Why Paying an Owner is Essential

The failing of business start-ups is legendary. There are gads of reasons, but the primary and obvious one is that the owner needs money. Without an owner paycheck, a for-profit business is cloaked in non-profit attire. If a business doesn't use a financial model that supports a regular owner paycheck, the business will break down.

An owner rarely thinks about being paid for each hour they spend on their business. They are in it for the love of entrepreneurship-ideation, independence, resilience, and eventual ROI. Yes they want a pay-off, but in the exciting start-up phase, they get through on a diet of fresh ideas which, to most entrepreneurs, are just as important as food and water.

Reality hits when the "cup of soul" is drained. This simply means that the business has moved past early start-up and now needs more elbow-grease and follow-through-and fewer fresh ideas. It normalizes (feels like work) and the owner gets hungry, literally and figuratively. And in some cases, they are getting hard up for cash. Because they are contributing fewer big ideas in this phase-which is what feeds this personality-their energy wanes along with the pocketbook and the to-do list now seems insurmountable.

For some, their energy returns. They figure out how to enliven it in their mind and hearts again and they break down that to-do list. For others, the hum is gone and without it, the business falters.

Those who find the hum again have figured out an essential element to success: their business demands from them a supreme confidence in their business idea. A paycheck provides a significant boost to reminding them of their intrinsic value. For bread-winners, it helps them keep their energy and time in the business.

A new business rarely provides big salaries. In fact, a smart business plan starts with a small payroll, and ramps up contingent upon hard-won sales. While labor laws don't apply to owners, an owner who believes in their intrinsic value, and does what it takes to ensure their cash flow supports their pay each month, is a smart owner.

The simple take-away is this: A successful and long-term business provides the owner with a regular paycheck that is in-line with cash-flow, real effort, and results.