This article was originally published in the IDA The Detail Dialogue January 2023 Newsletter

Paying yourself first seems to be a pretty foreign concept in the detail industry as a whole. This is a very grave error on the part of an owner. You absolutely have to get yourself on payroll if you ever expect to scale your hobby into a profitable organization. You have a much better understanding of the profitability of the company when you pay yourself. Here are three things to keep in mind when it comes to your pay. 

The first thing you need to realize is that you are not running a charity. You can drastically change your mindset, pricing and target client by putting yourself on payroll. You will very quickly learn if you are charging enough if you cut yourself regular paychecks. If the money left over isn’t enough to run the business, something has to change. 

The second thing you will realize when paying yourself is that adding staff becomes an easier decision. When you pay yourself and end up with surplus, it is such an easy decision to add new team members. The goal should be to get to this position so that you no longer own a job, but a financial asset. 

The third and last thing you will realize when paying yourself is that efficiency trumps everything. You will learn very quickly your cost of labor and what that labor will produce. This again lends itself to making the decision to add staff much easier. You can see much more clearly that xxx amount of labor makes me xxx amount of money. So, in theory you can add additional labor and predict what that investment will produce in additional revenue. 

My final thought on this subject is that paying yourself is a matter of self respect. You wouldn’t go work for someone for free with the hopes of achieving greatness someday. Why are you working for yourself for free? Be better!