Many people dream of having their own company, starting in the world of entrepreneurship and building great brands that are recognized throughout the world. However, during the planning and development process of the project, the consideration of a salary that we deserve as owners of the company is often overlooked.
At the beginning of a venture, the budgets usually contemplate the expenses that the business demands: raw materials, production, services, taxes, leases, etc. However, if we do not include an estimated value of our salary, over time there may be gaps in which profits cannot meet all expenses and the development of the company is slowed down or our quality of life is affected.
It is important to remember that one of the fundamental parts for the success of the entrepreneur is to divide the finances of the company from the personal finances, since they are two totally different worlds that are better to have separated. That is why the idea that the profits of the company are also the profits of the owner is something that we must reformulate and start organizing from the early stages of the creation of our enterprise.
To reach an optimal value we can choose two paths. The first is to abide by what is stipulated by law such as a Minimum Wage or having as a reference other salaries that have people with tasks similar to ours. However, these fixed rates may not correspond to our needs or exceed the capacity of our company, hindering the development process. Second, we can choose to build it from scratch by budgeting according to expenses and profits.
To prepare these budgets and identify an expected salary range, we must ask ourselves at least three questions that will help us, not only to know how much money we need, but also to project a balance and growth for the company: How much do I need for my daily life? How much money does my company have? How much would I like to earn?
Asking ourselves how much we need to live on is the starting point to start building our salary as business owners and include it in the business budget. Starting from the fact that we must meet the basic needs as human beings, we can have the amount of how much money we must have to be able to meet the expenses of each month.
In this personal budget, it is essential that we initially include topics such as housing, food, family expenses, health and a percentage of savings that includes some unexpected extra. From that sum, we can determine a minimum and adjusted value that we need to support ourselves and our family. Let’s not forget that in some countries there may be extra expenses dictated by law such as pension contributions or labor insurance. Additionally, we must have the accounting of the company with monthly income, expenses and profits.
Once both budgets are taken into consideration, it is time to see if what the enterprise generates can support this initial salary. In case the profits of the company cannot offer such value, it is necessary to make adjustments that allow us to reach a balance point in which the most urgent expenses are resolved, and we can still include a percentage for contingencies. Let us remember that the first months of a venture, there are usually not great profits, because a client base is still being built, recovering the expenses of the initial investment and creating a place in the market.
Although this basic salary that we have built may not be what we expected, sometimes the scenario can be different and present very good earnings, so in addition to having a value according to the basic personal budget, we can include some extra expenses that They can help us improve our lifestyle, such as leisure, savings or investment.
However, even if we have achieved a functional salary, we must ask ourselves how much we want to earn in the future and set gradual goals, and thus start looking for business strategies, improve business processes, expand our customer base, etc. so that our business grows over time and meets the goal we want to meet with a much more comprehensive and comfortable salary for personal and business finances.
The business world is very diverse and changing, which is why it is important to do this calculation at least every 6 months, to assess if the value we have is really correct or if, on the contrary, we need to make changes to accommodate our finances. to the context in which we find ourselves. Although the process can be somewhat complex and full of uncertainties, the most advisable thing will always be to have expert advice to help us build budgets properly, complying with all legal and technical guidelines, to find that point of balance so important for the path of the entrepreneur.