CleanEdge Accelerator Program

6 reasons why a founder/co-founder deserves a monthly salary just like their employees.

If you are a founder/co-founder, you will relate to what we are going to discuss. Does a founder or co-founder deserve a monthly salary much like their employees? The answer is yes! It is a common mistake that every founder make by not taking out a fixed salary amount every month. It is the harsh reality because we are so focused upon other expenses that are required to be made to keep the business up and running. Founders think that they’ll start taking out a fixed sum once the company starts getting a decent ROI. But does it really happen? No! It becomes a habit of not taking out any money for personal expenses. Moreover, in case of need, they swipe the card linked to their current accounts. By doing so, it is hardly unlikely to ascertain whether your business growth is rising or not.

With startups, 50% of the times, come bad-debts. Sales are not as expected, skipped loan payment instalment, vendors went missing, and so on. When a founder looks at these problems, it becomes his/her priority to set these issues straight to sustain the startup. For that, he’s always ready to skip on his own salary amount.

We know this has become a startup culture, that is why while the employees are sustaining the founders at times are not. Following reasons will demonstrate why a founder/co-founder needs to take a fixed salary amount for them.

  1.   Personal Use

 No founder is devoid of personal expenses. And to bear those expenses, one needs money. However, it is a bad practice to cater to those expenses from the current account of your business. Not only will it hamper your profit reports but also break the trust among your employees.

  1.   Ascertain the Actual Cost to Business

 You are giving time and energy to your business as much as any of your employee, maybe even more. That time, energy and resources are added to the overhead cost of the business. To ascertain the actual profit-earning, it is crucial for founders as well to extract a monthly salary from the business’ current account.

  1.   Focus on your Business

 If you’re constantly worried about your personal overhead expenses and how to meet them, the chances are unlikely that you’ll be able to focus on your business. With a fixed salary, you’ll be able to give your business undivided attention, without worrying about how to make both ends meet.

  1.   Ascertain where your business stand.

 If you can extract a decent salary every month from the business account while maintaining a healthy balance for other expenses, you’ll be able to ascertain where your business stands more clearly.

  1.   Determine whether you need more funding

 Planning to take out a monthly salary but don’t have enough revenue? It is most likely that your business will need more capital to sustain the overheads shortly. Note: don’t plan on raising capital solely to afford yours/co-founders pay. It’s only a factor in determining that.

  1.   Tax Benefits.

 Depending on your business sector, there might be several tax benefits that you can acclaim for the company. If you’re not taking a salary, it might cut into your company’s profits. You don’t want that to happen.

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