CHAPTER 25: PAYING YOURSELF 2024
You pay, payroll, your people, attorney’s, CPA’s, book-keepers, spouse, kids, tradesman, contractors, suppliers a little all the time, a whole bunch all the time, a lot or a little once in awhile, sometimes, anytime, all kinds of variables. You also make determinations of what people are worth, perhaps you believe an employee is worth more than others, or perhaps one might lean towards professionals chosen as low bidder, medium or high. In addition one might consider, a company owner’s pay optional or inflatable, negotiable, set as a loan when taken, set as a loss when not taken, reduced, given as draw, any number of options.
This is about perception. What is perceived to be. Long story short, we’re not going to talk about giving employees huge bonuses so they stay and by this time next year they’re already gone. We’re not going to talk about wasting money on a few thousand dollar bonus or a small raise to professional allies, in the hopes of placating and acting grateful. To those responsible for the safety of your assets and all that is dear to you in your life you don’t pay, you share. That is for another day. Today it is about paying yourself. Are you taking money from the company or making money from the company? Always a good question. Taking money when you haven’t been making money is borrowing from the company when the company isn’t doing well, and probably with no intention or hope of ever being able to pay it back. Taking company money incorrectly, giving yourself bonuses incorrectly, or simply not paying yourself — as if that would fix any problem, all of it stems from not embracing the correct analysis of cash flow and the responsibility of a company owner, CEO, fiduciary, investor, whatever your position. And what is your position? At the very least each and every one of us has the opportunity to continue moving as the person in charge, the question is, “how long do you deserve that position?” If you can’t clearly pay yourself correctly, how in the heck do you expect to pay anything correctly.
2 Corinthians 9:15
Thanks be to God for his inexpressible gift!
What is the gift I’m referring to here? The company, your life, another day to continue. The allowance of prayer in these areas.
Psalm 25:4 New International Version
Show me your ways, Lord,
teach me your paths.
There are three kinds of CEOs when it comes to personal salary.
- Those who pay themselves too much,
- Those who pay themselves too little
- Those who pay themselves correctly
Matthew 13:9 New International Version
9 Whoever has ears, let them hear.”
This lesson requires hard choices. Payroll, expenses, payment schedules, all of these things need to be re-calibrated all the time, not just sometimes. Tending to such things is essential for long term success. That’s the problem sometimes. First of all, the job is to know where all the money is. Not just on the days that are bad, but everyday, good, bad or anywhere in between. That’s the job. And to know where the money isn’t. Where’s receivable, billing, collection calls. Once you know that, you can make decisions. If you’re paying yourself $7000.00 and you have a payroll expense of $7000.00, first look at your receivables and make collections, billing and make billing, get the money in. In the end of this situation, does it make sense, well, it is the only option left if you have a single bill for 7k and your salary is 7k, but it never works out like that. Basically either people take money when the company has none, or they don’t take the 7k and the company still owes 70k plus.
You don’t just blow it off and say I’ll use my check this week and I’m a martyr, no, no, no. Why? The company didn’t just get here today, it’s been a path to such things. The receivables are exhausted, everything has been billed and production has come to a stop. If that’s going on, you got bigger problems than your check, and there’s a possibility they’ll be no check for anybody for a long time. It’s just too convenient to say “can’t make payroll everybody, me included.”
Get on the phone and get your receivables, run down your billing, call customers and give them a cash discount for payment today, do the hard stuff, which is the right stuff.
Okay, what else drains a company? When bonus-ing out employees, don’t spend a gargantuan amount on somebody because you’re trying to make them stay. If they’re going to leave, they’ll leave whether you give them a bonus or not. When you give you a bonus ask yourself why? People bonus out money just because they need it, that is not prudent or correct. Be careful. How much does it cost to be your company every week? If paying yourself a bonus exceeds that, it better be because there’s two or three times that in the bank and number one before any taking of extra money, the bills need to be paid.
“Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor. ”
—Romans 13:7
I see it all the time. Things get tight, finally it comes to a severe problem. It might mean I didn’t call my vendors and negotiate payment, or let my taxes go, blame God, country, the economy, whatever. Blaming everybody except me. I’m the problem in this situation. Paid myself too much when I shouldn’t, paid other things I shouldn’t.
Psalm 25:4 – “Make me know Your ways, O LORD;
Teach me Your paths.”
Those who pay themselves correctly, receive (not take), taking is different than making …money. What is earned fairly and squarely is just that. To be that guy, a CEO needs to ask some very sobering questions almost every day.
Have you taken money from the company, i.e. stolen? Have you overspent corporate budgets? Have you failed to collect money owed? Have you committed the horrible infraction of low bidder and lost money on not just one job, but many? Are you selling too much or not enough, either way credit from your vendors will be required to complete the job or sustain the company? If the money can’t do both, what the heck are you doing? Are your customers demanding credit from you, do you act like a bank, which you are not? These are the questions of correctness.
