Have you heard that many small businesses go without a salary for the first three years they are in
business? Did you know that most small businesses stay in the red for the first three years and often close? I don’t think this has to be the case. A small business owner doesn’t have to go without a salary and they can thrive in their business instead of surviving. From my experience, I honestly believe that paying yourself is crucial to your restoration business. When an owner does this, success can follow. No need to wait.
The reasons for paying yourself first is strategy based as well as beneficial.
- You took the risk, you should get the first reward. This is just my honest opinion.
- Paying yourself 20% of your profits is not a lot in some cases, but it should cover the bills.
Allocating 20% of the profits to you, the owner, gives you the insight you need in order to budget properly. Once you see you will for certain take 20% of your restoration business’ profits, that means you have 80% left to make your business work. That 80% will budgeted for payroll, operations and marketing. To find this magical number, review last year’s sales and deduct 20% from that as your new benchmark for your salary. It might be lower than you expect, but it can work. Reevaluate your numbers every six months to ensure you are on track for yourself and your restoration business.
Learn more about how your business can be a cash flow machine by downloading
my cash flow guide.