12 Week . Challenge
Week 7 – Are you forgetting to pay your most important employee, yourself?

As a business owner, one of the biggest concerns is making sure you have enough funds to keep things running smoothly. However, it’s easy to get caught up in the day-to-day operations and forget about paying yourself. After all, it’s not always clear how to prioritize your finances.

But neglecting to pay yourself can lead to a less than desirable lifestyle, despite all the work you’re putting in. So, how do you ensure that you’re getting a fair salary on top of covering your business expenses?

One solution is to set up a payment schedule for yourself, just like you would for your staff and other bills. By budgeting for your own salary, you’ll see a significant change in your personal finances and overall well-being. Don’t overlook the importance of taking care of your own financial needs in addition to your business’s needs.

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A financially healthy company is a result of a frugal business owner not a cheap one.
Mike Michalowicz, Author Profit First

Why are you sacrificing your pay?

Many business owners often overlook the importance of paying themselves, assuming that their work is a given. But as a business owner, you are a crucial part of your business’s success. You are responsible for delivering high-quality services, marketing your business, and strategizing for the future. If you were to hire someone else to do all of these tasks, you would have to compensate them accordingly.

So why are you sacrificing your pay when your business encounters financial difficulties? It’s essential to learn how to pay yourself fairly and consistently, just like any other employee. By doing so, you’ll be more motivated to keep growing your business, knowing that your efforts are adequately acknowledged.

“You are the most important employee, and you need to treat yourself just as you would any other staff member who is integral to the success of the company.”

You must pay yourself fairly

It’s time to Stop the Cycle.

Every business owner has motivations that drive their desire to own their business. And they probably don’t include living day to day off credit cards, family loans, and always scrambling around to pay bills for your business or your life.

Owner’s Compensation in Profit First

You started a business to serve you, not for you to help the business!
That is why the second account in Profit First is Owner’s Compensation. This account ensures that you, as an owner, are getting paid for the work you do for your business. Because, after all, you are the most critical employee in your business, and it wouldn’t be here without you.

Determining Fair Owner’s Compensation

So, how do you determine a fair owner’s compensation for your work?

Start by listing all the activities, tasks, and responsibilities you handle for your business. Nothing is too big or too small to be listed.

For Example:

  • Marketing to generate new business
  • Servicing existing clients
  • Creating strategic plans to move the practice to the next level
  • Updating accounting records & reconciling checking accounts

Allocating Time and Compensation

Next, determine how much time you spend performing each task area.

  • Marketing to generate new business – 15%
  • Servicing existing clients – 70%
  • Creating strategic plans to move the business
    to the next level –
    10%
  • Updating accounting records & reconciling
    checking accounts – 
    5%

Setting Your Target Owner’s Compensation

Now, determine a fair compensation plan if you hire someone to perform each activity for your business. Then multiply that by the percentage of the time you allocate to that function. Then you add everything up, which is your target for your owner’s compensation.

How to Pay Yourself as a Chiropractor – Starting Small

If you haven’t taken a steady paycheck from your business in the past, reaching your calculated compensation amount won’t happen overnight. Building up to that target requires time and effort, but having a clear goal is crucial. Creating a target amount is critical for evaluating your business and spending habits. It ensures honesty and prevents diverting funds from yourself to cover operating expenses.

Steps to Achieve Your Owner’s Compensation Target

To work towards your owner’s compensation target, consider the following steps:

1. Evaluate Current Spending

Review your current spending to ensure that all expenses contribute value to your business. Remove non-value-adding costs and replace them with more valuable options.

2. Streamline Your Process

Examine your processes and identify tasks for efficiency improvement. Free up time to perform other revenue-generating tasks by eliminating manual entry, automating processes, and using time block scheduling.

3. Document Your Activities

Documenting what you do and how you do it is imperative for business growth. It sets up a system for expansion, making onboarding new hires faster and easier. Additionally, it may reveal faster and easier ways to perform tasks.

Build Business Health

As a small business owner, you take extraordinary risks in opening a business. A significant investment of time, energy, and money are needed to grow and nurture it. It would be best if you got compensated for all the hard work you do daily in the business.

By implementing the Owner’s Compensation account, you are ensuring that you are getting a paycheck for the work that you are performing. You are the most important employee, and your well-being is vital to the business’s success.

Profit First Chiro Roadmap

Is it one of your goals to have a financial system that is simple, easy, and allows you to make the best decisions to increase your practice's profitability?

With the Profit First Chiro Roadmap, you'll learn the five key numbers every chiropractor needs to know to make informed decisions about their practice. You'll also get a personalized roadmap that shows you exactly how to achieve profitability.

Stop struggling and start making a profit with the Profit First Chiro Roadmap. Get started today and see the results for yourself!

The Profit First Chiro Roadmap

The Profit First Chiro Roadmap Product Lineup become a Purposeful & Profitable Practice by implementing Profit First Chiro In your practice today
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