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As a small business owner, figuring out how to pay yourself can be a daunting task.
What you pay yourself isn’t 100% of everything you make, but it isn’t 0% either. You would never expect someone to work for you for free, so you should not be working for free either! You wouldn’t expect your employees to work without compensation, so why should you?
While reinvesting 100% of all your profits to fuel your growth sounds great, this will only work for a short while. Now, I’m a proponent of this, but you need to give yourself a deadline for a paycheck.
Don’t wait until this indefinite time in the future to pay yourself as a business owner. Make paying yourself a priority. Be organized enough in your finances to set aside enough to pay yourself and reinvest. Paying yourself needs to be a part of your larger financial plan. No matter how much money the business is making, the amount you’re making as a business owner will not change until you get organized with your finances and get a plan.
But you may be saying “But Marguerite, I make enough to pay myself and reinvest”. If you’re feeling like you can’t take money out because you aren’t making enough, you have to find a middle ground. You do not want to drain your account, but having money to invest in yourself and your business is key to building a sustainable business that’s positioned to flourish.
Now I understand maybe you don’t have enough for a full-time income. But you HAVE to pay yourself something.
Let’s say you worked at a corporation, your manager isn’t going to say hey we had a good month in sales, let’s give you a bonus. No, that’s not how it works. If you have a good month, slow months happen too, so you’d wait to see how things pan out over time. Instead, you’d say “Hey we had a good year, let’s get you a year-end bonus”. You get a steady paycheck throughout the year, but that “bonus” you’d get would be based on your yearly performance.
Listen to the full episode to understand how to pay yourself as a business owner and learn how to “double-dip” in paying yourself…
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