Many people become entrepreneurs without realizing that their business is causing them to lose money. Ironically, it may be the case that your salary is lower , even, than the base salary of any company. Jack Chapman author of the book “Negotiating your salary: How to make 1,000 dollars an hour”, talks in his work about how to make money for himself and not for people.
When trying to figure out your salary, consider what your time is worth and whether or not it is worth moving forward. These 10 questions can help you know the right amount for you and your business:
- What do other people in my industry earn?
Chapman ensures that we can find some of the payment parameters through various online sites to see how much they are paying other entrepreneurs. We recommend Salary.com, which gets data from the largest companies, PayScale.com , whose information comes from executives, and Glassdoor.com, a professional community that includes employee-generated content . “While these sites are not aimed at entrepreneurs,” he says, “you can find a business similar to yours, to see what other people are paid, and use it as a benchmark to learn what they should pay themselves. themselves. “
- How many jobs do I do?
If you’re acting as CEO and commercial advisor, you deserve to be paid for those jobs, or at least a portion of what it would cost to hire people for them, says Chapman.
- What is my cash flow, now and in the future?
Your salary will depend on cash flow, not just current cash flow, but future cash flow. Steve Troya, a small business public accountant at SMT & Associates, recommends that a financial estimate be made before starting a business to help understand how much cash flow will be generated over time, how much it will take to scale the business, and how much can be available for your personal expenses. This will help you understand how much money you should set aside for living expenses before starting the business. Troy advises, that if possible it is better to have a part-time job in the early stages of its start-up.
- At what point can I have a salary?
There are two common mistakes that you should avoid: assigning you a payment that your company can hardly afford and bringing the entire business income to your personal account. On the other hand, depriving yourself of pay for your work will not only make you despair soon, but you will appear unprofessional to potential partners . In that sense, it is recommended to be cautious and realistic.
Make a comprehensive list of your annual spending as detailed as possible , so you will have a clearer idea of how and what you spend. Attention: if you fall in the red, chances are high that your business will too.
- Have you put in writing what you expect to be paid?
It is vitally important that you sign an agreement when you have to answer to other people – whether they are partners, a board of directors or investors. Sign it before a notary and keep it, so there will be no questions later.
