How Business Owners Can Finally Pay Themselves Without Starving Their Companies

How Business Owners Can Finally Pay Themselves Without Starving Their Companies

For many entrepreneurs, reaching seven figures in revenue doesn’t always mean a seven-figure lifestyle. Despite running successful businesses, thousands of owners still struggle to pay themselves what they’re truly worth. The challenge? Knowing when and how to take money out of the business responsibly—without crippling growth.

Why Many Entrepreneurs Don’t Pay Themselves Enough

Owners often fall into one of two traps: they either don’t know when it’s safe to start paying themselves more, or they’re unsure of the right method to do so.

The result? Leaders sacrifice personal financial stability while employees, vendors, and everyone else get paid first. But you didn’t build a business to be the only one left out.

Top Questions Business Owners Ask About Paying Themselves

1. Should I Take a Salary?

Yes—if the business can support it. Start with a modest salary that covers your basic household needs. As profits stabilize, increase your pay in line with growth.

In the early years, even business leaders like Dave Ramsey only paid themselves enough to support their families. Today, Ramsey runs a $250 million debt-free company, drawing a strong W-2 salary plus bonuses—but only after prioritizing team benefits, marketing, and profit sharing.

2. Can I Pay Myself While Building Retained Earnings?

Absolutely—but structure it wisely.

• If debt-free: Pay yourself what it would cost to replace you. From profits, direct about 50% into retained earnings until you have at least 3–6 months of operating capital. The remainder can be taken home.

• If carrying debt: Limit yourself to a modest living wage. Then direct 15–20% of monthly profits into retained earnings while aggressively paying down debt.

Always budget ahead for equipment, new hires, and software upgrades to avoid cash flow shocks.

3. What’s the Best Way to Pay Myself?

The method depends on your structure—LLC, corporation, or other—and your cash flow. But most small-business owners succeed with this framework:

• Pay a modest W-2 salary.

• Build a habit of retained earnings.

• Take owner draws or bonuses only from realized profit.

A consistent salary offers stability, prevents overdraws, and forces you to think like a CFO—not just the owner.

Reinvesting vs. Paying Yourself: Not an Either/Or

Owners often assume profits must always be reinvested. While true in the early stages or during debt repayment, a healthy company eventually does three things:

1. Reinvests in people, systems, and tools.

2. Protects itself with retained earnings.

3. Pays the owner based on actual profit—not emotion.

With margin, you can both lead responsibly and enjoy the reward of your work.

The Principle of Overflow

Paying yourself is not greed—it’s stewardship. In Jewish tradition, the Havdalah ceremony ends the Sabbath with wine poured until the cup overflows, symbolizing abundance meant to be shared.

In the same way, your business should generate enough “overflow” to support you, your team, and the broader community.

That’s more than profit—it’s noble profit.