5 Things You Need To Do Before You Start Paying Yourself As A Business Owner
Summary: You're running a business, and that's AMAZING! But...are you paying yourself what you deserve?
Many small business owners don’t pay themselves because they are afraid of running out of money. They worry that if they take any money out of their business, the company won’t have enough to survive. This fear keeps them from paying themselves what they deserve and limits the growth potential of their businesses.
If you want to change that without risking your financial stability or future success with your company, then listen in!
Here are the 5 best ways you can pay yourself as a business owner so that you feel more in control and confident about where your finances stand at all times while growing an even stronger company than ever before!
So, you're running a business. And it's been an amazing journey.
But somewhere toward the beginning, you made the choice not to pay yourself right away because you wanted to be able to reinvest the money you’ve back into the business.
This is completely understandable! I have clients coming to me saying the same exact thing all the time.
And as much as I’m proud of you for wanting to put your all into your business, it’s time to make a change. It’s time to start paying yourself more.
I know that, especially as women entrepreneurs, doing this is particularly difficult. We’re so often full of much more doubt than we are of confidence that we can actually pull this off. We experience internal turmoil over what amount is too much and how much we’re going to be able to give to other team members and put into other aspects of our business.
But we need to leave that uncertain, unforgiving, too-often selfless version of ourselves behind and start giving ourselves what we deserve. It’ll just take a little bit of navigating first.
And I have some tips and tricks to help you do just that.
Five Things You Need To Do Before You Start Paying Yourself As A Business Owner
1. Change your mindset.
Up until now, you've been last in line because you've actively chosen not to pay yourself.
This strategy is fine for a bit…and it can even be the smartest choice in certain situations. However, it shouldn't be the long-term practice. If you've gotten yourself into this habit where there's not enough leftover cash at the end of the day for you to pay yourself, it’s clear that some changes need to be made – particularly, changes in your mindset.
YOU have to be as equally important as everything else in your business because, chances are, your business can’t run without you. Once you’re able to view it in this way, paying yourself the money you need will become a lot easier on you mentally.
2. Good financial practice.
The best way to maintain good financial practice is to keep business, business, and personal stuff personal.
It’s true that you can write off some expenses in your business, but this is a conversation you need to be having with your accountant. I often see that a business owner will be a bit ‘loosey-goosey’ in this area and wind up “perking” the business to death. So, in effect, they do end up paying themselves, but not in the ways that really matter. And, sometimes, it can end up coming back to bite you in the butt.
Instead of opting to go down that route, you can work to rectify your expenditures with your accountant BEFORE the end of the year so that you're taking advantage of your tax benefits in all the right ways.
3. Have a specific number in mind.
The first step to getting the salary you want? Knowing what that salary IS to begin with!
There’s no point in getting to the place where you’re ready to pay yourself what you want if you don’t, well, know what it is that you want!
Take some time to visualize the number that you’re shooting for so that when the time comes to pull the trigger on everything you’ve worked toward, you know exactly what to ask for.
4. Design a plan.
Working with a mentor or an advisor who's experienced in putting together compensation plans is key!
In addition to providing insights on how to lead others and take vital steps in growing your business, they can also help you put together a plan that ends with YOU finally getting what you want and need out of this venture.
They’ll show you how to analyze key metrics, put together some critical financial frameworks, and, most importantly, be there to act as a voice of reason regarding your salary.
They can be there to encourage you to take the money you’ve earned and explain to you WHY you should.
Sometimes, you just need another voice in the back of your head besides your own. One that lifts you up with confidence rather than tears you down in fear.
5. Build a Reserve.
You can plan and prepare and troubleshoot all you want, but sometimes things happen in business that are out of our control (...Covid-19 did a great job of teaching us that).
It is for this reason that a reserve is not a want, but a need.
A reserve is your safety net.
When you have a source of money set aside, you can continue to pay yourself even during the lower-earning months. It ultimately allows you to make different choices that you wouldn’t be able to make otherwise.
Having three to six months' reserve is a great starting place. It's worth finding out what that reserve needs for your business because that magic number differs on a case to case basis.
Pro tip: Start building an emergency fund for your business AND for yourself as you finally begin to take in some personal earnings. This will allow you more reassurance that you actually ARE in a place to continue paying yourself without it adversely affecting your business (or your life if you need to make changes down the road).
You CAN start paying yourself and, in fact, YOU SHOULD.
With some shifts in perspective, goal-setting, and strategic planning, you can make it happen in a way that leaves you feeling confident and validated in all your hard work.
I recognize, however, that getting rid of years and years of ingrained uncertainty and self-doubt is no easy feat. Which is why my team here at YBR wants to be here to help in any way we can!
Are you ready to FINALLY create a strategy that brings in repeat customers and residual income WITHOUT piling on dreaded client acquisition costs!
Learn how how to inside of my FREE $10K in 3 Days Challenge to plug your money leaks, make smart money moves and boost your profitability fast!
Go here now to get started: https://www.yourbizrules.com/profitablegrowthchallenge/