From Startup to Paycheck: Crafting Your Self-Payment Strategy

Embarking on the journey of entrepreneurship comes with its triumphs and challenges, and for many small business owners, paying themselves in the early stages can seem like a distant dream. However, it's not only possible but surprisingly easy when approached strategically. Let me share my firsthand experience and guide you through the steps to ensure you're not only sustaining your business but also rewarding yourself consistently.

1. Money Talks, Separate Accounts Listen. Establish Financial Separation:

From the outset of your business, prioritize financial separation by establishing a dedicated business bank account. While I actually recommend having five different accounts for your business, having at least one dedicated business account is the essential minimum to kickstart your financial organization. You can explore the details of the five accounts I recommend here. This fundamental step ensures a distinct boundary between business and personal expenses, laying a solid foundation for effective financial tracking.

2. Crunch Those Numbers:

Understanding your business's financial landscape is crucial. Calculate your monthly income and meticulously subtract necessary taxes, operating expenses (supplies, office rent, equipment maintenance, subscriptions, etc.), and marketing costs. Don't forget transaction fees, often overlooked by small businesses, incurred by services like Square, Paypal, and Venmo.

3. Stash Some Cash. Set Realistic Savings:

Allocate a small, realistic percentage of your monthly income toward savings. This financial discipline not only builds a safety net but also fosters a habit of responsible financial management. Wondering where to put that money? Read about setting up a capital expenditure (ooo fancy) account here.

4. Sneaky Transaction Fees, I See You. Beware of Transaction Fees:

In the world of small business, every dollar counts, and transaction fees can be the silent profit killer. Don't let these fees sneak up on you. Stay vigilant and factor them into your financial calculations. Whether it's Square, Paypal, or Venmo, be aware of the costs associated with your payment methods. This attention to detail ensures accurate planning and helps you maximize your earnings without any unpleasant surprises.

5. Embrace the Weekly Payday Vibes:

After deducting all necessary expenses, divide the remaining funds to enable weekly payments to yourself. When opting for early self-compensation, consider rounding down your remaining amount. This "cushion" serves as a financial buffer for unforeseen expenses.

Paying yourself weekly offers a practical and manageable approach to personal compensation. It ensures a consistent flow of income while allowing for agile adjustments based on your business's financial dynamics.

6. Strategic Reallocation. Shuffle That Cash Around:

If your rounded-down cushion starts to accumulate, consider reallocating it for other essential aspects of your business. Whether it's investing in new equipment, marketing initiatives, or that coveted camera lens, strategic reallocation enhances the flexibility of your business finances.

In conclusion, paying yourself early in your business venture is not just a possibility; it's a strategic imperative. By implementing these steps, you can navigate the financial landscape of your business with confidence, ensuring not only its growth but also your consistent and responsible compensation. Here's to your entrepreneurial journey and the financial success that lies ahead!

Want to learn even more? I invite you to delve into another insightful blog post - "Don't Let Your Books Be a Horror Show: Avoid These 3 Bookkeeping Mistakes.” This complementary read will further empower you on your entrepreneurial path.

Additionally, kickstart your journey towards financial clarity by downloading QuickBooks Online, a powerful tool to streamline your business finances. Download QuickBooks Online today and take a huge step towards financial empowerment.