• WELCOME Grumblers
    Backup is now done at 3PM EDT. You may find the server down for up to two minutes at that time.

Paying yourself ?? or am I just slave labor!!

K

koglerem

Guest
I am readying my studio to take it primetime and am wondering how you determine what you pay yourself to start. Until now, I have used off of my profit to purchase equipment and get my studio ready. Do any of you have a standard formula for determing this. I have always learned in business, that you should pay yourself first - they never say how to determine what that pay is!

Any suggestions
 
Sponsor Wanted

ArtLady

SGF, Supreme Grumble Framer
Go to one of Jay Goltz's seminars. Or email him he is a member of this billboard group.

------------------
Timberwoman
AL
I cut the mat, I pet the =^..^= cat.
 

Bob Carter

SPFG, Supreme Picture Framing God
With all due respect, are you sure you are ready for prime time if you don't know what to pay yourself. Not trying to be mean, but what did you budget for yourself? These are questions that you should already have an answer for way before you decided to hang a shingle.

My answer, though, is I pay myself what I feel I'm worth on the open market. I'm not going to work for less than I could earn working for someone else. That kind of defeats the purpose.

And oh, yeah-Profits. That what I keep for taking the risk.

It looks like you might need some help. Email me privately, if you like, and I'll try to give you what help I can
 

Jim Miller

SPFG, Supreme Picture Framing God
It seems that you have not made a formal business plan yet. I urge you to do that before you try to operate a full-service business of any kind. Running a hobby is easier than running a business.

If you wanted to drive to a certain place across the country, you would get maps and plan a route. You wouldn't get in the car and just start driving -- chances are you would not get where you intended to go, and you might run out of gas before you get anywhere useful.

Running a business is like that. It's important for you to know where you want to go and how you're going to get there. The success of your venture depends upon how finely you detail your plan. Some fundamental questions answered by a good business plan:

1. What is the profile of your target customer?

2. What mix of products & services will sell best, and how much of each?

3. What are the specific objectives of your marketing, merchandising, and advertising?

4. What will be your fixed and variable costs; such as utilities, rent, advertising, web site, trash collection, window washing, donations, office supplies, magazine subscriptions, framing software subscription, etc.?

5. What will you need in terms of computer hardware/software, fixtures, equipment, tools, administrative structure, accounting/tax setup, suppliers, inventory, etc.? And what will each item cost?

6. How many labor-hours will be required to meet your goals, and what will they cost?

7. What is your profit goal, and what mix of costs/revenues will yield that profit soonest, and when will the break-even point be achieved?

Most entrepreneurs do not make a business plan, which is why 80% of them fail in the first three years, and only half of the remainder (about 10% of startups) survive their first six years.

Think about that -- it's a terrible mortality rate. What a waste of time, money and talent. Many of those businesses could have survived, if only they had made a good business plan. Some of them would have started differently, and some of them wouldn't have started at all, after the planning process revealed flaws in their concepts.

But in every case, the entrepreneur who plans carefully has a high probability of success based on facts, not guesses; based on confirmed research, not imaginary wishes.

Please talk to your banker, your accountant, your lawyer, and your nearest branch of the federal Small Business Administration (SBA) as soon as possible. All of them can give you insights that will help you.

Good luck.
 

Bob Carter

SPFG, Supreme Picture Framing God
Jim-You bring up some very good points. You also mention speaking to your Banker, Accountant, Lawyer et al.

How many people really have all three that they use on a regular basis? I suspect not many do, but it is very good advice.

For us my partner is my CPA. We discuss many more things in our biz than acounting. I've had the same personal banker for many years and we speak on a first name basis. My lawyer, well let's say it's a good year when I don't speak to him.

But it is important to have a working relationship with these people, and not just once a year.

I hope Kogelrem takes one of us up on any offers that might help. It's mighty rough sailing out there when you try to go it alone.And for a mixed metaphor, nobody should be in business flying by the seat of their pants. Not when help is available.
 

JRB

PFG, Picture Framing God
Koglerem, Welcome to the Grumble. I have always just taken what I've needed.

I started my business with almost zero money. I could not afford CPAs, lawyers, etc., my girlfriend at the time was a bookkeeper so she handled that end. I tried the SBA and was told, in writing, that all services of the SBA where for minorities only, that was in 1976. A law was passed several years later that said government services should include ALL races, however I was already soured on the SBA.

I never had a business plan, I just went to work. I went door to door and introduced myself and started my business. If I needed ten bucks for dinner, I just took it.

The only thing I can't stress more is, keep accurate records, of everything you receive or spend. Get Quickbooks for your computer and use it.
As my business grew, those records where invaluable for getting bank loans approved.

When you take money from your business, only take what you need. Try to build a cash base so you will have something to fall back on during slow times.

Having a business plan does not guarantee your success any more than not having one, in fact if you are starting as small as I did I think it would be a waste of time. You would not have the capital to live up to your plan and you would just get frustrated.
If you are starting with a decent amount invested then I think a business plan would be a good idea, I have never had one though, other than what was in my head. To this day I still just take what I need.

John
 
K

koglerem

Guest
<BLOCKQUOTE>quote:</font><HR>
I hope Kogelrem takes one of us up on any offers that might help. .[/B]<HR></BLOCKQUOTE>

Actually, thanks for the advice. I reread my post, and I must have sounded(read) like a bumbling idiot! I was more curious about how all of you that have been in the framing business determine your salary. I have been working in the business/finance field for 20 years; I managed the books for a family's personal invesments (LLC's,partnerships, etc) who own a large mfg business (>$500 million)I have a hybrid bachelors degree in accounting and managment, etc. I appreciate your advice. I have a lawyer, accountant (me), and a banker, and have touched base with SBA and a local Excell business program. I have a plan and am working the plan and thats one of the main reasons I have maintained my full-time job while growing my business to a point that I feel that it won't be too painful to take it to "prime-time." I will go into it debt-free, minimal overhead, and minimal operating expenses. I have made projections on gross sales, competition, market, etc.

I think I have a pretty good handle on things but always welcome "nice" advice by experienced people in the industry.

It still goes back to my original question - how are you determining an "owners" salary? Are you taking less salary and putting more into a SEP program for retirement to reduce your taxable income or are you taking more salary so that when it comes time to calculate your social security benefits you receive more SS (if its still around) Do you even worry about the taxable benefits of owning a business and the loopholes that are available to you for lowering your taxable income?? SEP's 401k's?? A lot of accountants don't tell you these things and leave it to the financial planners.

Hopefully thise sounds more intelligent!


------------------
Elaine
The Skaneateles Framing Co.
 

JRB

PFG, Picture Framing God
I take what need for personal expenses. I put a substantial sum every month into my retirement fund, which includes IRAs and stock purchases. I also invest in real estate. I put a small amount into a savings acct. I have gotten my social security scaled upwards as well.

John
 

Lance E

Member
Pay yourself what you think you're worth, I really don't think that you can draw parallels between any business when it comes down to what you want for yourself.
Some advcice my father gave me years ago went something like this "listen to your lawyer never your accountant, the accountant looks after your money, thats all. If you know your bank managers first name and how many kids he has then you're in too much debt." I quite like that advice. (nothing against accountants
)
 
Sponsor Wanted
Top