Compensating Yourself

How to get money out of your business . . . the entrepreneur's eternal quest! Since you're in business for yourself, you can pay yourself what you always knew you were worth or you can elect to plow cash back into growing your business. Of course, investing in the growth of your own business is also a way to build your personal wealth, although doing so sacrifices some portfolio diversity.

Chances are you'll do a little of each. Often it comes down to a decision as to what's more urgent, your needs or the needs of the business. You need to pay your mortgage and feed your kids, but the business may need to meet debt/equity ratios to pacify your bankers. There's also the consideration of how much personal luxury you are willing to forego or defer to achieve stability in your business?

Compensation is a two-tiered decision:

• How will you pay yourself?
• How much should you pay yourself?