Entrepreneurs Pay Themselves What They are Worth

When you are the owner of your own business, oneprofessional manager.Separate compensation into
of the most difficult decisions you will make is howparts. 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 doingstatic that can prohibit performance (some clubs
things on a shoestring, you may not have enoughmemberships do put you in contact with business
money to pay yourself. Suppose that you do, but itprospects), and the last, a bonus based on some
will be a struggle. You might opt to pay yourself butcombination of increased sales (just a small piece) to
to not run the pay through all of the deductions. Inincreasing profits (a bigger piece) and making the
other words, you treat yourself as an independentprojections within say 5% (plus or minus).... the
contractor -- or maybe you just borrow enoughbiggest piece.As for the other hat, the one you as
money to meet your monthly needs.On the otherthe 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 orbe paying yourself. Constantly focus on making the
bank loans. In this case you can pay yourself and paybusiness better. Develop the fear that there is
all of the associated payroll expenses. But how muchsomebody out there who will be able to do your job
do you pay yourself?In either situation, I suggestbetter than you and when that person shows up --
that you go back to the projections you made whenyou are going to have to defend your
you first started looking at the business. In thoseperformance.Now back to wearing the owner's hat,
projections, you included expenses for salaries andhold 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 arrivechallenges for yourself as the manager; keep raising
at that number?One way would have been tothe performance bar. And keep a sharp eye out for
consider how much you wanted, how much youthat proven performer who walks in and wants the
needed to live on. A second way would have beenjob of running your business.When that happens,
to come up with a figure based on what you weredon't be afraid to fire yourself.Learn more about this
worth. If your last position was President of atopic in Chapter Twenty-seven in my book.By Art
multi-national corporation, and you were paid a millionConsoliEntrepreneurs 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 afrom:How to Evaluate and Profit from a Business
salary based on what the going rate is for a personOpportunity - The Entrepreneur's GuideBy Art
to do the job in a business similar to the one youConsoliArt Consoli held eight corporate positions with
now own. Industry statistics are available and thisJohnson & Johnson before starting his first business.
amount should be fairly easy to determine.But youHe went on to build over twenty businesses from
bought or started this business because there werepatents or ideas or from businesses others couldn't
things you and you alone were going to do to makemake successful. These ranged from starting a
it an incredible success. You could never find a personveterinarian drug company to taking over a steel
who would be able to do what you have the visionfabricating company to developing the first
to see and to accomplish. You can easily convincemanufactured home subdivision to qualify for every
yourself that you are worth more that the industryprivate 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 feelowners; the last was a $30 million, 300 employee,
that you are entitled to everything that is left, andprecision 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 inskills allow him to speak and write about how
the minority here, but I suggest that if you aresomeone with limited experience can do a
serious about business and about making what youself-evaluation which will let him decide which business
bought or started into a successful business -- treatopportunity is best, how to evaluate opportunities
it like a business and run it as a professional managerand gain control over the one which offers the
would. In fact, go to the point of wearing two hatsgreatest potential and then manage that business to
-- a manager and the owner. While wearing thesuccess. Readers of his book call and write to tell him
owner's hat decide how to pay yourself while thinkinghow much his book has helped their lives and
about how you would hire and pay a well-qualifiedimproved their business.