How Much Should You Pay Yourself?
This is a question I hear so much in entrepreneurial circles, and the only correct answer really depends on you.
A lot of the time, I see people building a business that can’t sustain their lifestyle. If you want to only work 2 hours per week but make $500 in that time, you need to look at your business model.
More often than not, your lifestyle needs and your business aren’t aligned. You’re not creating the kind of money that can sustain the life you want to live.
Everything in business needs to be strategic, and that includes paying yourself.
My signature course, Profit Perfect, tackles how to align your lifestyle goals and your business model. One of the things I cover with my students is the WIN method, and it’s helped so many of them find a way to match their desires with their business using it.
W is for Wants
These are your hopes and dreams – and I want you to dream big! What are you striving for?
This isn’t just the money you want to be making (although that’s a big part of it!) It’s also the life you want.
$150k per year profit? Working no more than 20 hours per week? 2 family vacations a year? They all go in your wants column!
Listing these helps you to strategically look at your business model. Is it only possible to make that money if you’re working 50+ hours per week? If so, then something needs to change.
Step one to discovering how much to pay yourself – and how to get there – is to understand exactly what you want from the life your business should provide.
I is for Impact
We all want to leave a legacy behind when we’re gone. You might want to commit to donating a certain amount each month to a charity close to your heart.
You might want to give your time instead of money (find out more about ways to give back that don’t involve spending).
Either way, we need to work it into our business: the amount of money we want to donate, or the amount of hours we want to volunteer.
I’ve worked with students inside Profit Perfect who want to start new charities and really change the world. Your impact is the mark you want to leave on your friends, family, community or planet. And it needs to be taken into account!
N is for Needs
This stage is where you need to look at your current life and situation. How much money do you need to be taking home each month to meet your commitments?
Your mortgage, your car, groceries, childcare… What are you having to cover now?
You might aspire to a $1000 per month car, and that’s great – but that’s a want. Needs are a very different bucket, and being able to differentiate them will help you understand how much your business can afford (and needs) to pay you.
Taking time to sit down with a pen and paper, or a spreadsheet, and identifying actual figures for how much money you want, how much you need, how many hours you want to work, is a powerful exercise.
So often as entrepreneurs we get stuck in the weeds of the day to day running of our business. We don’t end up paying ourselves what we should because our books aren’t remotely in order.
How can you know how much you should pay yourself if you don’t even know what you want?
Rather than choosing a random amount (“I’m going to pay myself 10% each month”), I want you to reverse-engineer the system.
Find out what your end goal is and see how you can build a business that allows that!
One of my students went through this process with her cleaning company, and she realized how she could bring in the money she wanted, on the hours she wanted. She would need to hire 7 new members of staff, and a whole new support system.
When she broke it down, she saw that wasn’t the business she wanted to run. So she pivoted, created a digital product, and was able to scale her business to meet her wants and needs that way.
The goal for entrepreneurs is money, sure. But it’s also a lifestyle that you enjoy. We want happiness as well as funds.
What good is a full bank account without the freedom to enjoy it? I want you to be designing and building a business that checks all your boxes.
If you’re interested in a more detailed breakdown of this topic, you can watch my video training on YouTube, and to learn more about the ways you can start taking back control of your money, drop me a message.