subscribe to RSS feeds

« back to all blogs

Note to Self: If I'm Not Getting Paid, I Really Don't Have a Business!

So, Mr. Entrepreneur, when's the last time you took a paycheck? Working more hours than you ever have in your life; under more pressure, both from the business and what it is doing to your personal life...and you're not getting paid? Is this what you signed up for?Wasn't this entrepreneur stuff supposed to be your path to riches?

Okay, you can all stop nodding your heads now. Admittedly, maybe a little extreme, but it's way more common than you might imagine.If you think you're the only one operating that way, think again.It's one of the big problems in early stage companies. When to start paying yourself, anything at all, let alone a livable wage. Yet, if you think about it, it's not until you do pay yourself on a consistent and rational (meaning somewhere above minimum wage and but certainly something less than a Fortune 500 CEO) basis, that you actually have a real business. Too many entrepreneurs end up not only investing their life savings but continuing to also invest "sweat equity" while paying employees, suppliers and landlords.

Of course, there will always be times, when cash is short whether because that big customer is late paying their bill, or you've just invested in a new marketing campaign, when you might have to forego your check for a pay period or two. That's part of being an owner. My point is that you don't really have a solid business unless and until you are paying yourself on a consistent basis.Worse, the stress created by personal cash flow problems will, ultimately, filter back into your business in the form of distraction reducing your efficiency, taking your eye off the ball.

Here are some guidelines to help you understand when to begin paying yourself, how much and what to do if you can't:

It's a Business You're Working For, Not a Piggy Bank You Can Raid

Establish this philosophy from the "get-go," and your cash flow, both business and personal will thank you in the future. While you may own it, too many entrepreneurs treat their business checkbook, like just another checkbook in the house.Keep them separate.

"Break-even" Has to Include You

If not, you're just fooling yourself.You are what makes the business go. If you aren't getting paid, you aren't paying for the engine!

New Expenses or Employees Only If and When You're Paying Yourself

Committing to a lease, whether for equipment or space or hiring an employee will only make your business "nut" that much bigger each month, making it even harder to pay yourself. Beyond the basics for what you need to operate your business, no new expenses unless or until you are paying yourself.

Salary - Balance What You Must Have vs. What You Can Pay

Covering your personal "nut" is often difficult, early on. Most entrepreneurs have come from the comfort (and the salary) of corporate America and have become used to that standard of living. That won't change, quickly or easily, so you have to figure out, at a minimum, how much you can cover through savings and how much you can afford to take out of the business. But you must take something out of the business, weekly, monthly or quarterly.

If You're Short, Always Pay Yourself Something

Even if it means you delay a supplier payment or pay in installments.That the business is paying you, even something small, psychologically, helps you justify the hours and the effort.

Put Something Aside for "Sam"

One final point. In the early going, things are less formal, and if you're an S corporation with no employees, you're probably not doing the formal payroll thing."Sam" (as in Uncle, my nickname for the IRS) still needs to get paid. Make sure you are doing more than accruing that money, but actually putting it aside.

Later as your business is growing you will have really hard-working employees and you'll want to be sure you take care of them. Start that kind of philosophy right out of the chute. Take care of your earliest and hardest working employee - you, by paying yourself. You don't really have a business until you do.

"The Entrepreneur's Yoda" knows these things.  He's been there.  May success be with you!  


« back to all blogs


2013-01-26 18:50:51 by Steven J Weil, PhD, EA, LCAM

You could add to the above: If there is only income from the work you do your self or if income does not continue when you take a day off or are sick, you don't have a business you have a Job with out the benefits.

2013-01-26 20:17:15 by Toby Marshall

So very true Lonnie! Great article, have been in this situation myself in the past.

2013-01-27 10:07:22 by Gene Henley

Good advice for some businesses,BUT NOT ALL! Read Rich Dad ,Poor Dad. Not all businesses have emplyees,bricks and mortor,or at home retail sales .
How about Avon,Melaleuca,Ambit,Amway,Tupperware,Watkins,,,,,,,,,,,,,,,,,,.
Gene Henley

2013-01-31 05:58:28 by Patricia Bleck

Many good points Lonnie! Psychologically, it give you a boost to move your business forward. For me, paying rent was a big deal. Launching my website and social media sites was another milestone. Each time I put another "building stone" in place, I felt more excited about my business.

2013-01-31 10:36:13 by Sutton Spieckerman

Thanks for the article. I needed to hear some "positive". I am in that very beginning stage of an online dropship business. Very frustrating when you are spending, but nothing is coming in.

2013-02-01 09:47:50 by Tom Merlino, Jr.

This was a great article! It is way too easy to put off paying yourself as the business owner, and it's too easy to open up the company checkbook when it comes time to "raid the piggybank." I think a more consistent payment method to myself would benefit tremendously. It will keep me motivated even more than I already am, because I know that if I expect to get paid, I need to get the money flowing into my company to be able to afford me - ha ha. That last part was to be taken a little lightheartedly, but the point is still the same. It puts a new prospective on things when you see yourself as an employee who needs to get paid.


2013-02-12 18:00:50 by Annie

Hi I just found your blog, looking forward to reading your posts hopefully I will learn som things Thank you for sharing

2013-03-07 15:02:34 by gary

This becomes much easier if your paycheck is included in your business plan as an expense and is part of your startup fending. Adding bonuses to your business plan for you for attaining goals is also very helpful.


Name (required)
E-mail (required but not shown)


Blog Articles

Blog Archives



Do you like these articles? Read my book for more advice you can use immediately.

Get Your Free Chapter!