Here’s a question for you: Who is your most valuable employee? The answer is YOU are your most important and most valuable employee, and you need to treat yourself just as you would any other staff member who’s important to the success of the company.
So are you paying yourself? Most small business owners think they can (or should!) put off paying themselves until they’re “making it.” Whatever that means. But that’s actually the wrong way to think about it! Not paying yourself a real salary and just assuming that you will use whatever profits are left at the end of the year is a very dangerous game of smoke-and-mirrors. Because if you are just making enough to pay your bills, or fooling yourself that the $10,000 left over at the end of the year is a job well done, then you don’t have a good grasp on your financials and you don’t have a clearly defined path to profitability. Basically, you don’t have a sustainable business model.
I know it can be hard to set that money aside, but here are 4 reasons for why you have to start paying yourself today:
1. This is a business, not a hobby! If you’re subsidizing your business by not paying yourself, then your company isn’t in good financial health. Too many small business owners think they should be the last to get any money when they’re starting or growing a business. But that isn’t true! You have a better chance of starting on the path to a real and profitable business if you have a salary included in your overhead from the very first day of business and you make a plan to cash flow your operations including your salary.
2. You can’t ever hire if you aren’t paying the ONE employee you have now! That would be you. Think about everything that you do for your company – all of your responsibilities and tasks. Wouldn’t you pay someone else to do all that work? Exactly. But it’s going to be tough to add someone to your overhead and come up with the money to pay them, if you’ve been just “volunteering” for your company all this time to complete those same tasks. You have to be able to afford employees as your company grows, and you can only do that if you have a budget line for salaries.
3. You have to pay yourself to keep the passion for your business alive. If you aren’t making anything out of this business, then what’s the point of doing business at all? No, really, what’s the point? Running a small business is hard. I know from experience that, if you haven’t already, you’ll soon find yourself managing people and tasks and you will have very little time to do the thing you started this business for to begin with. And if you’re working for free doing these tasks you don’t love, it’s even worse. You’re going to burn yourself out and you’re going to be angry and resentful about your business and lack of funds. That isn’t exactly a great mood to be in if you want to attract more clients and more business.
4. It’s a great incentive. If you do want to attract more clients (and I know you do!), then what better way to motivate yourself to work harder than you already do than to give yourself a paid incentive to bring in more money. If you’re really being disciplined about your finances, then you know exactly how much money you need to make each month to meet your overhead. And you should then know how much more you need to make in order to give yourself a raise. And realizing all the things you can do with that money from taking your family on a vacation to saving for your kids college funds, can be a real reason to work even harder and put some more of that money in your own pocket.
I know getting serious about business and making money can be tough, especially for creatives, but it’s critical to getting your company into great financial shape and operating it like a real business should so it can afford you your dream life. So get out that checkbook and write a check to yourself TODAY! And leave me a comment below and let me know if this is one of the things you struggle with in your business and if you’re willing to make the leap towards valuing yourself as the key part of your business right now. You can do it!
PS – Need help getting your financial house in order? My Financials for Creatives online master class will give you the strategies and tools you need to become that financial genius that I know you have inside you! There are 9 modules, each designed to help you get a handle on a specific part of your income, your fees, and your cash flow. Each module is a video webinar, designed to deliver you the information you need so you can work through them on your own schedule and at your own pace. Click here to learn more!