A BIG ISSUE for ENTREPRENEURS is they don’t pay themselves or they use their business bank account like their personal bank accounts which is a BIG NO-NO.
I always encourage clients open a business bank account and also have a personal bank account. The two must be separated.
At month end, you should write a cheque or transfer adequate funds or cash for you to be used during the following month.
Is there a percentage or particular value I should pay myself?…you ask
There is no set percentage or ratio to use because each company and person differs. You have to make an informative decision based on your company’s monthly overheads and something suitable for yourself to have a liveable lifestyle.
For example: You can’t withdraw five thousand dollars ($5,000) every month when in fact this month you only made two thousand dollars ($2,000) but your actual liveable lifestyle you need five thousand dollars ($5,000). In this case, you have to do two things learn to manage with two thousand dollars ($2,000) or push your business to help you cover five thousand dollars ($5,000) per month.
Making the same amount of income every month
There is no way every month you will make the same amount of income. I will say have a set value that you need to live and try to make income at that value every month and a little extra to carry you to the next month.
School of Thought 1
Another school of thought is as a new entrepreneur, you should not pay yourself for the first ten years instead re-invest into your business.
I suggest at least take a small salary to cover your necessities every month which does not include clubbing/partying money. You do need to live as well. You started this business to have financial freedom.
Just take enough to survive for the month and re-invest the rest into the business to help the business grow to reach its true full potential.
School of Thought 2
Another school of thought would be to not take NO MONEY, capitalise on the returns and re-invest to make more money. At the end of the first profitable year, which may not always be the first year in business, pay yourself a good dividend. Most start-ups business do not make any money in the first two years of trading. Hence, you need to set priorities and stick to them religiously. If you are operating as a sole trader, you should not ever think about having any drawing/withdrawal for the first year or so.
It is a HUGE SACRIFICE once you are willing to FIGHT HARD and go the distance. Entrepreneurial life is not easy but it is REWARDING with the RIGHT ATTITUDE. You can have the MOST SUCCESSFUL BUSINESS once you learn how to SHINE ABOVE the CROWD. THINK BIG and GROW BIG.
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