INTERVIEW: How to pay yourself as a business owner without taking too much from your business?
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GUEST – Dr Mongezi Makhalima - Organization development specialist and chartered executive coach
Most business owners take only modest weekly or monthly pay – just enough to meet household living expenses. The rest of the cash is left in the business where it acts as a float to cover against a lull in revenue or unexpected business expense. If cash reserves build up in the business, an owner might take out extra ‘bonus’ payments.
So while there aren’t any worthwhile stats on average business owner salary or income (each business is different after all), their regular pay tends to be conservatively low. HOW TO PAY
Irrespective of how much you pay yourself, be fair about it. Pay yourself a consistent amount at frequent intervals. That predictability will help you run a functional home budget. This is where the rainy-day fund for your business can help. Having a reserve of cash in the business reduces the need to dip into your own pocket when there’s an unexpected expense at the shop or office. And having that financial security in your personal life helps clear your head to be a better business manager.
Most business owners take only modest weekly or monthly pay – just enough to meet household living expenses. The rest of the cash is left in the business where it acts as a float to cover against a lull in revenue or unexpected business expense. If cash reserves build up in the business, an owner might take out extra ‘bonus’ payments.
So while there aren’t any worthwhile stats on average business owner salary or income (each business is different after all), their regular pay tends to be conservatively low. HOW TO PAY
Irrespective of how much you pay yourself, be fair about it. Pay yourself a consistent amount at frequent intervals. That predictability will help you run a functional home budget. This is where the rainy-day fund for your business can help. Having a reserve of cash in the business reduces the need to dip into your own pocket when there’s an unexpected expense at the shop or office. And having that financial security in your personal life helps clear your head to be a better business manager.
