A Complete Breakdown Of The Steps You Need To Take To Get Paid As A Business Owner

A Complete Breakdown Of The Steps You Need To Take To Get Paid As A Business Owner

I am here today to talk more about paying yourself as an expert, and the steps you need to take to get paid as a business owner, and really how to pay yourself more without doing more. That is going to come down to understanding all the steps that actually go into you paying yourself.

Because if you had, at one point, worked for somebody else—and 87% of people surveyed on my Instagram poll recently said that they worked for somebody else before they worked for themselves. They were either in a corporate role, an academic role in some kind of traditional 9 to 5 role before becoming self-employed, before choosing to earn income independent of an employer—if that is you, if you were in a traditional 9 to 5 role (I certainly was), this is a big  shocker.

Prior to running your own business, you would complete the assigned tasks as per the job specifications and money would automagically appear in your bank account through direct deposit. You didn’t have to worry about paying for benefits that came out of your paycheck and you didn’t have to worry about making sure you were handling your retirement because you know likely that was coming out of your paycheck too.

I know I was that HR person who would be running around going, “Are you making sure that you’re saving enough for your retirement? We have a financial planner coming on-site to do lunch and learn and to teach you about financial literacy and what you might need to know about the importance of saving for your future.” 

We don’t have that now in our own businesses. Well, technically you do, you have me. But the reality is we don’t have somebody who is doing that for us now. I gotta tell you personally, it was a big shock when I realized that my revenue, all the cash that I made in my business, my revenue, all the money taking in in my business did not equal my take home pay, that there was a difference between revenue and what I paid myself as the owner of the business.

$100,000 in revenue did not equal $100,000 in my owner’s pay. 

I think that that’s probably a really big shock for a lot of people. If you started your business with the original intent to replace your corporate salary, you might be scratching your head as to like, “Hmm, why isn’t this as easy as I thought it was going to be?” I want to have a really transparent conversation. I’m going to outline the things that need to happen in order for you to pay yourself—and there are a lot of things.

The point is not to confuse you and not to overwhelm you, but to validate you in the fact that why is this not happening or why am I not making the amount of money that I have wanted to make, that I thought I would make, or any of those things because we’ve taken a two step process, complete job requirement, access personal bank account, like it’s really one step, complete job requirement, and then they just pay you, that is the contract. I work, you pay.

That is not how it works here. There is an infinite amount of more steps, or I should say that those job requirements are quite lengthy in order for you to get yourself paid. That’s really why I am having this conversation. Throughout this podcast episode, I’m going to let you know where I have resources for you, whether they’re free or paid to help you along your way.

How much do you actually need to make and how does that translate to your revenue? Don’t hesitate. Don’t be intimidated by the fact that it’s a calculator or that it’s a spreadsheet. I have done the programming for you. I touch base with you along the way to see if you have any questions and if you need any support from me for free, because I really just want to see more money in the hands of more women.

The first spot is the Revenue Goal Calculator. How much do you actually need to make and how does that translate to your revenue? Don’t hesitate. Don’t be intimidated by the fact that it’s a calculator or that it’s a spreadsheet. I have done the programming for you. I touch base with you along the way to see if you have any questions and if you need any support from me for free, because I really just want to see more money in the hands of more women.

Women and financial literacy 

Until I started my business, until the second year in my business, I deferred all of my money stuff to my husband. We started dating, I was very young, I was 19 before the frontal lobe was fully formed, we moved in together and I was 23. We got married, I was 24. From the time we moved in together when I was 23, I just took my paycheck and gave it to him. It got direct deposited, we have always shared bank accounts, and he just went and did what he needed to do with it.

That progressed that way for a really long time, almost 20 years until I was 39. When I started this business, I was like, “Egad, I need financial literacy. I need to understand what is happening.” It wasn’t that I didn’t have any financial literacy. I did. I worked in a corporate organization. I worked in the compensation function. I was responsible for people getting paid. I was responsible for looking at budgets. I was responsible for looking at P&L, but it somehow is very different when you own a business.

Even with the little knowledge that I did have, it wasn’t the right knowledge, it just scratched the bucket, it was a big learning curve. It took me an entire year to realize a few lessons, one, business requires a capital investment. Even for those with a low barrier to entry, you need to make investments in systems, people, knowledge, and things, and that is important. This is not a no-cost thing. Businesses require capital investment. I will say it all the time. This is why over-saving, hoarding your money, and penny-pinching, are not good for business.

It’s not good in personal finance either. That is a really big myth, but I’ll tackle that one another time. It’s not good for business. What I generated in revenue did not equal what I would be able to pay myself and I had no idea what that number was. I was shooting fish in a barrel for a few years.

