| When you are the owner of your own business, | | | | well-qualified professional manager.Separate |
| one of the most difficult decisions you will make is | | | | compensation into parts. The first should be for |
| how to pay yourself and how much to pay | | | | showing up (basic salary). The second for perks |
| yourself. First, there is the issue of adequate cash. | | | | to clear away the static that can prohibit |
| If you are doing things on a shoestring, you may | | | | performance (some clubs memberships do put |
| not have enough money to pay yourself. Suppose | | | | you in contact with business prospects), and the |
| that you do, but it will be a struggle. You might | | | | last, a bonus based on some combination of |
| opt to pay yourself but to not run the pay | | | | increased sales (just a small piece) to increasing |
| through all of the deductions. In other words, you | | | | profits (a bigger piece) and making the projections |
| treat yourself as an independent contractor -- or | | | | within say 5% (plus or minus).... the biggest |
| maybe you just borrow enough money to meet | | | | piece.As for the other hat, the one you as the |
| your monthly needs.On the other hand suppose | | | | manager wears, think about how you are going to |
| you properly capitalized the business -- either with | | | | improve the business and earn the bonus you will |
| your own money, investor money or bank loans. | | | | be paying yourself. Constantly focus on making |
| In this case you can pay yourself and pay all of | | | | the business better. Develop the fear that there |
| the associated payroll expenses. But how much | | | | is somebody out there who will be able to do |
| do you pay yourself?In either situation, I suggest | | | | your job better than you and when that person |
| that you go back to the projections you made | | | | shows up -- you are going to have to defend |
| when you first started looking at the business. In | | | | your performance.Now back to wearing the |
| those projections, you included expenses for | | | | owner's hat, hold yourself, as the manager, |
| salaries and you had a number in those | | | | accountable for making the projections, keep |
| projections for yourself. Or, you should have.What | | | | laying out bigger challenges for yourself as the |
| was it? How did you arrive at that number?One | | | | manager; keep raising the performance bar. And |
| way would have been to consider how much you | | | | keep a sharp eye out for that proven performer |
| wanted, how much you needed to live on. A | | | | who walks in and wants the job of running your |
| second way would have been to come up with a | | | | business.When that happens, don't be afraid to |
| figure based on what you were worth. If your | | | | fire yourself.Learn more about this topic in |
| last position was President of a multi-national | | | | Chapter Twenty-seven in my book.By Art |
| corporation, and you were paid a million dollars a | | | | ConsoliEntrepreneurs Pay Themselves What They |
| year -- then that's what you are worth. Right? A | | | | are Worth -- number seventeen in a series taken |
| third way would have been to establish a salary | | | | from:How to Evaluate and Profit from a Business |
| based on what the going rate is for a person to | | | | Opportunity - The Entrepreneur's GuideBy Art |
| do the job in a business similar to the one you | | | | ConsoliArt Consoli held eight corporate positions |
| now own. Industry statistics are available and this | | | | with Johnson & Johnson before starting his first |
| amount should be fairly easy to determine.But | | | | business. He went on to build over twenty |
| you bought or started this business because there | | | | businesses from patents or ideas or from |
| were things you and you alone were going to do | | | | businesses others couldn't make successful. These |
| to make it an incredible success. You could never | | | | ranged from starting a veterinarian drug company |
| find a person who would be able to do what you | | | | to taking over a steel fabricating company to |
| have the vision to see and to accomplish. You can | | | | developing the first manufactured home |
| easily convince yourself that you are worth more | | | | subdivision to qualify for every private and |
| that the industry average.And last, since you own | | | | government assisted mortgage program in |
| the business, (without investors for this example) | | | | Arizona. He also did ten workouts for lenders and |
| you might feel that you are entitled to everything | | | | owners; the last was a $30 million, 300 employee, |
| that is left, and you could just ignore the fine lines | | | | precision parts manufacturing plant that made |
| between salary, perks, bonus and distribution of | | | | parts for the auto industry. Consoli's unique |
| profits.I may be in the minority here, but I | | | | background and skills allow him to speak and write |
| suggest that if you are serious about business | | | | about how someone with limited experience can |
| and about making what you bought or started | | | | do a self-evaluation which will let him decide which |
| into a successful business -- treat it like a business | | | | business opportunity is best, how to evaluate |
| and run it as a professional manager would. In | | | | opportunities and gain control over the one which |
| fact, go to the point of wearing two hats -- a | | | | offers the greatest potential and then manage |
| manager and the owner. While wearing the | | | | that business to success. Readers of his book call |
| owner's hat decide how to pay yourself while | | | | and write to tell him how much his book has |
| thinking about how you would hire and pay a | | | | helped their lives and improved their business. |