Why Paying Yourself First Is A Good Thing

As a small business owner you might naturally put yourself to the bottom of the pile when it comes to getting paid and money from the business.

Your logic being that because your are the owner you need to lead by example and sure everyone else is paid first.

You check off your bills diligently and make sure any staff you have are paid first and then you put some money aside for a rainy day.

Before you know it the money that usually is left to pay you has all but dried up and your left with a smaller and smaller salary.

At the start of all of this process you probably had a number in mind to pay yourself from the business but all the other priorities took over and ate into your margin.

This is where a version of Parkinson’s principal (that work expands to fill the time available) comes into play though.

The variation to the principal is that: businesses / business owners will use whatever cash is available to sustain themselves.

This means that if you have 100000 to cover your costs you will spend all of it to do so.

However, if someone reduced the money available to do the work to 60000 you could still make it work and you would see savings that could be made if you hadn’t had to with enough cash in the bank.

So, what you should do we a business owner to be responsible to yourself and those that rely on you is to take the salary you want to pay yourself out of the business before the bills or payroll are made and then see if you can run your business at the lower operating cost.

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