[indymike]

There's an old rule in small business: "Pay yourself first." It means, make sure you allocate money to pay yourself before paying everything else. Once you are used to it, it makes it a lot easier to get to something that seems like market rate.

[skeeter2020]

This "rule" falls down pretty quick IME. It's more like Taxes > Employees > Suppliers > Yourself.

[onlypositive]

If the rule falls down it's a sign your business isn't going to work. That's the entire point of the rule. It's supposed to highlight when you're beating a dead horse.

[dceddia]

I’ve always thought of this rule (and the similar Profit First strategy, which I personally follow) as more of a guiding principle.

When taxes, salaries, and expenses come due, those need to be a priority, so before any money flows in or out, have a plan for how to set your own salary at X% while also meeting those commitments.

[indymike]

The reason for the rule is to make sure there is ample planning to make sure you don’t fall to the bottom of the priority list. It is also to have an aversion to letting business get to a state where you have to forgo getting paid.

[simplotek]

The whole point is that if you can't sustain your company or even meet the baseline of it's operational costs then either you've grossly overextended your expenses or you don't have a viable business on your hands.

[rexreed]

The point is to allocate money for yourself first, and if there aren't sufficient funds to fund operations then you know you have a problem. Clearly paying necessary expenses must come first from a cash perspective but in terms of the business, if allocating for what you want to make results in the company not being able to cover expenses then you know that you are working for your business and not the other way around. It's a common trap.