Business owners can be prone to paying everyone and everything else, then checking what’s left in the kitty for themselves!
Yet as a business owner, it’s you who is running the business and taking the big risks, so it’s important to see yourself as deserving of compensation for your hard work.
The benefits of paying yourself
Paying yourself a reasonable and regular wage out of your business can:
- Give you an incentive to grow your business.
- Better enable you to save and invest.
- Encourage you to better manage your cashflow and finances.
- Enable you to create a clear line between business and personal expenditures.
Tips for paying yourself first
- Decide on a reasonable wage to meet your personal expenses and save for emergencies, holidays or towards retirement.
- Do a full review of your financial position over a period of time (two quarters for example).
- If it appears your business doesn’t have enough to cover your pay, consider where you could cut costs or increase your revenue.
If your business is in the start-up phase, you may need to accept a smaller wage for now. But in any case, make sure that paying yourself first is a priority in your business!