Anna Kupisz Blog

Salary for the business owner? – oh no – we work for free!

I hope that you are well and full of energy, ​as today I would like you to face one of the most painful topics when it comes to finances! Yes, today we will be talking about the salary of business owners like you!

Yes – your SALARY – you know, this is something that people working in a regular job ​receive for their work and unfortunately, this is a thing that most entrepreneurs think does not exist ​when you run your own business! However, I want you to get rid of this ridiculous belief and embrace the simple fact that you, too, need a salary from your own company!​

Nothing else can destroy a business so easily as the lack of remuneration for its owner. 

And I want you to know, your ability to pay yourself a salary does not necessarily mean that the business is profitable or successful. It just means that it breaks even!​

We all know that, as entrepreneurs, we need to be motivated to work. We deserve a good life but at the​​ same time, ​​we are convinced that our remuneration should be paid out of what remains in the company after covering all costs. It’s just that very often there is nothing left for the owner of the company. ​​And even if some money remains in the business account, we decide to reinvest it. Then we fall into a vicious circle saying, sell more, then you will have higher revenues ​​and for sure something will be there for you.​

But the more you sell, the more costs you generate!

So the revenue is higher and higher but at the same time, costs are higher and you work more ​​and become more and more tired. And the money for your salary is still not there!​

Why? Everything is eaten up by costs!​

So what to do to break this vicious circle? Let’s start by changing the perception of your salary. We have to start with recognizing that you are an employee of your own company. ​​That means that you are its cost. You must not work for free in the hope that someday the business ​​will start to prosper. Your company must be able to cover the cost of the salary of business owners from the beginning! 

I know, I know, easy to say but how actually to do it?​

Calculating the revenue and the profit - salary of business owners

First of all, your remuneration must be included in the price of your products and services. ​​Not on the margin side but the unit cost side. What do I mean here?​

If you’ve read and remembered my free guide “Pricing for success – how to set the price ​​for your product or service”, you know that the price consists of unit cost and margin. You also know that a unit cost consists of more than just production costs. It also consists of ​​a certain percentage of a company’s investment costs and a certain percentage of fixed costs.

The salary of business owners is a part of the fixed costs of your company

Then, you need to add it to them.​

​Usually, we assume that we pay ourselves when a company generates profit. First of all, the profit should be treated as extra money for the business owner who works ​​in their own company, or money for the further development of the company. ​

Secondly, the profit should be generated from the margin of your products and services. ​​But if you did not calculate the prices properly, you may find that you do not have a margin at all, or that it is very small. Then, even if you sell more, you will not see the profit on the account that the margin​​ is supposed to generate.​

But if you assume that the unit cost has to cover your salary, then even if the company does not make a profit and only breaks even, ​​you will still be able to pay your salary!

​​Summing it up:​

  1. The first step to be able to have regular money from your business is ​​to change the perception of salary of business owners.​
  2. ​The second means that you need to sit down and recalculate the prices again. ​​Then taking into account new prices you need to set new financial goals, ​​new sales targets and recalculate the new break even point. ​​Only then you can start planning new marketing campaigns and selling systems. Why? ​​Because only then running a business makes sense again!​

Please remember that business is about more than just its owner’s survival. ​​It is about us thriving!​

And if you feel like you need guidance here and some answers to questions like: 

  • ​How to start doing it?  
  • ​How to recalculate all the prices so you can have your salary? 
  • ​What other aspects need to be checked so you can finally thrive in your business?

Then I want you to know that you can schedule one online strategy session with me 

​(strategy session not selling pitch). ​​

On the call I will be able :​

  • ​to analyze the situation of your business, 
  • ​give a roadmap to your business success, 
  • set new goals with you, 
  • check how I can help you achieve them.

Also, check out our other articles:

Book a 60 minutes strategy session now!

Remember that Business is about more than surviving. It is about truly thriving!

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