How Much Should Your Business Pay You?
Are you bringing in enough revenue to pay yourself the salary you need?
When sitting with a business owner, they often tell me they're not paying themselves as much as they like.
Or worse, they're not paying themselves as much as they need.
It's easy to fall into the trap of sacrificing our paycheck for the good of the business. Only pulling money out to cover the mortgage or a weekly grocery trip, leaving the rest to cover the day-to-day expenses of the company.
This often goes hand in hand with the idea that "Someday the business will be stable enough to pay me more."
Unfortunately we learn (often too late) that this cycle doesn't break itself. In fact, it gets harder to undo as the business grows.
If you're struggling to pay yourself consistently, or are unsure of how much you need to pay yourself a decent paycheck, the best thing to do is work backward.
Start with your personal budget. List all of your expenses in a "bare-bones" budget. How much do you need to keep a roof over your head and food on the table?
Then create an "ideal" budget filled with your lifestyle items. What are the things you normally pay for in a month? How much do you need for restaurants or kids sports?
Once you pinpoint these numbers, you can work backward into your business. How much revenue does your company earn? What percentage of that revenue would you need to meet the ideal lifestyle budget?
Begin setting that percentage aside each time you make a sale or a client pays you. This will help level out your paychecks and allow you to pay yourself on a consistent basis.
If your revenue isn't large enough, or your expenses are too high, then you might need to stick to the bare bones budget until you can get your company into a financially healthier state.
Need help increasing your pay and decreasing expenses? That's exactly what I do! Click here to book a free coaching session. I'll show you exactly how you can increase your paychecks while growing your business.
Most business owners struggle with managing their money, resulting in small paychecks for themselves. At Craig Dacy Financial Coaching, we help make managing your money simple. That way you can pay yourself what you want, when you want it.