By: Sarah Dew Whitsett
Today I wanted to talk about something that has come up fairly often over the last few months with some of our new clients. How much are you paying yourself and is it enough?
Paying yourself is essential. When you aren’t making enough money to support your life it gets stressful. Not only are you focused on your business but your focus is pulled to your welfare. It gets hard to keep your eye on the ball and continue to make sound business decisions from a place of worry.
Ideally, you will pay yourself enough to cover your expenses and live comfortably without stressing about how you are going to pay for groceries.
As the business owner, you work hard and are more than likely putting more time and energy into the running of the business than anyone else on your team. Make sure you are compensating yourself adequately.
It is very common to look at a business owners numbers and see all of their team, contractors, and coaches being paid regularly and well. When I look across at the line item for the owner’s compensation I see irregular payments, many times none at all, or minimal amounts. FRACTIONS of what they are paying their employees. And these folks have large revenue streams.
What’s that you say? If I had the money I would be paying myself, I just don’t have it.
One of my favorite things to do is to help people find money in their business. If you know how to make money and are doing it consistently, it comes down to expenses.
First, let’s talk about how to figure out how much to pay yourself.
It’s Revenue – expenses (all of them) – profit (this is not money for you, it’s to reinvest in your company) = a reasonable amount to start paying yourself.
Once you have determined what your number is then decide: is this comfortable? If the answer is no, the first place to looks is expenses. Be ruthless. What can you get rid of that is not 100% necessary. To channel Marie Kondo, what expenses are you paying that do not spark joy? Get rid of them. Many times this simple action will free up enough money for people to regularly and consistently pay themselves a salary that is perfect for their lifestyle.
Still, find that it’s not enough? Awesome. Now we get to talk about increasing your revenue. But that is for another day.
Until then I would love to hear where you landed with your expenses. Don’t forget your business WANTS to pay you. You are its star player, and it wants you to be safe and secure so you can keep growing it.
Sarah is cofounder and strategist at Las Peregrinas, a creative and consulting agency. She’s all action and no beating around the bush. A former intensive care unit nurse, if you look closely, you’ll see her continuing to run triage in her work with clients now. It’s in her bones. Sarah’s ears are tuned to the efficient and effective use of time, money, and effort, and which actions need to be taken in which order to get the result you want.
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