Do you know what your EQ is? Do you even know what an EQ is? I know that for many people, the term is a bit of a puzzle. So this article is going to explain what it is and how to figure out what yours is. Not knowing could be detrimental to YOUR home business.

Okay, so what exactly is EQ? Well, it stands for “Earning Quotient.” Great, so what exactly is an earning quotient? Well, it’s a measure of your actual earning level, potential or whatever you want to call it. It’s not a raw dollar number but more a measurement. It’s measured with the following formula.

EQ = D / H x R

Let’s take each of the variables one at a time.

D is the number of dollars you’re currently making per day in your home business. It’s not the number of dollars you WANT to make. That’s how we figure out our optimal EQ. No, this is the real dollar income on a daily basis. No cheating on this. In my case, it’s about $300 per day.

H is the number of actual hours that you work in a day. Most people who run their own home business work anywhere from 4 to 8 hours daily. At this stage of my life online, I work about an hour a day. That’s because most days I don’t work at all and on the few days I do work, it comes out to about 30 hours per month. So if you divide by 30 (an average month) that comes out to an hour a day.

R is the rate that you feel you are worth per each hour that you work. Where D is a real number, R can be any number that you like. But please keep it realistic. I feel, after over seven years of running my own home business that my time is worth at least $100 per hour.

If you plug in the values above, my EQ would be this:

EQ = 300/1 x 100

EQ = 30,000

Great, we have an EQ of 30,000. What does this mean? Is this a good or bad EQ?

Well to get an idea of whether or not this is a good or bad IQ, let’s compare it to somebody who makes $100 per day, feels there time is worth $20 per hour and works 4 hours a day at their home business. We could have the following equation.

EQ = 100/4 x 20

EQ = 500.

As you can see, this EQ is much lower than mine. The person makes less money, works more hours and their hourly worth is less.

If this person worked just one hour a day to make that $100, then their EQ would be 2,000, a little better. If they felt their hourly worth was $100 per hour, and worked just 1 hour a day, their EQ would be 10,000.

Ah, and therein lies the rub with this formula. Anybody can jack up their EQ by simply jacking up their hourly worth. And that’s fine, if you want to delude yourself. But if you want to get an accurate gauge of your EQ, use a number that is realistic for your years of experience.

For that, I have found these values to be pretty close.

First year of business, $20 per hour.
Second year of business $30 per hour.
Third year of business $50 per hour.
Fourth year of business $75 per hour
Fifth year of business and beyond $100 per hour.

To increase your rate after that, you will need to do a bit of outsourcing. The big boys have EPH of about $1,000 to $10,000 per hour worked. I don’t even want to know what Donald Trump’s EQ is.

To increase your EQ, you have to do one of three things…increase your dollars earned per day, decrease the number of hours worked per day while keeping the same income level, or raise your dollar worth per hour worked.

There you have it…what EQ is, how to calculate it and how to increase yours.

So, do you know what YOUR EQ is?

To YOUR Success,

Steven Wagenheim

Looking for a solid 4 step plan to building your own business…FREE? Pick up my free report at http://www.stevewagenheim.com/4steps.html and get started TODAY!