A recent article on MSN’s Business on Main covered the topic of paying yourself as a small business owner. It can be a tricky topic for many owners as they try and handle company growth and profits along with their own needs. One key point the article makes is the realization for a small business owner that the company value has to be based on paying yourself a market based wage.
This basically means that even though you’re a startup and taking a minimum salary what would you’re bottom line look like if you made what your peers made? Instead of $50,000 what are your profits if you take a competitive $100,000 salary?
This is something that may not apply to the earliest stage companies but as you grow you have to compensate yourself appropriately. Many business owners forget this when talking about the success and profits of their business.
The article reviews an example of a business owner who did just this. He doubled his salary in 1 day up to a market based rate to force him to realize the true numbers in his business. The bottom line as he said was “If you’re not paying yourself what you’re worth, you may be hurting, not helping, your small business.”
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