3 Steps to Start Paying Yourself from the BeginningRuchi Pinniger
As a founder and a financial mentor to small business owners. One of those questions I hear time and time again is “Do you start paying yourself from the beginning?”
I always reply with a bold, “YES”! As soon as you are profitable and have cash flow available, a piece of that pie belongs to you.
Though that may sound obvious this is actually a very common struggle among other business owners.
Would you believe that according to the 2016 American Express OPEN Small Business Monitor, only 51% of business owners pay themselves a salary? If you are part of the other 49% you are not alone. Keep reading for some helpful tips.
First, it’s important to be excited about the energy that surrounds the feeling of paying yourself.
This doesn’t have to be a scary or intimidating process. You can even make it fun! Enjoy watching your business grow and soon you will be able to give yourself regular raises. The possibilities are endless when you’re in business with yourself. Remember why you started out on this journey!
On the contrary, when we undercharge or underpay ourselves it leads to burnout, resentment, and general unhappiness (and we know that is never sustainable for the long term). Keep continuing that momentum and feel proud about it. Don’t put yourself last. By doing this you are prioritizing long-term prosperity and stepping deeper into true financial freedom.
Don’t put yourself last.
Now, once you have your mindset recalibrated, how do you take action? Here are some simple guidelines to help you start walking in the right direction.
Review your budget.
Take a deep dive and look at your monthly income and spending. Then, include your pay as a part of your monthly business budget and set up a payment plan. Think of yourself as an employee of your business. After all, you are!
Set goals and strategize.
A great place to start is being sure to separate your personal and business expenses to help determine a tangible salary. What would you pay yourself in this role? Is that sustainable based on your projected income? Once you align these things you will have a number to start working with.
Consider investing in financial support.
Investing in a financial planning tool, or real life person can be extremely beneficial to help throughout this process. It helps you stay organized, hold yourself accountable, and provide direct guidance in support of your goals. Even hiring a trusted accountant or advisor can help you identify areas where you can save (such as tax breaks) and then contribute to your future salary.
Next time you’re struggling over how much to pay yourself, remember this reasoning. Then break the process down into simple steps: review, strategize, and consider reaching out for financial support from an expert.