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