Originally Posted by snomaha
Good discussion on a relevant topic.
My experience has been that between start-up and $1,000,000 in revenue the owner is wearing many hats and takes sweat equity in lieu of a fair market wage. Once that 1m in revenue hits you better be profitable and paying yourself a fair market wage because you no longer can handle all the functional roles of the business - seems like around the 20 employee mark this happens.
The next jump from 1m - 3.5m in revenue is tough. You are adding management infrastructure to continue to grow which drives down profitability. I think this is one of the most important points i discuss with my accountant - you have to have capital in the business to survive the push from 1m - 3.5m. Live off your wage and leave the profit in the company to fund growth. This is also the point when many realize that managing the balance sheet is just as important as managing the P & L statement. Try and get a line of credit increased or consolidate equipment debt if your balance sheet is out of whack - banks don't like it!
just my 2 cents for now.....
Very true statements
The business owner oversees everything from maintenance to books until it become necessary to put other people into those roles.