How Much Should You Earn as an Entrepreneur?4:55 AM
No employee you hire will work for free. Neither should you. Better, learn to set a fair salary and maximize the profits of your company. ...
No employee you hire will work for free. Neither should you. Better, learn to set a fair salary and maximize the profits of your company.
As the owner of a startup or growing business, it is tempting to reinvest every weight you gain in your operation. Some entrepreneurs go even further and do not pay themselves until they are in black numbers, which means they have returned their money to investors and have a financial cushion.
Being profitable is the goal of every business. To achieve this, many entrepreneurs make sacrifices, including a salary. You may not need to pay a significant amount in the first few years; However, at some point, you should receive a salary for the time and talent you bring to your own company.
Here are some reasons why:
Depriving yourself is counterproductiveNot having a pay means that nothing is coming into your account and, therefore, your personal finances could be affected if you live off your savings. While it is normal in the early stages of your business to refrain from a salary to help you grow, it is also reasonable that you begin to receive some of the profits when it starts to generate them.
Fair payment for honest workSome entrepreneurs pay a modest base salary and compensate by benefiting from a higher percentage of advantages. If you have investors or partners, this could be the justest agreement, because it inspires everyone to put their best efforts into the work. Because the better results are obtained, the greater the income and profits.
Your time is valuableEntrepreneurs usually account for obvious things, such as rent, telephone, the Internet, or office stationery, but they forget to include payment for their working hours. A good rule of thumb is to estimate how much your time would be worth (considering the market standard) and use the calculation as your base salary. In the start-up phase, this could represent a low wage; Although once you have monthly profits and your company is self-sustaining, you can pay more. Remember, no one works for free, and neither should you.
With or without investors, you must payDo not assume that your ancestors should receive their full pay before you can get a salary. If your business is already profitable, it is worth putting aside a percentage of the monthly earnings as your salary. Many investors are cautious about entrepreneurs who want to earn a generous salary from day one because they first want to prove that they are as much or more committed to investing and to the company. Abstaining from earning a salary in the initial phase until the business is profitable can be one of your expectations.
However, when you begin to move to more solid ground, most investors will agree that you are the first to receive a portion of the profits. Rule of thumb: pay yourself first each month.