As many small business owners find out the hard way, making sure of a decent salary for the number of hours you put in can sometimes seem like an impossible goal. Even once you start turning a decent profit (which can take a while), the chances are that you’ll still feel the need to prioritize things like employee payroll and stock reinvestment. And, as you do that, your money management may often end up coming last.
Luckily, as the famous entrepreneurs who also started out small prove, this negative salary cycle is certainly not representative of the earning potential this opportunity provides overall. However, far from simply slipping into place, you may want to take the following proactive steps to make sure that your salary as a small business owner is truly worth your while.
Step #1: Expect to Play the Long Game
The early days of any small business can be financially volatile, and rely on substantial savings, small business loans, and a whole load of crossed fingers. There’s certainly little chance that you’ll be able to pay yourself big bucks up front, meaning that it’s always worth keeping aside personal savings that are substantial enough to last you at least six months of small business buildup, That way, while you may need to skim some profits to pay for bills, mortgage, etc., you won’t even need to rock the early profitability boat in order to be financially comfortable.
Step #2: Keep Your Salary as Modest as You Can for as Long as You Can
Even once profits start rolling, experts like Whitney Delaney recommend keeping your salary as modest as you can. While this modesty should be in context, generally limiting your salary to 50% of profits after employee payroll is the best way to ensure that you keep positive investment cycles rolling while also living a comfortable life. This might not necessarily put you in the billionaire category straight away but, as your profits increase, you should ultimately find yourself earning big without compromise.
Step #3: Adjust Hours, Not Income
It’s also worth noting that ensuring a ‘decent’ salary as a business owner is all about adjusting your hours before your income. After all, if you’re working 100 hours every week, even a six-figure salary is unlikely to be representative. Hence, making sure that you’re paid well for what you do means capping your working hours at a reasonable rate to make that 50% limit viable. Obviously, you can adjust this as you take on more clients and naturally need to spend more time at your desk, but in a general sense, writing to-do lists and understanding how much work you should reasonably put into projects can make a huge difference for job satisfaction overall.
Putting your employees and products ahead of your financial needs is a sure sign of a small business owner that’s set to go far. Just make sure that you implement these salary pointers to prevent that from unraveling your efforts, or incentive, to take your business to the next level.