Then giving up benefits like my 401(k), my 401(k) match, my health care contributions, paid time off, needed to be addressed. I didn’t put myself at risk for the freedoms of business ownership. I wanted to make sure that I could address those things as well as run a business and live life on my own terms. Nobody told me any of this when I was starting out, not even my business coach, and she was amazing. She was awesome. This was not her thing. This just probably wasn’t in her wheelhouse or her area of expertise, so it wasn’t a conversation that we had.

However, there were plenty of people willing to tell me how to run Facebook ads to determine if my ideal client shopped at Target or Nordstrom, or how to use Periscope to get more clients. But nobody was out there with this really important information. As I traveled down the path of trying to post on social media three times a day and be everywhere to everyone, I had no idea why I was doing any of this.

What would truly move the needle? What would actually allow me to get paid as a business owner? Would that effort equate to a salary that was commensurate with my expertise and my experience and my effort? When would I stop feeling like a giant failure for not earning enough income? This was a big one for me because I had always been a high earner in my jobs. That was always important to me from when I first got my very first job. I had a history of really doubling my income quite quickly because of the opportunities that I had created early on in my career.

I had always been able to support myself if needed. This was very important. This was something that my father really conditioned me to not need a husband. I always joke around that he raised me to be the single mom of like 12 children with no husband and that I was just going to earn all the monies and make it work and be able to provide for my family. That is how he raised me, certainly has come with its challenges. I’m not saying that was the best way to be raised, but that I was able to earn the income to support myself.

When I started this business and left my full-time job, it was the first time in my life, at 39, that I was not able to do that and I gave that so much meaning. That was really something that I had to overcome in order for me to step into earning the money I earn today in my business.

When experts don’t pay themselves an expert salary, they put themselves on the fast track to entrepreneurial poverty. 

The vast majority of business owners, you’ve probably heard me say this over and over again, are living paycheck to paycheck, and we want to stop them. That is one thing that we want to stop from happening.

I know that you love what you do so much that you would even do it for free. I feel the same way. I am obsessed with what I do. I’m obsessed with doing work that brings meaning and purpose to my life. It’s work that just motivates me naturally. I sometimes do joke that I would do it for free but that just really leads to an epic amount of burnout, leaving you feeling resentful, and maybe even rageful. I know that I have felt like that at times. I want to acknowledge that these things exist for us, but that doesn’t mean that it has to stay that way or be true all the time.

I want to now give you the steps that you need to take to get paid as a business owner. 

I’m going to outline these steps and they might sound very overwhelming, but I don’t want you to be overwhelmed. I just want you to go, “Okay, there’s a reason why this is not easy. There’s a reason why I might be struggling with this. Here are the areas that I might want to tune into over a period of time.”

First, understand your personal financial situation and where you want to go. 

What are some of those near term, midterm, long term aspirations? If you hop onto my email list by downloading the Revenue Goal Calculator, we frequently run workshops that talk about what you need to know about money to build wealth in any economy. We do talk about these near term, midterm, long term aspirations and goals. You’re going to want to keep an eye out for that.

Two, you’re going to want to determine what entity is the best entity for your personal needs.

 This is going to require you to speak to an accountant and/or an attorney. This is something that my accountant, my CFO helped me with. They helped me decide, do I want to be an LLC? Do I want to be an S corp, a sole prop? When I first started my business for the first year or two, I was a sole proprietorship. Then my accountant and I sat down and we had a conversation, and we decided that I was going to become an S corp.

Again, everybody’s personal situation is different. Please consult a professional advisor. The one thing that is a benefit of having an S Corp is that you are only taxed on what you technically pay yourself but you’re not taxed on the distributions you take from your business. You can be paying yourself by taking a paycheck but also taking distributions. This is why an accountant is a very, very important person to have on your team.

If you do not have an accountant, if you want a new accountant, and you would like me to refer somebody from my network of Profit First accountants, my CFO is a Profit First accountant for my firm, I’m happy to make connections for you with people in your country, in your state, they don’t have to be in your state, but wherever you want them to be and help find you a really good match because this is really important.

If you are looking for an accountant and you want me to connect you to one, you can DM me on Instagram and let me know. That’s probably the best way to grab me in that way or you can send an email to support@theboldleadershiprevolution.com and put accountant recommendation in the subject line. You have to determine what kind of entity you’re going to have.

Three, set a revenue goal that ensures you can meet the personal needs that you’ve established and make a plan for those next level aspirations.

 This is where our Revenue Goal Calculator comes in handy. It is free. You can get a handle on it. We have other resources as well in our resource hub that support you in using that Revenue Goal Calculator. It’s really important to me that women have this tool in their hands.

Fourth, you need to create a service that allows you to meet that goal.

Once created you must continue to tweak and evolve this offer so it differentiates you in the marketplace and is irresistible to your customers. This does take continued refinement, which is often a critical step that business owners miss. This speaks to your business model because what I see a lot of people doing is needing to earn, say, $100,000 in revenue and going with a business model that maybe sells $47 membership or a $97 membership.

