Do You Pay Yourself?
September 23rd, 2015 by Morna
Recently I attended a conference where I had a chance to talk with a number of different business owners, not all in creative fields. One of the topics that came up was the dreaded “F” word — finances. In fact, we heard an entire presentation geared to helping us understand financial terms and creating a dashboard so that we could look at our key indicators. Remember, if you do not measure, you cannot make changes, and that is why we need to track through those indicators.
One of the questions from the group was about paying yourself. When should you pay yourself? Should you just reinvest all the money in the business and not take any out as a salary? Should you wait until the end of the year and then see if anything is left? Should you pay yourself first?
I know we always hear we should do this; yet, how many really do? I know I hear people say, “Wait, I will take extra out at the end of the month.” This is particularly true for those who are just starting their business and who are not relying on their business to support the household. The thought is to wait until you get some experience and cash flowing in.
What is the problem? You get to the end of the month, the next month starts, and you promise to do it then. And on, and on. Maybe once in a while you do take money out as a “salary.” Maybe at the end of the year, you look and decide to take some money out. And maybe you do not. So what is wrong with leaving all the money in your business checking account to build the business? I think it says you don’t value yourself or your business the way you should. If you stick with that approach, it is also easy to get to burnout. Again, I think it is related to not truly valuing yourself as a business person. It’s so easy to decide you don’t need to pay yourself.
What should you do? Set aside a certain amount each month to pay yourself. It does not matter how much. Perhaps you decide to pay yourself 10%. If you make $100, then you pay yourself $10; if you make $1,000; you pay yourself $100; if you make $10,000, you pay yourself, $1,000. It really does not matter if you pick 10% or $100. It just matters that you do.
Make it easy on yourself. Set up a savings account attached to your checking account and have the funds automatically transferred once a month. I think you will be surprised that you will always be able to pay yourself.
My question is, do you pay yourself first? How do you value yourself monetarily. Please share your thoughts below. I would love to hear them. You are also welcome to go to leave a comment on the ICAP Facebook or Google+ pages.
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Morna McEver is the founder and CEO of the International Association of Creative Arts Professionals where creative arts entrepreneurs craft business success. Her weekly e-zine offers tips, techniques and inspiration to help you craft business success from your creative arts passion. You can sign up for a FREE subscription at http://www.creativeartsprofessional.com.
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