Pay Yourself First


How large must your company be to pay you what you want? 

Make sure this never happens to you: “My company is growing, but I’m not putting any more money in my pocket. I’m still occasionally ‘loaning’ money to the company to cover payroll. And I’m still carrying uncashed payroll checks I’ve written to myself.”

The first step is knowing how much you need, so that you can find a way to bring in that much. These exercises take you step-by-step to calculate how much revenue your business must bring in to cover all your operating costs, pay you well, and generate a profit besides.

Topics covered:
• Calculate how much money you need—and want—to pay yourself.
• Make the business “bottom line” your “top line.” Flip your profit & loss statement upside down.
• Calculate needed business revenue, starting from your paycheck.
• Formula to calculate needed business revenue--using your paycheck. overhead, profit needed, and gross margin from sales.
• The three biggest barriers to calculating needed revenue
• How to calculate your real gross margin
• Estimate your needed profit
• Estimate your expected overhead costs in the coming year

This approach is tailored to small service businesses, such as sole professionals, consultants, contractors—with or without employees. For home-based solopreneurs, it will force you to separate your home and business expenses—a key step in becoming a “real business.”

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