We are proud to call ourselves an entrepreneurial country, with . As a result of our DIY attitude and the courage and motivation to give things a red-hot crack, innovative and modern small businesses pop up on the daily.
There are many benefits to starting a new small business or startup – following passions, being your own boss, flexible working; just to name a few. Obviously, one other major draw-card is the ability to make your own money. Yes, please.
But, and sorry to be the bearer of bad news, very rarely does a founder reap the financial benefits immediately. Yes, your business could be successful straight away and making money however, is it making a profit?
Business and entrepreneur publication, SmartCompany, has an informative article on what Australian business owners are paying themselves. They reached out to several small businesses and obtained some great examples of compensation figures, shining light on some realistic financial goals for startups.
A classic rule of thumb for any entrepreneur running a successful business is as follows;
Year 1 – take less than prior salary, re-investing most of net revenue back into the business.
Year 2 – draw former salary.
Year 3 (and beyond) – draw a larger salary.
Of course, there are many variables to consider; are you providing a product or a service, are there overheads, do you have employees to pay, are you leasing office space, what about insurances etc. There is no ‘one size fits all’ in small business, and nor should there be when you’re following your startup dreams.
At IM Business Solutions, our biggest advice would be managing expectations from the get-go, identifying a healthy balance of passion and success and finally, patience. Profitability and success can be a long-term goal that if set right, will be well worth the wait for you and your business.