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Long term technology bootstrapping founder here. Paying yourself is very important. You may need to work for free for a while but when you get your first payi

Long term technology bootstrapping founder here. Paying yourself is very important. You may need to work for free for a while but when you get your first paying customer pay yourself a little salary. And when you get a second customer, pay yourself some more. Try to get a near market salary before you hire your first employee. Corporate and your own founder/personal longevity is the path to success.

indymike 4y ago
There's an old rule in small business: "Pay yourself first." It means, make sure you allocate money to pay yourself before paying everything else. Once you are used to it, it makes it a lot easier to get to something that seems like market rate.
- skeeter2020 4y ago
  This "rule" falls down pretty quick IME. It's more like Taxes > Employees > Suppliers > Yourself.
  - dceddia 4y ago
    I’ve always thought of this rule (and the similar Profit First strategy, which I personally follow) as more of a guiding principle. When taxes, salaries, and expenses come due, those need to be a priority, so before any money flows in or out, have a plan for how to set your own salary at X% while also meeting those commitments.
  - onlypositive 4y ago
    If the rule falls down it's a sign your business isn't going to work. That's the entire point of the rule. It's supposed to highlight when you're beating a dead horse.
  - indymike 4y ago
    The reason for the rule is to make sure there is ample planning to make sure you don’t fall to the bottom of the priority list. It is also to have an aversion to letting business get to a state where you have to forgo getting paid.
  - rexreed 4y ago
    The point is to allocate money for yourself first, and if there aren't sufficient funds to fund operations then you know you have a problem. Clearly paying necessary expenses must come first from a cash perspective but in terms of the business, if allocating for what you want to make results in the company not being able to cover expenses then you know that you are working for your business and not the other way around. It's a common trap.
  - simplotek 4y ago
    The whole point is that if you can't sustain your company or even meet the baseline of it's operational costs then either you've grossly overextended your expenses or you don't have a viable business on your hands.
duxup 4y ago
I imagine the issue is just psychology,there's always a reason not to, another place to put that money that might help make more money. But then, you're never paid.
jbenjoseph 4y ago
Also the taxman in most jurisdictions gives you a tax amnesty for some yearly income per year that you are essentially throwing away with a $0 income.
holdenk 4y ago
Only the flipside, QSBS shares have some great tax advantages if you think you might have a traditional "exit" at some point.
tjbiddle 4y ago
Highly recommend the book "Profit First".
- 0898 4y ago
  Just to say - I bought this on your recommendation. Life changing. Thanks.
taneq 4y ago
Having a regular salary at all is great. Being able to pay yourself ~market rate is an amazing milestone.

indymike 4y ago

There's an old rule in small business: "Pay yourself first." It means, make sure you allocate money to pay yourself before paying everything else. Once you are used to it, it makes it a lot easier to get to something that seems like market rate.

skeeter2020 4y ago
This "rule" falls down pretty quick IME. It's more like Taxes > Employees > Suppliers > Yourself.
- dceddia 4y ago
  I’ve always thought of this rule (and the similar Profit First strategy, which I personally follow) as more of a guiding principle. When taxes, salaries, and expenses come due, those need to be a priority, so before any money flows in or out, have a plan for how to set your own salary at X% while also meeting those commitments.
- onlypositive 4y ago
  If the rule falls down it's a sign your business isn't going to work. That's the entire point of the rule. It's supposed to highlight when you're beating a dead horse.
- indymike 4y ago
  The reason for the rule is to make sure there is ample planning to make sure you don’t fall to the bottom of the priority list. It is also to have an aversion to letting business get to a state where you have to forgo getting paid.
- rexreed 4y ago
  The point is to allocate money for yourself first, and if there aren't sufficient funds to fund operations then you know you have a problem. Clearly paying necessary expenses must come first from a cash perspective but in terms of the business, if allocating for what you want to make results in the company not being able to cover expenses then you know that you are working for your business and not the other way around. It's a common trap.
- simplotek 4y ago
  The whole point is that if you can't sustain your company or even meet the baseline of it's operational costs then either you've grossly overextended your expenses or you don't have a viable business on your hands.

duxup 4y ago

I imagine the issue is just psychology,there's always a reason not to, another place to put that money that might help make more money. But then, you're never paid.

jbenjoseph 4y ago

Also the taxman in most jurisdictions gives you a tax amnesty for some yearly income per year that you are essentially throwing away with a $0 income.

holdenk 4y ago

Only the flipside, QSBS shares have some great tax advantages if you think you might have a traditional "exit" at some point.

tjbiddle 4y ago

Highly recommend the book "Profit First".

0898 4y ago
Just to say - I bought this on your recommendation. Life changing. Thanks.

taneq 4y ago

Having a regular salary at all is great. Being able to pay yourself ~market rate is an amazing milestone.