Are you thinking about starting your own business? If so, at some point you’ve probably wanted to know what an entrepreneur’s salary is and that’s what we’re going to discuss today.
Entrepreneurship is one of the most exciting jobs in the world. There’s nothing like planting something and watching it sprout into a tree that provides shade for hundreds of people. Could we compare it to raising a child?
But the truth is that earning money with a start-up is not that simple, because unlike a regular job you don’t have a guaranteed salary, so you will have to focus on the right growth strategies.
Are you ready for this new reality? Get ready to see what the possible economic future holds for you:
Table of Content
- How much does an entrepreneur earn?
- Factors to consider when determining your salary as an entrepreneur
- Benefits of making money as an entrepreneur
- Tips for being a successful entrepreneur
How much does an entrepreneur earn?
The entrepreneur’s salary is one of the most misunderstood topics in the business world. When you start a new company, a lot of resources go into organising all the activities to successfully launch that product.
Specialists say it is a slow process: it can take several years to sustain the operations of the project. That is why it’s very difficult to say what the fixed salary of an entrepreneur is, because in most cases they do not have a salary at all.
What does it mean that they have no salary? Well, if most of the resources are used to reinvest in the same business, it’s difficult to inject the surplus, since it is precisely destined to cover unforeseen events that may occur.
However, in the United States, the average salary for a small business owner is around 30,000 to 160,000 USD. However, these are projects that have been in business for some time and have overcome the initial barriers that any growing company tends to face.
These entrepreneurs are paid a fixed salary like any other employee, in addition to different loyalty and performance bonuses depending on the results obtained at the end of the year.
Factors to consider when determining your salary as an entrepreneur
There are many elements to consider before assigning yourself a salary if you are a business owner. The most important thing is to ensure the long-term sustainability of the business, so take a look at the following list to keep your numbers healthy at all times:
1. Identify the stage of the business
The first thing you have to do is identify the stage the business is at. Are you taking the first steps? It’s impossible to think about a salary when resources are limited and are destined to the growth of the project.
However, if you have already been in the market for a few years and you have passed that first stage, you can think about assigning yourself a salary that is in line with the situation of the business.
Many specialists recommend a salary that is not too high, it should always be considered in the accounting plans and you should earn a percentage of the sales according to how the company is doing. This way you will be the first one interested in the welfare of the project.
In addition, you should study how much an average professional from your experience in other companies earns. This way you will know how much you need, to feel well remunerated.
2. Look at the level of sales
It’s essential to determine what the company’s sales level is. You could be in business for 10 years and still not have a sufficiently stable marketing ratio to think about a high salary.
Ideally, the salary should correspond to the level of sales of the company, i.e. neither too high nor too low. Remember that at the end of the day, entrepreneurs do not live on a salary, but on the surplus generated by their business, which is why you became an entrepreneur.
3. Salary policy
For more transparency it is a good idea to talk to your team about setting a salary policy for all managers. Get together and establish what parameters you will use to set the pay scale for each position.
This way everyone will know how much each person earns and what additional income is coming in from bonuses and sales. This creates confidence and peace of mind for the future.
4. Reinvestment first and foremost
It’s important to define how much you will earn in a year, but it’s more important that the business receives sufficient reinvestment to maintain operations.
That’s why it’s essential to have clear accounts and to set each salary in the company’s accounting plan. This way everyone will know what percentage goes to salaries and what goes to reinvestment in the business.
5. Calculate your annual salary
If you want to have a salary in line with market demands, it’s important that you define your salary on a yearly basis. Why? Basically, all salaries offered by other companies are projected for 12 months, so you should not be the exception.
Calculating your salary is very simple, just follow this formula: monthly salary multiplied by 12 months. You can also divide your weekly salary by 52, which is the number of weeks in a year.
Benefits of making money as an entrepreneur
There are many benefits you get from earning money as an entrepreneur. Grab a pen and paper and discover some of them below:
And yes, one of the most important challenges an entrepreneur lives with is self-motivation.
As an employee you will always have someone to guide, correct and in some cases motivate you to achieve your goals, but as an entrepreneur you will have no one above you to pat you on the back.
You will give yourself the applause and there’s nothing better than seeing the money in your bank account from the turnover of your company.
Many people laughed when you pitched your business idea to them, but when they see the money in your pocket, they will stop laughing. Do it and you will see the difference.
