Has your business seen explosive growth in profit but you’re still hesitant to reward yourself? Here are three considerations why business owners must give themselves raises.
Pay Yourself or Risk Being Burnt Out
Setting up a new business is like riding a roller coaster without a safety harness. It can be tough to go through the ups and downs without certainty on what the future will look like. The important thing to keep in mind is that we can’t work for free, we must reward yourself for your time.
Think of it this way – would you continue to work for someone else who didn’t reward you for the time and effort that you put forth towards the business? Would you continue to work as hard for them if they don’t reward you?
We have to think of ourselves that way. The same way that we reward employees for a job well done, we must give ourselves the same opportunity. Otherwise, we risk being burnt out and our business suffering.
When to Give Yourself a Raise
It may be difficult to bite the bullet because we think there are so many other things that the money should be used for. But keep in mind the principle from above that business owners cannot work for free.
You must also consider factors that affect your life that may require this increase in the future. Things like inflation are a great example because not only are prices increasing in your business, but they’re also increasing on home utilities, consumer goods and etc. Aside from that, if you have a growing family or changes coming to the family you will have to consider those things. So make sure youre giving yourself a raise when your business experiences significant growth.
Some significant signs of growth that signal it’s time for a raise include:
- Increased Profits
- New Investments in the Business
- New partnerships
- More employees
- Increasing customer base
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How to Give Yourself a Raise
You can start small but start paying yourself now – even if it is $50 a month.
When your company reaches break-even, put a percentage of the incoming profits and investments to give to yourself.
This goes without saying for most of us but you have to understand your financials.
Accounting is the language of business. For better or worse, not all of us are Certified Public Accountants, and we don’t all speak the accounting gibberish. Unfortunately, when we talk to most accountants, they speak to us in gibberish. The end result is that many business owners have a phobia about numbers and accounting.
But we must understand financials at the most basic level: Balance Sheet, Profit and Loss, and Cash Flow Statement. Once we understand these then we can make better decisions for the business without you necessarily having to sacrifice your own compensation.
Are you ready for a much-needed pay raise, but aren’t sure if your business is ready for it? Contact one of our business coaches today for a deep dive into your business’s health and next steps to getting you that raise.
