So you saved up and started out on your own. Being your own boss and creating livelihood for a few others can be as rewarding financially as it is to the conscience. But in taking care of the team and the operations of your spanking new business, forget not yourself!
Here’s why paying yourself right from the start is important:
1. Lean Operations:
Having a line item in your accounts for the founder’s salary right from the start helps you plan for overheads and the necessary revenue to sustain the business. You end up charging significantly low to attract customers, but eventually you are trapped in your own maze – you can’t raise the prices of the quality you deliver!
2. Because You’re Worth It:
If you’ve started out after many years of experience and a great employee track record, then your experience and exposure count for a lot more than something. While it’s noble to let go of your own share of your enterprise’s progress, depriving yourself of that monthly reward can eventually sap you of your spirit.
3. Clean Financial Statements:
Intend to approach investors or a lending institution for a loan? One of the key entries investors especially want to see is how much the CEO earns. Financial institutions also examine the financial statements for the CEO’s pay package. On finding it absent, queries are raised and that road seldom leads anywhere near the path of success.
4. Time Value of Money:
Your qualifications, experience, and prowess are brought to use in your business to grow it and make it profitable by generating revenue. All of this takes time, and that time, literally, has a metre attached to it when you’re spending it growing your business. If nothing else, it is this monetary value that you need to attach to your time and pay yourself appropriately.
5. Show Commitment Paying yourself:
Even if to reinvest the profit back in your business as additional capital – is indicative of a high degree of commitment to grow it. When you steadily draw sustenance from the start-up, you also realise that as its brainchild, you are responsible to keep the machines oiled and running to keep you and your team afloat. It is understandable that some of you need to run lean operations in your startup at the beginning. But if you’ve earned a salary in the past, that too for long enough, then the habit is hard to abandon. But we pursue business to make money – most importantly of all, for ourselves. Paying yourself even a small sum on a monthly basis will boost your confidence to set new milestones and reach new heights.