"Paying Yourself"

I don't know everything but I can sure search for everything. There are so many online resources that have such great free and fact rich information. One article among many is an article entitled, "Paying Yourself: From Startup and Beyond." It gives a simple yet information rich synopsis of how to go about your pay as an entrepreneur and what exactly that means for your lifestyle. It describes 2 of the most popular perspectives and the rationale behind the two.

1. Avoid the Red: The article talks about this tactic as a means of getting and keeping your business out of debt at the expense of your luxury. This method requires a detailed assessment of your personal expenditures and a paycheck that covers just that and very little extra until your company is stable enough to allow room for a raise. Consider that "avoiding the red" may last months and factor in costs that may come up or accumulate during an extended time period. While you reduce company losses this way, you simultaneously raise your net profit.

2. "I'm worth it right?"  This second tactic requires an entrepreneur to assess how much he/she thinks he/she is worth and go with that taking into account basic living expenses. By doing this, the companies operating costs will not fluctuate too wildly when the company gets on its feet because you have already paid yourself accordingly. Your basic worth calculation will be done according to your current market work plus a percentage increase that will account for inflation and the fact that your position merits a little more than your hourly wage assessment right now. The article provides an equation that looks like this: Market Worth (annual salary with bonuses or overtime)/12 x I(inflation percentage) x 4=Basic Worth. This basic worth can then be used as a guide for your pay.

Other tips:

*Don't be fooled by breaking even and increase your pay right away. Instead, wait for profit increases after breaking even and increase your pay proportionally.

* Don't forget to look at overhead cost growth against profit growth because you may be paying more than you're making.

* Overhead costs will ride automatically because of inflation.

Check the article out yourself for more in depth information: http://www.entrepreneur.com/article/80024