If it’s a $97 a month membership, you’re going to need to sell a lot more of that than if you are an expert who has an expertise and qualification that can command a much higher dollar value. That doesn’t mean that you’re selling to other businesses. I have paid a tremendous amount of money to healthcare practitioners and other folks. I pay a lot of money to my dog trainer by the way, a lot of money. I pay a lot of money to the tutoring center to tutor my children. It’s not about like, “Oh, I have to only sell to other businesses and business owners,” it’s about carving out the value of what you do sell.

Five, You have to understand how many of these services you need to sell to ensure you meet your revenue goal.

If you’re going to require a business model that requires a lot of traffic, and a lot of leads, that’s not going to be as profitable as selling a more premium service.

Six, you need to identify your target market.

You need to identify your target market and understand why they buy. What is the job they’re looking to do. We cover this in our curriculum in The Bold Profit Academy

Do you see why this is not as easy? I’m on step six. You have to do these things in order to get paid, in order to get money from your business bank account. We need to get money into the business bank account, and then we have to get money from the business bank account to your personal bank account.

At this point, we’re just working on getting money into your business bank account. We haven’t even talked about getting the money out of your business bank account. Again, I’m not sharing this to be complex and overwhelming. I’m sharing this to say that there’s a reason why this might not be working for you. There are steps.

Anybody can move and work these steps when they know how. This is why business owners feel like there’s such a large learning curve. I don’t think that anybody’s breaking it down like this for you to see, “Okay, these are all the steps I actually do need to take and these are the levers that I need to pull.” 

Seven, you need to identify what your sales process is going to look like. 

You need to identify your sales process so that you know exactly what steps you need to take on a daily, weekly, and monthly basis to create more predictable revenue. 

This is where you need to understand how to convert a lead to a sale. This is why I say all the time—folks don’t like it—but as a small business owner, you are a commissioned salesperson. If you don’t sell and convert those leads, you’re not going to have the money to pay yourself.

Eight, you have to enroll your best fit clients. 

Not anyone who will buy your service. Anybody who will buy is actually very costly. It’s not profitable. You want to enroll your best fit clients into your service. Then you need to receive payment and you need to follow up on payments if a client is late or their credit card declines.

Nine, understand how all those payments you’re receiving flow through your business cash flow.

How does all the money in, revenue, get allocated and move through your business? It has to get mapped through your business cash flow so you can become profitable, so you can pay yourself, so you pay the tax man, and are utilizing all your resources, all your financial resources for the continued growth of your business. This is exactly what Profit First does. It gives you this system. This is exactly where Profit First comes in. For those of you who might be curious or wondering or wanting to implement that.

Ten, based on your personal and business goals, you’re going to decide.

Nobody’s going to tell you, I know that sucks. I know you want someone to tell you exactly how much money you should be paying yourself—but based on your personal and business goals, you can—with guidance, we do guidance in The Bold Profit Academy and when you work with me—decide how much money you’re going to pay yourself.

Now this is going to look really different depending on where you are in different stages and phases of your business. I want to normalize that. 

For the first two years of my business, I chose to pay myself nothing and aggressively invest in my skill set. For year one, I worked my 9 to 5, so I still had income coming in. For year two, I had lived off of one, but I had saved, two, my husband’s income. We cut way back on our personal expenses so that I could do that. Then in year three, I started building my salary back up and for the last four years, I’ve been earning more than I was earning in my 9 to 5.

Eleven, establish a twice-annual review period where you check in with your salary and decide if you’re going to give yourself a raise. 

You don’t have to give yourself a raise. You might choose to intentionally use that money differently in your business. But then it’s an intentional decision and you’re not just a victim of happenstance, circumstance, or lack of knowledge at that point. Now you’re empowered. You’re making wise money decisions.

Twelve, transfer money to your personal bank account. 

Either using a payroll system like a Gusto or transferring money from your business bank account to your personal bank account.

Those are steps, by the way, to get paid as a business owner. This would be maybe the job description, the list of items and tasks that you need to complete, the skill sets and competencies that you need to have in order to get that paycheck.

I hope that you are going to take something away from this, maybe even if you just listen to it again, and just go, “Yes, I’m doing that. Yeah, I’m doing that.” “Oh, no, I’m not doing that,” and find one thing that you’ve gleaned, one insight or shift in perspective that you can go and implement.

If you don’t have the Revenue Goal Calculator, please go download it. 

It is a tool and a resource. It’s free. It’s there for you to use. If you need help putting this all together, gaining the skills, gaining the competencies, that is what The Bold Profit Academy is for. It is there to help business owners pay themselves like an expert, pay themselves a six-figure salary. They’re designed to bring you to a revenue of at least around $300,000 a year. If you are beyond that, and you’re like beyond this, you want to work on other things, you can absolutely schedule a time to talk to me and we can book you in for an intensive.