Paying yourself as an entrepreneur
If you are an entrepreneur that finds yourself taking random amounts at random times from your business to pay your personal expenses and not having any consistency to how, when or how much you get paid, listen up!
I think it is SO very important to pay yourself from your business because if not, you will end up resenting it. (Speaking from experience here.)
I had a business that generated almost a MILLION dollars in revenue, and I wasn't able to take a paycheck for 10 months! I was near personal and business bankruptcy and home life was pretty bad. I can literally remember standing in line at the grocery store, praying that the check I had sent the electric company to avoid shut off hadn't cleared yet so I could buy the measly $20 of groceries I had in my basket so I could feed my kids that weekend. Clear as day, I remember telling myself
Well, if our power gets shut off, I can go stay at my mom's for the weekend and tell the kids it is a sleepover and I can find someway to scrounge up some money over the weekend to make sure the electric check clears.
I am truly not sure how much lower I could have gotten at that time in my life without becoming homeless. That also happened to be the moment I KNEW things had to change. I could not continue to prioritize everything in my business above me, heck above my family.
I can be a little rash in my decisions at times and I was with this one, but it was the best thing that happened. I walked into my office the next day, locked myself in my office, told my entire staff of 13 people I would be unavailable all day and told myself I was not coming out until I had a solution. That afternoon 7 of my 13 employees were laid off and it broke my heart, but I knew it was time to put my paycheck as a priority.
Now, that story may not be where you are, but I wanted to share it to express how vitally important it is that your check is a top priority in your business.
So how do you start paying yourself regularly if you never have?
It all starts with knowing your numbers. You need to know how much you are bringing in (revenue) and how much you are spending in expenses. You then need to get honest with yourself and decide if everything you are spending on is necessary. If it is not necessary, then is it beneficial? (Does it generate income that you can track an ROI on?) If not, then you need to cut it yesterday.
Then you need to create a budget for your business to really lay out how you can earn and spend with your pay built in as an ongoing expense.
Then determine how often you need paid. I like twice a month because it makes personal budgeting and finance management so much easier as well.
Now how do you pay yourself is almost always the first question I get?
You don't just use your business bank account to pay for personal expenses and say you paid yourself. That is called comingling and can be a nightmare for entrepreneurs.
What you do is transfer money to your personal account from your business account, or go old school and write yourself a physical check.
If you feel like you could use some support figuring out these numbers and truly determining what your business can afford to pay you, you can schedule a call with me here. I am an entrepreneur financial coach and I work with entrepreneurs every single day to help them understand the money in their business and home.
Taking your first actual check is so exciting, but it is even better when you look back after 3 months and realize you have done it consistently for that time and how much better your overall financial situation is as a result of that.