Did you know that the average entrepreneur only pays himself around $50,000 a year? While this is a decent income, it’s likely not the number you had in mind when you decided to go into business for yourself. One of the perks of being an independent advisor is that you can set your own hours and your own income. However, if you wait to pay yourself until after you’ve paid everyone else at the end of the month, you’re not going to hit the number you’re shooting for. So what’s the answer to this dilemma? You need to pay yourself first. Paying yourself first means you take out your salary and money for personal investments before you pay monthly expenses or make any discretionary business purchases. Here’s why this is so crucial.
Your business should serve you, not the other way around. That means it should pay you enough to sustain your personal lifestyle. You should not be making sacrifices to keep your doors open or even to grow your business. If that happens, you become a slave to the very thing you created. When you pay yourself first, you’re able to maintain a comfortable – keep in mind I say comfortable, not lavish – lifestyle. This lowers your stress levels, makes for a happy home life, and allows you to concentrate on building your business and serving your clients. If you don’t do this, the stress and sacrifice will wear you down and you’ll eventually decide to throw in the towel.
Emotional agility is key for any entrepreneur and without it, you’ll have a tough time building momentum. It’s much easier to stay agile and dedicated to your business when you’re getting paid now instead of “someday.” Momentum will keep you going through the bad times and push you to even greater heights during the good times. Not paying yourself first and being “okay” with whatever’s left after you’ve paid everyone else is the best way to bring momentum to a screeching halt.
Building the Profitability Muscle
You are the result of your thoughts as an entrepreneurial advisor and if you don’t get into the habit of being profitable, you might never reach your goals. Profit – not revenue –is the reason you are in business in the first place. If you feel guilty about making a profit, you’re not alone. Many entrepreneurs have to get over this feeling and understand that profit is the reason why businesses exist. The more you pay yourself first and make a profit, the more your mindset will shift and you’ll make it a habit for the life of your business.
As the business owner, you are the leader, the captain, and the #1 salesperson. How can you expect your business to expand if the #1 employee (you) aren’t being paid what you’re worth?
Pay yourself first, and watch your business expand with you. If you’d like to learn more about how to take your entrepreneurial advisor business to the next level, take our Evolved Advisor course.