The meeting ends, the client signs and the company you’ve been working for since 2018 gets the million-dollar contract. Everyone is thrilled and your all-nighter pays off! The perk, a good old pat on the back of course, and you just might get to do the next pitch. And, at the end of the month, the same salary will arrive in your bank account.
💰Finished with this life?
💰 Refuse for this to be you ever again?
💰 The million dollars could have been yours!
Say it was, I mean, you did all of the work anyway and delivered that pitch like a freakin’ queen. What would you have done with that money?
That holiday (finally), paid off your debt, perhaps sorted out a wrinkle or two? The beauty of working for yourself is knowing that the money you make is yours, and yours alone.
The money you make is, however, also required to cover the office that you need. Unless you’re working from home of course in which case you need a more comfortable chair. You also need loads more plants to create a more productive space. Don’t forget wifi! A printer, paper, ink. Stationary? Your brand collateral – you aren’t just going to have one client, get pitching girl, time is money!
Now that we have the expenses out the way, and Monday to Friday is full to the brim, where will your spending money come from? Seeing as it’s no longer about waiting for your boss to release payment.
This is where it gets interesting. When it comes to being an entrepreneur, how do you pay yourself a salary?
Tip 1: Only Pay Yourself From Your Profits – Not Your Entire Revenue
The money coming in is not all profit. Get a good system in place to keep track of your taxes, payroll (if you have other people working for you), resources and overheads. Once you have removed all of your expenses, you will have an idea of what is left. You can then draw a salary from these profits.
Tip 2: Consider Having a Zero Balance in Your First Year
Your first year of business can be tough. You may need to consider not turning over a profit so that you can still take out money for yourself. This means you will break even. There are benefits to this that will pay off in the long run.
If you try to keep money in your business so that it can make a profit, you may end up causing yourself personal stress which will affect your productivity and business decisions. Make sure you are living comfortably to avoid additional problems where possible.
Tip 3: Stay Consistent When Paying Yourself
Don’t dip into your business account when there is something you need. Actually, add yourself to the payroll and get a salary on a monthly basis as though you worked for the company. Build this into your business plan from day one, with increases as you grow.
This way, you will get used to that amount of money being removed from your overall revenue each month.
Tip 4: Let Your Salary Grow With Your Business
Your salary will depend on the success of your business. As logic has it, the more revenue your business brings in, the higher your salary will be. It makes sense then, early on and for a while after, to not pay yourself too much until your business has a stable revenue stream and consistent growth. Once you are seeing growth in profits – you can reward yourself for your success with an increase.
Tip 5: When Not To Pay Yourself
If your business is going through a really tough time financially. Unlike in tip 2 where your business is just lifting off. You shouldn’t pay yourself a salary if you are not actually making any money at all. Money that is made should be used to pay staff or should go straight back into the business until revenue stabilises again.
There is a fine line between being stingy and being Sofia Vergara when it comes to paying yourself a salary as an entrepreneur. It comes down to what your business really needs (which is you), so what is going to ultimately sustain you to be able to keep making your business dreams come true.