How much you should pay yourself as the business owner

Lesson Details:

Video Transcription: Many people write to me and ask like how how much should I pay myself as a business owner or how to figure it out this video is brought to you by Appy Pie’s Academy is their way to do that is there a structured way to figure that out it's kind of interesting because when you're a small business you and your business are so intertwined right if your business is doing well you're doing well if your business isn't doing well you're not doing well so it's really a matter of if you don't want to be shortchanging anybody to the extent that you can right so I see a lot of business owners and their lifestyle is like here you know they want to drive nice cars and they want to live in a nice place and so their business is doing well but they're pulling a lot of money out of the business support their lifestyle and if the business can't support it you can you're basically robbing from your business for lifestyle which means you're not doing wealth your business if you get down back your lifestyle for a little while and really let your business fly I mean you could probably live better than you even imagined yeah your brother living up here right yes so it's always that careful balance of being sure not to rub your business leaving enough capital in your business to be able to cash flow so you're not having to incur a ton of debt and that you can make the biggest alts that you want to make you know the big new marketing campaign or the software you need to buy or the new person that you want to bring on to be really careful to balance that with lifestyle it gets a little harder with more established people I see it it's more difficult when you're somebody like me.

I'm 43 I have three kids I'm accustomed to a certain lifestyle it's not even that but it's just you know I mean kids eat food they go to school they wear through their shoes right as opposed to a young guy who can pull a Mark Cuban and sleep on somebody's couch for a couple years so yeah it's always that careful balance now when you pay yourself you always want to track that so the very important thing is that you're not commingling your personal and your business expenses so a lot of time business owners are notoriously terrible at this you know they'll have their business debit card in their personal debit card and they don't have any money in their personal account and they're at the grocery store so they use their business debit card you know or maybe they're paying their wife's car payment out of the business account you know when you do that you're messing up your numbers right you don't really know what's going on in your biz yes if you got the whole thing just I call it spaghetti it's all like spaghetti together and you don't know what's going on in your business so keep that stuff really separate and when you pay yourself pay yourself you know and one of the best measures of how well your business is doing is if you can pay yourself a fair salary for what you bring to the business so if you're the CEO of your business what do CEOs in your industry make generally and if you can pay yourself that salary out of the business and how the business continued to be healthy and continue to be operating you have a viable business that's a business that you can step out of you can sell that's something that's set up to sell so that's really what you're looking for because then everything after that is your is your bonus for owning the business reading the guys smart enough to make this you know come up with this business and run this business in a way that it pays its CEO and it throws off a profit so your goal is always to strike that balance and for a lot of entrepreneurs in the beginning it means dialing back the lifestyle so that you don't have to pay yourself as much so you give your business really room to grow and develop.