2 Peter 1 New International Version
5 For this very reason, make every effort to add to your faith goodness; and to goodness, knowledge; 6 and to knowledge, self-control; and to self-control, perseverance; and to perseverance, godliness;
I must remember, anything I have, God gave it to me. Paying yourself incorrectly is a sign of obstinance and stupidity and not worthy of “important and special,” which God made me to be.
Long story short, if I do not use the gifts the Lord has given me in a correct and righteous manner, my life, as I know it, can change for the worse, very quickly, leaving one with. Does He give grace for trying? Absolutely. You do need to ask Him and then when He sends direction, don’t argue the point. What’s at stake? Losing all.
“The memory of being special without being special anymore..”
Produce, Deliver, Collect and check your income vs expenses, all the time. Stay away from Perceived Benefits, “if I borrow money, I’ll be able to make a ton more with that money, then I’ll pay it back and wow, what a success story I’ll be!” Wrong, never works out.
“What was a good perception to out to be a bad perspective.”
I hear it all the time. I prayed for an answer people say, and then when I ask them to do simple things, some won’t do it, the result of that decision is never good. Both those who do what is asked and those who do not, have the same fears. What you thought it would be, in your mind, didn’t turn out to be what it is in your life.
The difference between the two, those who take direction and those who don’t? Self-will, and for believers it’s easy to do what should not be done in the name of God, oh yea, like maybe they have the market cornered on the Holy Spirit and the stupid things they’re doing are anointed by God. Those who do the hard stuff and don’t resist direction, well, they get better, period. Always, did you pray about it first? Did you ask God, really? Did you wait for an answer, did you really listen to God or to You? At the end of the ride, God will say “My Will be done, or your will be done.” You can guess which one works better. What about non-believers, guess what? It’s the same.
Job 36:11
Holman Christian Standard Bible
11 If they obey and serve him, they shall spend their days in prosperity, and their years in pleasures.
Revolt against old ways, evolve, pay yourself according to income vs expenses. Collect your bills and correct your cash flow! Let the company pay you what is earned rather than what you think you deserve or don’t deserve. Live by what is actually available after expenses.
“Don’t participate in the things these people do. For once you were full of darkness, but now you have light from the Lord. So live as people of light! For this light within you produces only what is good and right and true. Carefully determine what pleases the Lord. Take no part in the worthless deeds of evil and darkness; instead, expose them. ”
—Ephesians 5:7–11
Chapter 25 is about destroying excuses and good reasons to do the wrong thing. Listening to God, well that’s a whole thing in itself, isn’t it? Do I really listen to God when I have money problems? Do I really ask God when I’m trying to manage cash flow? Let’s recap. Paying yourself too much or not enough is a head trip. You’re kidding yourself one way or another. Too much money is entitlement or just plain silly, you’re going to run out of money. Too little is based on any number of craziness that you make up in your head and the end result is it won’t help, you’re lying to the mirror.
The best thing? “Do what needs to be done,” be happy about it and pray to the Lord on all these matters to give clarity and Discernment.
Isaiah 30:21
New King James Version
Your ears shall hear a word behind you, saying, “This is the way, walk in it,” Whenever you turn to the right hand Or whenever you turn to the left.
Navigate creditors, negotiate higher margins, trim payroll as needed each week and adjust “owner’s draw” vs “payroll accordingly in a tax environment. It’s a moving target, learn to be a better sharp shooter, in for a penny in for a pound, in for the good times, in for the challenge. Company perks are only available to the CEO if you collect money on time, every time, all the time.
Philippians 4:12-13
12 I’m just as happy with little as with much, with much as with little. I’ve found the recipe for being happy
whether full or hungry, hands full or hands empty.
13 Whatever I have, wherever I am,
I can make it through anything in the One
who makes me who I am.
Time is never on your side. Check yourself daily, listen to those around you who have a history of wisdom, when you need more schooling and information, yearn for direction and be willing to yield in the face of doing things you don’t like, or don’t want to do.
Proverbs 19:3 NLT People ruin their lives by their own foolishness and then are angry at the LORD.
- Pray to God in thanks for the challenge
- Take a close look at income vs expenses
- Ask qualified people and if you find them, it is an answer to prayer, do what is asked.
- Be brutally honest with yourself and those around you
- Do not assume that you have it figured out
- Don’t shoot the messenger
- Pray thanks to God for every hard decision you get to make
Remember, there are three kinds of CEO’s, those who pay themselves too much, not enough and those who pay correctly. Which one are you? Chapter 25, paying yourself, it can be resentment city or it can be quite liberating…
Job 13:23
“How many are my iniquities and sins?
Make known to me my rebellion and my sin.
Amen..
Chapter 26 Paying Yourself 2024
