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Bottom line and top line. Did you know that these two “lines” determine your pay? Whether you realize it or not, your organization knows which “line” you contribute to and assigns a value in the form of a wage. If you know how you contribute to the top line or bottom line, you will know how you can increase your value (and income!) wherever you work!
Let me explain those two important terms. The “top line” refers to the very top line of your organization’s financial statement. On that statement, the very top show how much money a company brings in. This income is before all expenses. If you are contributing to the top line of your company, that means the work you do brings in new business or revenue to the organization.
For almost all organizations, the people who make the most money are the ones who contribute the most to the top line. Growth is valuable to organizations. No one wants to sit still or go backwards. And so, a primary focus for nearly all organizations, nonprofit and for profit alike, is to grow their top line, or to increase the amount of revenue the organization is generating. Because this is valuable, companies are willing to exchange more money for increased revenue.
The bottom line is the profit of an organization. For non-profit organizations, they’ll refer to the remaining money as a surplus. Below the top line on a financial statement, an organization has expenses. These expenses range anywhere from salaries, to research and development, to technology cost or even rent for office space. After all of the expenses are subtracted from the total revenue, or the top line, you’re left with your bottom line, your profit or surplus.
Individuals who help create efficiencies within the business can often contribute positively to the bottom line. By making work, processes, and systems more efficient, the organization is able to spend less, thereby increasing their profit or surplus.
Is your work positively contributing to the bottom line or the top line of your organization?
If you can’t answer that question, you may be in the “messy middle.” If your work isn’t specifically increasing income or reducing costs, then your work is considered an “expense” to your employer. There is nothing wrong with being in the “middle” of the financial statement. However, it is in the messy middle that people feel trapped.
People in the middle are paid on a “market rate” basis. In other words, you get paid based on what other people in your position would get paid. This may sound ok until you try to increase your income. It becomes next to impossible.
Next week, I will discuss how to get out of the messy middle rat race that has caused so many people to settle for “market rate” wages. If you want to be paid based on your value, then I will teach you how to move towards contributing towards the top line or the bottom line so you can be paid far beyond “market rate” wages.
Zach Santmier is the owner of Trumble Agency, Inc. and the author of the personal financial course, Increase. He focuses on helping families escape paycheck to paycheck living so they can freely pursue their ideal future.
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