2. You work with joy
It may sound silly, but it’s super important to work in a good mood, something that is much easier if you do it with your bank account full of numbers.
We know that starting out in entrepreneurship is not easy, but at some point there has to be a break-even point for you to start earning money.
Once you get your first payments you will see how your spirits rise significantly. You will realise that your dreams are worth working for and you will be motivated for what lies ahead.
3. You visualise your goals more closely
The projection of objectives is an indispensable aspect for the growth of any company, but in many occasions they seem far away because the results are not yet tangible.
However, if you have money in your pocket, it is much easier to talk about medium and long-term goals because you know that the work you are currently doing is being rewarded.
You already know, focus on earning money as soon as possible to get things going.
4. It requires you to be organised with your numbers
Last but not least, if you make money as an entrepreneur you will have to be more organised with your numbers.
Remember that you are an entrepreneur, not an employee, so it’s not just your numbers that matter, but the stability of the company. Therefore, you will have to separate your salary from the profits of the company and the reinvestment you will make in the short term.
Organisation is key to the success of any venture. Start earning money and find out.
Tips for being a successful entrepreneur
Do you want to become independent to fulfil your dreams and not someone else’s? Then it’s time to develop your own business.
Yes, we know that entrepreneurship is a hackneyed topic, but it is a tangible option for many today. The internet has democratised all the opportunities, so all you need is a computer with a connection to start working towards your goals.
Here are some tips to help you make your dreams come true:
1. Know your numbers
Yes, the first thing you need to do is know your numbers. Before starting a business, it’s essential that you know how much capital you need to start your business, what resources you have to ensure the stability of the project and the type of fixed costs that will be involved in the company.
Without these numbers it will be impossible to succeed, in fact, you will most likely finish before you begin.
Do the maths, talk to your team and organise everyone so that you can move forward.
2. Don’t lose sight of your purpose
Just as it is essential to know your numbers, it is mega relevant not to lose sight of your goals so that you are motivated at all times.
Is money important? Yes, but it wasn’t the reason you decided to start a business. You embarked on this adventure to change the world and make a difference through the topic you love.
In this sense, we recommend that you have written down the objectives you want to achieve in the short, medium and long term. Make sure that your whole team knows this so that they have the right direction in their compass, only this way they will achieve success.
3. Understand the market
To be successful in your business it is essential that you know the market you want to target. You need to know who your competitors are, who your target customers are and what needs you have to satisfy at the moment.
The good news is that nowadays there are many tools that will help you obtain data that will reveal the current market situation. Use them and keep moving forward.
4. Study the competition well
In entrepreneurship you will never be alone, you will always have someone to share a piece of the pie with.
No, we don’t mean your friends or loved ones, but your competition. Every niche has a number of competitors that fight every day for a bigger share of the market.
You need to evaluate what behaviours, numbers and strategies they are using to dethrone you. Anticipate their moves and you can increase your chances of success.
5. Always focus on the customer
Customer focus is one of the healthiest practices for you to survive in a jungle inhabited by more and more predators.
You must put the customer as the north of your map and know all their consumption habits to develop strategies that solve their problems through different products and services.
Give them the attention they deserve and they will reward you in different ways.
6. Design precise strategies
Strategies must be carried out in a precise way to address all the variables that exist in the market.
Once you make a study of the current situation you will be able to detect the best tactics you can implement to improve your numbers.
Sales, loyalty, market position, all these figures are important for the sustainability of the company.
7. Find your motivation
If you want to become a successful entrepreneur you must understand that you will pat yourself on the shoulder every time you do something well.
Don’t wait for a boss to come along because you won’t get one, so be prepared to self-motivate when the situation calls for it.
How do you do that? By concentrating on the thing that got you started, that dream you long to fulfil above all else.
Focus on that and you will see how little by little you will overcome the difficult moments.
8. Never stop learning
An entrepreneur should never stop learning if he wants his business to be sustainable over time.
Focus on acquiring new skills that your clients demand and that in turn will help you to solve all the challenges that any business demands.
With a little patience and discipline you will be able to achieve the goals you set for yourself.
Entrepreneurship is a movement that is to some extent inevitable. However, the important thing is that you do it out of conviction and not out of fashion so that you can withstand all the challenges that entrepreneurship proposes.
We hope that with this information you will understand what salary you should have as an entrepreneur. Remember that the most important thing is your business numbers, not your income.
How much can you aspire to earn with your own business?