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Pay yourself enough to live if you want to be successful later on
A big problem a lot of businesses run into is that the CEO tends to take a big chunk of the profits as their salary. This happens a lot, no matter how small the company is, and it's usually because the person running the business wants to feel successful and buy a lot of mundane things. I've learned this from experience when I started a company with four friends, all who owned 25% of the business, but the "CEO" decided to be the big man and spend money on whatever he wanted because "He was the boss" as he liked to say.
Well, the downfall of that company wasn't the way it was run, it was the way we appointed shares, and that will never happen to me or one of my businesses again lol.
My experience with "CEOs" acting like they can spend all the money because "They're the Boss" is why I now pay myself as much as I need to live and re-invest everything else to make my websites and businesses more successful. This helps me live today, tomorrow, and I might be able to sell a website for top dollar later on and retire early (probably not, but I can dream lol).
In this discussion, I'll be going over four things you need to understand when it comes to living paycheck to paycheck now, even if you could live better, and becoming successful later on.
It takes money to make money
One thing I learned early on, even though others will tell you differently is that you need to spend money to make money. Sure, you can invest all of your time into SEO and eventually get sales, but the people who spend money on ads now have an SEO team doing all that work and are lightyears ahead of you lol.
It may not take money to make money, but it helps you jump ahead on your way to success, build your company, become an authority, and be the top brand in your niche. Do you think Coca-Cola isn't spending money on advertising? They are spending millions of dollars each month, and that's why they're now killing Pepsi lol.
You're not rich... yet.
You can't spend all of your profits now and expect it to be there next week or next year. You need to bootstrap as much as you possibly can and turn your profits into more profits instead of buying a nice pair of shoes, a car, fancy clothes, etc.
The more you re-invest, the more likely you'll be successful, and that means you'll be able to buy all those fancy things you have your heart set on, and you won't be hurting for money later.
Hire people instead of paying yourself more
Instead of paying yourself 100k a year, why not hire a couple of salespeople for 30k a year, and then you can focus on everything else that doesn't revolve around customer acquisition. Think about it, you could pay yourself $100,000 a year and do everything on your own, or you could pay yourself $30,000, pay each of your salespeople $30,000, and you will then bring in much more profit because of those two people working 8 hours a day to boost revenue. You'll have to be selective when hiring a salesperson, so do your research on them, and hire the people who understand your industry and can bring in customers.
Save for the rainy days because they will come
Not only do you need to pay yourself less, but you will need to save up for those rainy days that will come. Yes, you will have downtimes and profit draughts that you will need to work through, and if you don't have funds saved up, then you can kiss your employee's goodbye.
Saving money is a normal thing when it comes to running a business, and the ones who aren't saving up for rainy days are the ones who have gone out of business. Don't be one of those businesses that fail within their first five years.
When running a business, you need to be cautious about every turn and every step you take until you have a finely tuned machine that brings in sales on its own. In the beginning, you won't be able to spend much, so don't buy a car and think everything will be ok because you never know when a profit drought will hit. Hire credible people to help you, while you eat ramen noodles, and make sure you keep them happy at all times. The better the moral, the better the sales, and the better the profits
Thanks for reading
- Tommy Carey