I’ve been talking to several clients recently about their business goals. It’s reminded me how common it is to see people running a business, working tirelessly to deliver a fantastic service to their clients but paying themselves a frankly measly salary. So many people pay everyone and everything else before they pay themselves, and are almost grateful if there’s anything actually left for themselves once everything else is covered.
It’s a very British trait.
But it’s bad for business! And here’s why …
Because You’re Worth It!
There’s absolutely nothing wrong with wanting to earn a fair wage for a fair day’s work. And most people running a business are putting in far more than a fair day’s work! Think of it this way – if you heard of somebody else putting in the work, the effort and the hours that you do, would you think they were paid what they deserve if they were taking home your salary?
If you’re working hard and delivering a great service to your customers it’s only right and fair that you’re paid appropriately.
It Leads To Undercharging
If you don’t pay yourself enough you may be constantly worrying about what you’re spending or what you can afford (both inside and outside the business). That’s very likely to have a knock-on effect when it comes to how you price your own services. Whenever you talk to a customer about your fees there’s a good chance that the little voice inside your head is already telling you that this is expensive and that they probably can’t afford it.
Which means you’re likely to appear tentative about your price despite your best efforts not to. And that gives the customer one of two messages. They may think that you’re not confident about your price so you’re probably not very good. Or they may think that your lack of confidence means there’s room for negotiation so they’ll try and push you down on price.
Either way you’re unlikely to be charging what you’re genuinely worth if you have these doubts circulating.
It’s Hiding The Truth About Your Business
I’ve lost count of the number of people I’ve spoken to who tell me that their business is doing well, yet they’re taking little or no salary from it. The brutal truth is that if your business can’t pay you as it should, then your business isn’t working – yet!
It’s OK to draw a tiny salary from your business in the early days while you get established, but after the first few months you should be seeing a change in that. It’s better to acknowledge this sign of under performance and use it to kick-start the changes you need to make to get the business doing better, than to keep hiding and tolerating this situation for months or possibly even years to come!
The More Profitable You Are The More Customers You Can Help
There is such a widespread misconception that profitable businesses must somehow be taking advantage of their customers. And money is the root of all evil, bla bla bla. Now let’s be honest, we’ve all seen examples of the big corporates doing everything possible to bleed their customers dry. But that doesn’t mean that profit is unethical. It can actually be quite the opposite.
The healthier your business is the more chance you have to serve more customers. Profit allows you to employ more people, to create more jobs and to deliver your service to more customers. A profitable business is in a far better position to help more customers than a struggling business. When you look at it that way you actually owe it to your customers to make more money!
A Payrise Helps All The Best People In Your Life
By taking home a better salary from your business you’re also much better positioned to help your family, your friends, your local community, your preferred charity, you name it. When you think of money purely for the sake of money then yes, it’s a very shallow thing. But when you look at all the people you can help and the wider impact that paying yourself more could have then this can only be a good thing for those people closest to you and those causes that mean the most to you.
So I hope I’ve convinced you that paying yourself a sensible salary is good for you and good for your business. If this is something you know you need to do but you’re struggling to see how your business can afford to do this then get in touch and let’s book a strategy call to talk through the changes that might make this possible for you.