Entrepreneurs are not like the typical 9-5 workers. They are usually self-employed, so they do not receive salaries from employers or companies monthly/yearly. This explains why they have a different and unique financial arrangement. Entrepreneurs in Nigeria are wired to earn every day from selling their products. However, their earnings depend on the success of the business ventures, which can fluctuate significantly per month. 

Often, they even invest their personal capital in the business to ensure a good start, hoping that, in the long run, they can achieve the best. Also, they don’t exactly work with closing times; they are still on their phones posting their products and responding to customers in line. Entrepreneurs are hard workers, but most of them do not get the actual “employee benefit.”  

Should entrepreneurs pay themselves? 

Entrepreneurs, just like every other employee at different organizations, put in the work, so they should receive compensation for the good job done. Yes, they manage their personal finances and can determine what fair compensation looks like, but they should never cut themselves out of the privilege. If you have pulled all-nighters sorting orders, keeping track of orders, connecting with dispatch riders, taking stock, and restocking, you should get paid because that’s a lot of work. However, the default action of most entrepreneurs is to throw back the ROI (Returns on investment) and capital straight into the business and this doesn’t help them to factor in “salary payment”.

What measures must Entrepreneurs put in place to pay themselves?  

While entrepreneurs need to get some compensation, a couple of factors must be considered because they are “running a business” that must continue. Also, as an entrepreneur, you must know that your salary may not be static, which means that the salary varies monthly depending on certain factors which will be discussed below: 

Reevaluate your type of business from time to time

Entrepreneurs can have small-scale or large-scale businesses and this can determine how much they can spare to pay themselves. If your business is small-scale, this means that you may not have a lot of resources in place, and because of this, your income may not be a lot. Also, if you are looking to invest in more resources to upscale your business, you may not get to pay yourself enough. Of course, this is not entirely bad. Your business is still at the early stage and you need to invest in what you need to take it way beyond where it is currently. On the flip side, large business owners have enough resources and financial stability, which means that they can pay themselves something substantial. This doesn’t mean that they cannot upscale too but their salary will be enough and there will still be revenue to carry on with the business. 

Study your flow of income

There is a chance that if you make about N3 Million from your business this month, you could make more or less the next. This situation validates the fact that an entrepreneur’s salary cannot be the same monthly. If you have more this month, you could decide whether to pay yourself more salary and if you don’t, you may want to cut down on how much you allocate to your salary. Also, as an entrepreneur in their seed stage, it is possible to not have a regular income, and because of this, you change the pattern of your salary payment from monthly to quarterly. Note that you can still pay yourself, but may just need to give it time. Large business owners, on the other hand, can have a regular income and may not have to wait for long to enjoy the benefit of being a hard-working entrepreneur. Of course, they have had their “low time” as an early stage entrepreneur too.

Keep track of your business expenses

Depending on the type of entrepreneurial strategies you put in place in your business, your expenses will vary from time to time. This is why you should never place your personal and business funds together. If there is anything new you need to implement in your business, maybe buy a new freezer, a new printing machine, a bigger dryer, a faster sewing machine, a MacBook, or anything at all; the money you need to purchase these products must come from your business revenue. This is to help you to keep track of how much you have left in your business purse. Then, you decide, if I buy a new freezer this month, will I be able to pay myself? If I purchase a new printing machine, does that mean I can only pay myself in two months? Your business expenses determine if, how, and when to pay yourself a salary. However, don’t be too hard on yourself. If you worked really hard that month, run yourself some coins. 

Check your level of financial discipline

It is quite easy to handle your business finances your way because you are the boss here. But you need to remember that paying yourself should not jeopardize the financial health of your business. There is every need to create a balance between earning a reasonable income monthly/quarterly and having more than enough funds to continue running the business. If you have emergency expenses, it is not right to go into your business funds because you have exhausted your earnings. A business thrives on marketing, but it does even better when financial discipline is put in place. Removing a chunk of your business revenue to pay yourself as an entrepreneur is not the best, so you want to be prudent with how you reward yourself with the business money. 

Consider how much you have to spend on new investments

Sometimes, you have a new idea, and you want to execute it. For instance, if you sell branded shirts and you are doing well, and many months later, you think making branded tote bags will go a long way too. Good idea! An idea that means you have to spend money. So instead of taking your earnings or profit, you may decide to invest. There is no need to feel bad about not having anything to yourself that month because investing in new products as an entrepreneur is a good financial decision and a way to fuel your business growth. You can potentially attract new customer segments and markets, which can lead to increased revenue and profitability over the term. However, if you still think paying yourself even a little will not cause any financial dent in the business, do it. 

Think of your long-term goals

Many people have goals they want to have smashed in 5years, 10 years, or even 15 years and so do entrepreneurs. It could be that you want to move your business abroad in 10 years or have several branches in a few years. You want to consider all of these while you decide what your salary will be at the end of the month. With this in mind, you can make wise decisions about funding your market efforts, developing products, and expanding into new markets, even if you have to pay yourself a little in the short term. 

Taking all of these factors into consideration, you already know how to pay yourself a salary as an entrepreneur. Remember, you don’t have to be hard on yourself. If you worked so much, then you deserve some cash! Take it!