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All of these seem reasonable, self-explanatory except (4), can you expand/expound on why not taking a salary seems harmful? Is it because then the owners tend t
by peacetreefrog 9y ago
All of these seem reasonable, self-explanatory except (4), can you expand/expound on why not taking a salary seems harmful? Is it because then the owners tend to just dip into their cash on hand and aren't that disciplined?
- dazc 9y agoIsn't it just an indicator that the business isn't making any money?
- peacetreefrog 9y agoI suppose and that makes sense, but that's more of a correlation/symptom of failure, whereas 1-3 seem more causal
- rmason 9y agoThe business is losing money and by not taking a salary the owner is trying to prolong the inevitable. However in most cases he or she isn't making any changes in how the business is run so real improvement is nearly impossible. In effect all they're doing is delaying the business closing.
- taneq 9y agoIt depends why they're not taking a salary. If the owner is already loaded and doesn't need the money, that's fine. If they're having some cashflow issues but the pipeline is full and there's revenue coming, then that's probably OK. If the business is tanking and can't support a wage, obviously that's bad.
- Zanni 9y agoExactly. This is an issue with non-profits as well. They delude themselves into thinking they're in decent financial shape, even though they have a managing director, often the founder, who's taking no salary, or a very reduced salary. Then that person moves on and--BAM--they're hit with market rates trying to replace them, and they're in trouble.