Starting A Business: Paying Yourself A Wage
When you consider the success of a business, there are a lot of factors to take into account.
You need to think about whether you can:
- Get a business up and running
- Bring customers in
- Pay your expenses
- Pay yourself a wage
- Ensure positive cash flow
- Make a profit
But sometimes the paying of wages can get pushed to the back burner while entrepreneurs focus on paying their expenses.
You are worth it
Creatives, in particular, have this notion that they need to suffer for their art. They are sometimes afraid to charge for their work because they believe that a) people will not pay it, and b) it is not worth the money they are asking. But that couldn’t be further from the truth.
Be your best self
The truth of the matter is that if you are unable to pay yourself a wage, then you aren’t able to put your best self into your work. Your focus will remain on the continuous struggle to pay your bills. If you can meet your bills without constant worry, then you can concentrate on creating your best work. This will also give you extra time to source individuals who will be more than happy to pay a suitable price for your products or services.
If money is tight at first, you will need to pay yourself the minimum amount to get by. Start with just enough to pay your expenses and the necessities that you need each day plus a little extra. To work out your budget in more detail, visit Money Smart’s budget planner. This will give you a better idea of where your money is going. It will also allow you to think about what expenses must be paid on a daily, weekly and monthly basis.
Increase your wage as your business grows
As soon as your customer base grows and you can pay your business expenses comfortably, make it a priority to increase your wage. Make it a salary which is more representative of your worth. A wage that allows you to buy more clothes, go out for dinner more often and save up for that much-needed holiday. Build it up incrementally if necessary. Your wage needs to be over and above the money that is required to purchase more business supplies to grow your business and produce your work.
Keep business and personal expenses separate
Once you have set money aside to pay your bills, you must ensure that you keep your business and personal expenses separately. You must not continuously dip into your petty cash to buy your groceries. If it is becoming a constant in your life, then you must look to increase your wage, so you always have enough money on hand. Mixing the two can become messy, particularly at tax time. Always keep them separate where possible. On the off-chance, you do need to borrow from the account, it is imperative you pay it back as soon as possible to keep your books balanced.
You owe it to your business and to that of your customers to be able to support yourself in business. Remember your business is not successful unless it can afford to support itself and your employees. That includes any or all benefits that need to be paid as well as all tax obligations. A wage is not a luxury – it is a necessity. If your business is making a profit, then a certain amount of that money must be paid to you a wage. You would not consider working for someone else and not get paid unless you are opting to do it on a volunteer basis, so why do it yourself. If you want your business to be successful in the long-term and be fully sustainable for its employees, then paying yourself regularly and fairly makes perfect business sense.