When Is the Right Time to Start Paying Yourself?
I get excited when business owners ask “when is the right time to start paying myself?” because it means you’re actually thinking about it!
Many founders launch their food business with the expectation and belief that they will go unpaid for at least a year and that’s just the way it’s supposed to be.
Most go unpaid for much longer and have no plan in place for when, how or how much they’ll pay themselves in the future.
They simply aren’t thinking about paying themselves - even if they want to, the belief that they shouldn't or can’t, prevents them from really looking into it and taking action.
Does that sound like you? (It was 100% me, about 8 years ago)
One of my top priorities as a financial consultant is getting food biz owners paid! because you don’t truly have a financially sustainable or profitable business unless you’re paying yourself a fair wage.
There is no one-size-fits-all approach to this, but here are a few options to consider:
Pay yourself the same hourly rate as your employees.
This is the approach I take in my business. It forces me to pay myself for my time each week and ensures that there is money left over in the business each month for reinvestment, growth, etc. I sweeten the deal by setting a monthly profit goal - if we achieve it I pay myself a bonus + my team gets one too!
SEE how paying yourself your dream salary will affect your business Financially. You may be surprised to find that you CAN afford your dream salary now!
If you can’t afford that dream salary just yet, how many more units per month would you need to sell, or what other costs could you cut to make it a reality?
If you can afford 50% or some other portion of your dream salary now start there. Then create a plan to increase sales or reduce costs, and increase your salary when you achieve certain milestones.Record an In-Kind Donation to your business for your unpaid time
If you can’t pay yourself for your time just yet, or can only pay yourself a little bit (there was a point in my food biz where I paid myself just $100/week), Financial Coach Caroline Snyder of Verdi Advising recommends tracking your unpaid time as an In-Kind donation to your business.
Snyder agrees that it’s OK to not pay yourself so long as you have a plan in place for how and when you will start. And she says that tracking your time as an In-Kind donation (although it doesn’t actually affect your business financials) helps you see the value you’re giving to your business each month.
Do you have a method for paying yourself, or tracking your time that you’d like to share?
Join us in the Profitable Food Business Community and tell us all about it!
About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.