/year, so I submitted my application. As well as applied to companies my former co-workers work at. Unfortunately, the job post on Craig’s List did not get back to me, but for the new job I applied for, which I told them I was earning $38,000/year and wanted my salary to be $45,000/year, was granted and I will be working in that company in the next two weeks as I also submit my resignation for my last two weeks in the company where I work at now. Climbing the corporate ladder is not my idea of success, but these jobs will serve as good buffers to my cash flow problem and still being on track of my planned career path which is:

1. Generate more income from business.
2. When enough income is made to invest in stocks, I will invest in the gas/oil industry.
3. Income from gas/oil and still from business will be used for investing in real estate rental properties.
4. Income from all of these will be used to re-invest in more rental properties.
5. Will have the business managed by someone else on salary, or even sell the business and concentrate on investments.

This is my exit strategy from My Rat Race.