Ray DeckAcclaimed advisor to hundreds of founders and builders. Investor, teacher, founder, advisor

Pay Yourself a Salary #startups #entrepreneurship

Name: Pay Yourself a Salary #startups #entrepreneurship
Uploaded: 2024-06-07T13:00:09+00:00
Duration: 55 s
Channel: Ray Deck
Description: In this brief talk, the speaker urges entrepreneurs to consistently pay themselves a salary, emphasizing that doing so creates clear accounting…

7 Jun 2024 · 1 min

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In this brief talk, the speaker urges entrepreneurs to consistently pay themselves a salary, emphasizing that doing so creates clear accounting separation between earnings derived from technical work (salary) and earnings generated by entrepreneurial activities (profit). By treating personal compensation as a regular expense, founders can accurately assess true business profit, avoid overstating earnings, and compare their income to market salaries. The speaker illustrates the point with examples of entrepreneurs claiming high monthly profits that actually include their own salary and benefits, highlighting the importance of distinguishing personal compensation from business performance.

Chapters

Entrepreneurs should pay themselves salaries. Look, I know that you're not fair. This is income transferring to your bottom line, and that's the reality of how life goes. You're the last one to the trough. But when you, from an accounting point of view, make sure that you keep on giving yourself a salary, you can separate the question of how much you're making because you're a good technician— technicians get paid salaries— and how much you're making because you're a good entrepreneur, i.e., a good salesperson. Or a good operator of a company. By separating those two things, you'll get much better clarity on what your profit is. I talk to people who say they're making $30,000 a month in profit. You push them a bit, they're not counting for their own time. So really what's happening is they have like their salary, and by that they have their own benefits too. So total cost, that is around $30,000 a month. That can be a good living for a lot of folks, but actually compares pretty well with salaries. What is your salary? Where is your profit?