1. It’s the temporary ups and downs of business. Fat months and lean months. The key to success is to set aside money during the fat months, so that you can draw it down during the lean. Works the same way if you have a revolving line of credit at the bank: you borrow to cover a temporary shortfall, then repay it FIRST when revenue comes in. Takes discipline.

2. You are just starting up, and cash flow doesn’t yet cover your paycheck plus essential business expenses. The question is, how long can you go like this? Many small businesses start up way undercapitalized, and they deplete their savings before they make a profit.

If you had venture capital (alas, don’t we wish!) you’d be getting paid a salary out of that initial cash infusion. Why? Because you’re the most valuable employee there! Same is true even in a 1-person operation–even more so. So you need to figure out your monthly nut, and make sure you get it.

Paying yourself a regular paycheck at the beginning of the month has great psychological and spiritual benefits. It sharpens the mind: “I’m dang sure I’m going to bring in that money!” You insist on getting paid on time, and get initial deposits, invoice more often, and call the very day a payment is past due. You select more profitable jobs. You bill for all the work you do.

If you don’t pay yourself, it saps your spirit and energy. Imagine having an employee and saying, “Well, sorry, I can’t pay you this month.” No way! Well, you are the most important employee you have.

l.