How to Pay Yourself: A Guide for Small Business Owners
“I can put it off.”
“One day I’ll be making bank… but for now, I’ll pinch pennies.”
“It won’t be for long.”
If you’ve ever thought this way, you’re in danger. Why? Business owners who are not well compensated (thinking it isn’t a priority), burn out FAST!
Yes, when you’re starting a business you need to be thrifty, wise, frugal, and somewhat “cheap”. But no, when you’re running a business, you should not cut your pay!
If you neglect to pay yourself, your business will fail in the long-run.
Check out this video to get the logic behind paying yourself as a business owner.
It isn’t helpful to think you should not get paid now. To ensure business success, make a plan to pay yourself. Here are some ways to make that possible:
1. Create a Pay Structure
Decide how and when to get paid, whether through a fixed salary or periodic distributions. A clear pay structure ensures consistent personal income.
2. Set Aside a Percentage
Allocate a portion of profits, typically around 10%, for personal compensation. Then, adjust this percentage based on the current business financial health.
3. Prioritize Financial Stability
Ensure personal compensation to avoid financial stress and burnout. This stability supports both your personal well-being and business sustainability.
As the owner of the business, paying yourself isn’t just about taking home a steady paycheck. Yes, the financial challenges you face are unique but having an irregular income can be quite stressful.
Avoid the burn-out and get paid consistently especially when you are hands-on. If you can support yourself, you can sustain the business more. Paying yourself is key to long-term success.
Subscribe to our YouTube channel to keep updated on:
- Small business management tips
- Strategic business startup advice
- Strong financial-first planning
